Politics & Policy

The Growth Agenda

The Democratic agenda is regressive — and it should be labeled as such.

Since its electoral defeat last November, the Republican party has struggled to find its footing. It should be clear by now that merely waging guerrilla warfare against the Obama administration on a miscellaneous set of peripheral issues won’t do. Rather, what is needed is an independent agenda organized around a central theme that is readily comprehensible to the American people and designed to deal with the critical problems facing the nation. That agenda can only be economic growth.

Economic growth must be the central issue because it is only through growth that the devastating threat of national bankruptcy can be averted. Furthermore, it is only by reviving American economic growth that the West’s global predominance can be sustained, and peace and freedom kept secure around the world. Finally, it is only through economic growth that we can provide the millions of jobs for which Americans are crying out.

The choice that must be set before the body politic is between a set of policies that offer the prospect of real economic growth and a set that is inimical to that end. These can be laid out in a number of areas.

1. Stop red-tape strangulation. The proliferation of bureaucracy, regulations, and red tape at every level of government has been a problem for some time. But it has become especially onerous during President Obama’s tenure, to the extent that it has crippled the administration’s own efforts to build anything through its stimulus bill’s public-works projects. For companies and individuals, the impositions have been even worse, with the worst culprit being the EPA. It has denied or delayed millions of construction permits, on pretexts ranging from preserving imaginary rest-stops for migratory wildlife to halting suburban sprawl. It has prevented innumerable individuals from improving their own property, even when improvements — such as draining disease-spreading swamps — are necessary for public health and safety. It has created mountains of unjustifiable, indecipherable, and fundamentally unknowable regulations and imposed trillions of dollars in cumulative compliance and litigation costs on businesses of every description, thereby preventing their expansion or even driving them into bankruptcy.

2. Make energy plentiful and cheap. Energy powers our economy, both literally and figuratively. The more that energy costs, the less economic activity there can be. This is shown dramatically in the figure below, which compares U.S. unemployment rates with oil prices over the past four decades. Notice that every time the price of oil rises, American unemployment rates shoot up shortly thereafter.

Figure 1. Oil prices vs. U.S. unemployment rates, 1970 to 2010

The policy of the Obama administration is to employ regulatory strangulation to drive up the price of energy. This must be exposed and opposed for what it is: a policy of forced economic contraction. Items to be identified as part of this policy include:

‐ Efforts to impede the development of oil resources by impeding exploration, discouraging drilling, or holding up the building of infrastructure required for transport. The U.S. is the world’s leading oil importer; our adversaries are the world’s leading exporters. Any policy that restricts our oil production and thereby protects the ability of the Islamist-led OPEC cartel to rig high oil prices hurts the U.S. and helps our adversaries.

‐ Efforts to impede the development of natural gas by creating regulatory obstacles to fracking and other technologies.

‐ Efforts to constrict the nuclear industry. Prior to 1971, the average time from groundbreaking to commencement of operation for a nuclear plant was four years. For the most recently completed plants, it is 15 years. This fatal fourfold increase has been imposed by the EPA and the National Environmental Protection Act. Under this law, nuclear-power projects have been subjected to constant delays caused both by government bureaucrats who capriciously change engineering requirements during the middle of construction and by repeated legal harassment by organizations whose openly stated objective is to wreck the nuclear industry by driving up its costs. In addition, capital costs have been multiplied fourfold by endless additional requirements imposed by the Nuclear Regulatory Commission — all without rational engineering justification. Furthermore, as a result of NRC interference, it has become nearly impossible for the nuclear industry to make improvements, even obvious ones that might serve to reduce its costs. The Obama administration has further assisted this campaign by intervening to block the establishment of a permanent nuclear-waste repository in Nevada, a project on which the government had already spent billions of dollars. In doing so, it acted not only against the nuclear industry but against the public safety, since clearly, from a safety point of view, it is far preferable to store spent nuclear waste under a mountain in the middle of the Nevada desert than in plantside cooling ponds near major metropolitan areas.

Efforts to kill coal-fired power generation. Nuclear power accounts for 20 percent of American electricity, while coal produces 40 percent. Obama’s EPA recently set forth new regulations that will, at a minimum, vastly increase the price of coal-generated power, and that will most likely, as is their clear intent, wipe the industry out altogether. This will destroy hundreds of billions of dollars of private property and impose trillions of dollars of highly regressive, economy-destroying costs on the American public. The Romney campaign seriously mishandled this matter by discussing the president’s war on coal as if it were a niche issue that was of concern primarily to coal miners. Nothing could be further from the truth. By driving up the cost of electricity, Obama’s policy will make America less competitive across the board, causing the loss of millions of jobs in every sector of the economy.

Beyond opposing the destructive efforts of the Obama administration to constrict our energy production, the GOP needs to take the lead in forcing open the transportation-fuel market to non-petroleum resources. In particular, this means methanol, a very clean-burning liquid fuel that can be cheaply made from coal or natural gas — both resources that the U.S. possesses in abundance. Methanol is currently selling for $1.30 per gallon, without any subsidy. Nearly all cars sold in America for the past five years have flex-fuel capabilities that can be enabled by a properly skilled mechanic at little expense, and that would allow them to be driven with equal facility on gasoline, methanol, ethanol, or any mixture of the three, thereby opening the fuel market to free-market competition that would drive prices down across the board. Unfortunately, the EPA currently bans the commercial marketing of such conversions, as well as the sale of motor-vehicle methanol fuel in concentrations above 5.4 percent. These artificial regulatory obstacles to making full use of our own fuel resources are causing immense economic harm to America and need to be removed.

3. Defeat the war on carbon. This is closely related to the energy issue, but it has a broader aspect as well. President Obama has declared that a central goal of his second term will be to reduce humanity’s use of carbon. Yet as can be seen in figure 2, below, which graphs the advance in human well-being over the past 200 years (as measured by average global per capita GDP, in inflation-adjusted 2010 dollars), a sizable portion of the world’s population has managed an almost miraculous escape from poverty over the past two centuries.

Figure 2. Global GDP per capita vs. total human carbon use, 1800–2010 (in 2010 dollars)

As the graph shows, this has been driven largely by carbon use. But with the average human being still surviving on less than $9,000 per year, it is clear that we still have a long way to go. If the bulk of the human race is to have the opportunity for a decent life, it is clear that the world needs to use a lot more carbon. The president and his party, however, say they want to stop this march forward. In fact, they want to turn the clock back to the 1990 levels specified by the Kyoto treaty, which correspond to an average global income of $5,000 per year. This is a brutally reactionary position, and needs to be exposed as such.

4. Hold the line on taxes. Given the massive federal deficits, there is little prospect for any tax cuts that might contribute significantly to economic recovery. Even if there were, such a program would likely not be comprehensible to the public. Consequently, the emphasis must be on deregulation as the key strategy for enabling economic growth. At the same time, however, economy-depressing tax increases must be avoided. In particular, now that the issue of general income-tax rates has been settled, ideologues associated with the Democratic party are advancing proposals for collecting new government revenue through carbon taxes. These need to be opposed not just as efforts to continue to fund the cancerous growth of economy-strangling government bureaucracy (which they are) but as ultra-regressive measures that place a disproportionate burden on the poor, the working class, the middle class, and businesses that produce real things. Carbon taxes are much more regressive even than sales taxes, because high-priced prestige items, such as high-fashion dresses, generally involve no more carbon in their production than their low-priced counterparts. Furthermore, while sellers of junk stock or real-estate derivatives need use no carbon, those who make their money producing steel, food, plastics, paper, fabrics, cars, airplanes, buildings, or energy — in short, nearly everything making up the material basis of society — do indeed use carbon. In short, there could be no worse taxes than carbon taxes, nor any better means conceivable by which to harm the economy and the average American.

Barack Obama claims that his policy of reckless deficit spending is the key to growth. Nothing could be more false. While it is true that federal spending on technological research and development can significantly assist economic growth in both the near and long term, it is precisely such funding that has been put in danger by the administration’s profligate waste elsewhere. For example, the $535 million the administration chose to give away to the president’s campaign supporters at Solyndra exceeds by 30 percent the entire $400 million FY 2012 budget for U.S. research into controlled fusion. And Solyndra is just the tip of the iceberg. According to the detailed and itemized exposé presented by Peter Schweizer in his book Throw Them All Out, under Obama over $16 billion in federal cash that could have been used to fund important energy research was given away in scandalous kickbacks to companies either run or primarily owned by “individuals who were bundlers, members of Obama’s National Finance Committee, or large donors to the Democratic Party.” Federal research into new advanced technologies, particularly in energy, can and should be expanded, but not at the expense of the taxpayers. Instead, Congress should cut off the gravy train to the president’s profiteering followers, who have diverted the required funds from their proper purpose.

In any case, the central issue is not research but the freedom to use technology — new or old — to create wealth. At every turn, the administration’s policy is to restrict such freedom, thereby constricting the nation’s potential for economic growth. Such a “limits to growth” strategy is not just an attack on enterprising businessmen. It is a betrayal of the hopes of all, but most particularly the poor, who counted on Obama to lead them to the Promised Land. The president says he wants to raise the minimum wage, but at the same time he is destroying the capacity of the economy to pay higher wages. The pressing need facing the poor is not to have the wages of entry-level positions raised to $9 per hour, but to have many more real job opportunities that pay $25 per hour. That is what is needed for working-class families to support themselves in dignity, and that is precisely what Obama’s program would deny. Limits to growth means limits to hope.

Our policy must be the exact opposite. Growth is the tide that lifts all boats. Growth is the program that opens all doors. Growth is the magic that gives all hopes their chance to become real.

Growth must be our cause.

 Robert Zubrin is president of Pioneer Energy, a senior fellow with the Center for Security Policy, and the author of Energy Victory: Winning the War on Terror by Breaking Free of Oil. His newest book, Merchants of Despair: Radical Environmentalists, Criminal Pseudo-Scientists, and the Fatal Cult of Antihumanismwas recently published by Encounter Books.


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