Energy Policies That Will Lead to Economic Growth

"Doing something" for the economic development means "doing something" for energy development.

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Oil_120423_01.jpg
An oil drilling rig near Stanley, North Dakota.

Pete Sepp is executive vice president of the National Taxpayers Union.

Given the Federal Reserve's recent projection that the official unemployment rate could dip to 7.8 percent this year, many Washington pundits would have thought they'd see more politicians jumping for joy. But once again the pundits aren't looking outside the Beltway, where the jobs picture remains underwhelming for those politicians' constituents. Sensing the mood on the campaign trail—and remembering that Jimmy Carter lost an election when unemployment was at 7.8 percent—it's perhaps inevitable that elected officials would try to look like they're doing something, anything, to promote economic growth and development. Unfortunately, two recent votes in Congress show how the word "anything" can paradoxically translate into "nothing," even as a better energy policy offers that very "something" they seek.

[See a collection of political cartoons on the economy.]

Last week, the U.S. House of Representatives turned down the chance to allow expiration of the taxpayer-backed U.S. Export-Import Bank. The institution is supposed to provide financing for projects thought to boost export activity, but it hasn't always worked out that way. Export-Import has made some especially bad gambles in the energy sector, even doling out money to the likes of Solyndra. As my colleague Nan Swift put it prior to the House's errant vote:

While the taxpayer-backed guarantees the Export-Import Bank offers might benefit certain businesses that are struggling to compete, these kinds of programs pose serious risks to taxpayers and lead to misallocations of resources. American businesses, large or small, should not be coming to the taxpayer for subsidized loans in order to prop up their exports.

Yet, only 93 members of the House saw fit to vote against re-authorizing the Export-Import Bank. A bipartisan majority gave Export-Import an increase in lending authority, to $140 billion. In a supreme irony, the acquiescing lawmakers were following the White House's lead, even though when he was campaigning in 2008, Barack Obama called Export-Import "little more than a fund for corporate welfare."

The House compounded its mistake that same week by voting against (279-129) an amendment from Rep. Mike Pompeo, a Republican of Kansas, to an appropriations bill that would have zeroed out funding for the Economic Development Administration. This agency, long a concern for fiscal conservatives, has over the years served as a taxpayer-funded conduit for numerous pork-barrel projects like a $2 million "culinary amphitheater" in Washington state and $500,000 to replicate a Great Pyramid in Indiana. An Economic Development Administration Inspector General study showed that 29 percent of grant money had been wasted due to "accounting irregularities, conflict of interest, and improper procurement procedures."

[See an opinion slide show of 10 wasteful stimulus projects.]

These are but two of the "anythings" Washington keeps underwriting in hopes of jumpstarting the economy. According to a report by the Government Accountability Office, more than 80 federal economic development programs devoured some $2.9 billion in 2010.

So what could our leaders do to make the "anything" approach into "something" meaningful? Here's a short list worth considering, and it doesn't involve creating 80 new bureaucratic components:

  • Pass Rep. Pompeo's legislation to streamline complex energy-specific provisions in the tax code and cut tax rates at the same time.
  • Conversely, avoid enacting energy-specific tax hikes, such as the president's plan to take away a widely-used job-creation tax deduction only from oil and gas companies.
  • Re-evaluate regulatory policies toward energy development and the environment that are not based on solid cost-benefit analysis.
  • Allow for the responsible, accelerated development of our own energy resources on the outer continental shelf, while expediting construction (and the economic opportunities) of the Keystone XL Pipeline.
  • Apply these principles to the entire U.S. tax code, regulatory system, and the federal budget, so that a private sector-driven recovery can take better hold to benefit consumers and workers.
  • Such an agenda is ambitious for an election year; some might call it futile. Then again, isn't expecting something from nothing—as our leaders often do—the very definition of "futile"?

    • See a collection of political cartoons on energy policy.
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