The War on Jobs Continues

John Ransom
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Posted: Jul 09, 2011 12:01 AM
The War on Jobs Continues

The Obama Administration continued its war on American jobs this week by employing more Orwellian rhetoric than a Menshevik at a party congress. I wish they could show as much energy in prosecuting wars in Afghanistan or Libya as they have in the war on American jobs.

"The president believes, we believe, that there are enough members of both parties in both houses who support the idea that a big deal has to be balanced and therefore include spending cuts in the tax code," Carney said according to the Associated Press “employing a phrase White House officials use to describe ending tax loopholes and tax subsidies for certain taxpayers and corporations.”

“Spending cuts in the tax code?”

That’s the Menshevik-in-chief’s code for tax increases. Is it any wonder that the newest jobs report was such a stinkbomb? About the only people who don't seem to understand what's going in the economy is the Flat Earth Society at the White House. 

It's bad enough that top Obama advisor David Plouffe thinks unemployment isn't important to citizens. It's another thing for the president's economic czar Austan Goolsbee to claim the US is not facing another recession while  trying to raise taxes on Main Street, especially in light of the jobs report.

Like all tax increases in this administration, the one they’re talking about now is a “targeted” tax increase. They are targeted a you pocketbook and your job.  

The presidential candidate who once promised that he’d never, ever raise taxes on anyone making less than $250,000 has become the president who has proposed another set of tax increases that will be felt most acutely by the poor and the middle class.

This tax increase is on oil. And by "oil," I mean you.

You’ll feel it at the pump eventually and in the unemployment line.

The administration contends that they just want to close loopholes. But the Heritage Foundation says that some of those proposals unfairly single out the oil industry.

For example, the oil industry “already faces a higher marginal tax rate at 41 percent compared to 26 percent for the rest of businesses in Standard & Poor’s 500,” according to Heritage, and that doesn’t include the sales taxes that are imposed at the state and local level.

The administration is also trying to repeal some commonplace tax deductions that encourage investment in new capital and jobs here in the US.

Amongst these the administration is trying to do away with are the ability of oil companies to subtract capital investment immediately (which all companies should be able to do) and deductions aimed at making manufacturing more competitive in the US.  

While the rest of us would love for oil prices to come down, the president and the administration is doing everything they can to keep prices high and discourage domestic energy production.

The consequence is that everyone pays more at the pump and those costs are passed along to consumers.

But that’s not even half of the cost.

Six percent ($533 billion in payroll) of all labor income in the United States and 5.3 percent of all jobs are either directly tied to or support the oil and gas business. Some of the supporting industries include Services, Wholesale and Retail Trade, Finance, Insurance, Real Estate, Rental and Leasing, Manufacturing, Transportation and Warehousing, Information, Construction, Agriculture, Utilities and Mining.

The jobs are good paying, technical positions too. 

And despite everything the Obama administration has done to slow down domestic development of oil and gas resources, the oil and gas sector is one of the fastest growing jobs markets in a very anemic job market. While other sectors are shedding jobs, oil and gas is hot.

“The six fastest-growing jobs for 2010-11,” according to Economic Modeling Specialists Inc’s (EMSI) latest quarterly employment data, “are related to oil and gas extraction. This includes service unit operators, derrick operators, rotary drill operators, and roustabouts. Each is expected to grow anywhere from 9% to 11% through this year, in an otherwise mostly stagnant economy.”

“In total,” EMSI concluded, “nine of the top 11 fast-growing jobs in the nation are tied in one way or another to oil and gas extraction.”

EMSI says it’s not a one-year wonder either. The push for domestic exploration thanks to new technologies on oil and gas recovery is a long-term uptrend:

“Over the last five years, the explosion in the sector has been than staggering — even with a minor employment dip from 2009-2010. The industry added more than 345,000 jobs nationally from 2007 to 2009, and is expected add another 85,000 this year, which equals 11% growth.”

And the benefits of the oil industry could gather across the economic spectrum to help all of us, if the administration would only get out of our way.   

A recent report from Sonecon, an economic advisory firm that analyzes the impact of government policies, studied the investment results from the two largest public pension programs in 17 states. The study covered approximately 60 percent of all the public pension assets in those states. The assets were invested on behalf of teachers, firefighters, police and other public employees.

"During good economic times – or challenging ones – oil and natural gas investments far outperformed other public pension holdings," said Kyle Isakower, API vice president of regulatory and economic policy.

Amongst the finding of the report:

•           The average rate of return on investments by these funds in oil and natural gas stocks was seven times greater than the average return on their investments in all other assets. This ratio ranged from a low of 2.7 to 1 to a high of 40 to 1.

•           On average, the share of these funds’ combined returns attributable to their oil and natural gas assets was 3.4 times greater than those assets’ share of the funds’ total assets.

•           While oil and natural gas stocks make up an average of 4.6 percent of holdings in the top public pension funds, they accounted for an average of 15.7 percent of the returns in these funds over the five-year time period, according to the Sonecon study.

These returns are made possible, not because crude oil is a terrible and dangerous polluter, as Obama says, but because petroleum is one of the most versatile, coolest natural resources ever discovered. One barrel of oil creates 19 gallons (more or less) of gasoline. The rest of it goes into over 6,000 other products, including computers, CDs, DVDs, cell phones, pain relievers and vitamins, just to name a few.   

While the American job market continues to take casualties, we don’t have to look too closely to see where the fire is coming from.


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