Admittedly, we, as a country, need to get past this debt-ceiling crisis and, consequently, it has consumed the news cycle. But, the proposed solutions focus mainly on two elements of the problem, while the rating agencies seem to be looking at the bigger picture. Whether Republican or Democrat, the plans address only cutting spending or raising taxes, and the $14 trillion number is too large to meet in the middle—even if we did both. Long term, what Moody’s and Standard and Poor’s are looking for is a plan moving forward that will fix the future.
So, how’d we get here? The over-simplified answer is basically the same way any household account gets into trouble: too much spending and not enough income. Both sides of the debate seem willing to cut some spending. President Obama apparently thinks the only way to increase revenue is by raising taxes.
It is universally accepted that the bad economy, with its resulting unemployment and lack of consumer spending have cut into the funds that typically fill the federal coffers in a robust economy—even Research In Motion, the maker of the Blackberry, is laying off 2000 employees, and GE (GE Chief Executive Jeffrey Immelt, serves as a top adviser to the Obama administration on job creation) is moving its X-Ray headquarters to China and investing $2 billion there. With more people unemployed, there is less income, and therefore less income tax to fund the federal programs.
Despite the bad numbers, the administration’s policies continue to discourage a true revenue increase while the President continues to support raising taxes.
A variety of business and industrial groups are working together to point out the detrimental impact of the EPA’s proposed new ozone ruling, calling it, “one of the greatest threats to U.S. economic growth and job creation.” If implemented, the new rule will put most of the country, including nearly all of California, in a non-attainment status, which will require, as estimated by the EPA, $20-90 billion annually. Companies would be punished by having to obtain emission offsets (doing through regulation what—at the prodding of the people—Congress didn’t support in cap-and-trade proposals), install controls, and face expensive retrofits just to be allowed to continue current operations. While these regulatory fixes may create some short-term jobs, the regulations will seriously damage America’s ability to compete in the future in this economic war—all for no substantial benefit.
Earlier this month, the EPA issued tougher rules for power plants. The Cross-State Air Pollution Rule is just one of many rules that have been recently introduced that will, ultimately, close down coal-fueled power plants and make energy more expensive for Americans—taking away the one advantage America has in the global marketplace: comparatively cheap energy. Even before the new rule was finalized, coal-fueled power plants were already on-track to spend $125 billion through 2015 for emissions controls. Additionally, coal-fueled electricity generators find themselves facing expenditures of another $10.9 billion a year to comply with a proposed regulation called the MACT rule that, according to EPA’s own projections, will be one of the most expensive rules ever written by EPA for coal-fueled power plants. These regulations make electricity more expensive as the costs are ultimately passed on to the ratepayer—both industry and the consumer.
And it is not just the EPA. There is the Department of Energy, the Bureau of Land Management, the Forest Service and the Fish and Wildlife Service, all of which are working to block oil-and-gas extraction in America—while making us more dependent of foreign oil. Despite the dearth of off shore drilling permits, the underhanded efforts to stop oil and gas development, and the silly requirements that must be met to extract natural resources, one of the few segments that is adding jobs are the extractive industries. During the second quarter of 2011, US oil field jobs were up nearly 20,000. Imagine what that number might be if the government agencies encouraged rather than impeded? And, these are hard numbers just for oil and gas—but most industry is facing excessive regulation from a variety of agencies.
“Mr. Obama,” borrowing what we used to say in the motivational speaking world, “If there was a way to quickly increase revenues through putting Americans back to work, you’d want to know about it, wouldn’t you?” Any reasonable person would shout back, “Yes!” But that does not seem to be the administration’s real goal.
The President’s policies have come home to roost. The dismal employment numbers, the loss of businesses fleeing to other countries, and the high energy prices that hurt individual families and hamper the nation’s productivity have come to a head and rating agencies are telling us this isn’t working. Mr. President, you didn’t listen to the 2010 election results. Will you listen to the people who have the ability to downgrade all of America, if you do not produce a real change in economic direction? America’s future depends on it.
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