Keystone XL Pipeline Approved – Or Maybe Not

Keystone Pipeline OklahomaBoth the U.S. House and Senate have now approved construction of the Keystone XL pipeline. Once the two versions of the bill go through a brief reconciliation process the finalized bill will be sent to the President for his signature. He must decide within ten days whether to sign it into law or veto it.

The House with its increased Republican majority took up the Keystone bill as its first item of major business. House Resolution 3 was introduced on Jan 6, 2015 and passed on Jan 9.

The Republican-led Senate then took up the bill as its first item of business and, after lengthy debate and some amendments, passed its version of the bill on Jan 29.

Sen. John Barrasso (photo courtesy U.S. Senate - click to enlargMembers supporting the Keystone XL bill argued that the pipeline is vitally important to the U.S. economy, saying it would add thousands of new jobs. For example, Sen. John Barrasso on Wyoming claimed on Meet the Press on Jan. 4 that, “[Obama’s] own State Department said it’s 42,000 new jobs.”

The only problem is, as Emily Atkin of ThinkProgress has pointed out,

The State Department did not say the Keystone XL pipeline would create 42,000 new jobs. Instead, it said the project would “support” 42,000 direct, indirect and induced jobs, 99 percent of which would be temporary, not lasting more than the two years it would take to construct. Once the project is completed, the State Department estimates that the pipeline would only create 35 full-time jobs.

These 35 jobs would be all that is needed for “routine inspections, maintenance and repair.”

construction of the gas pipelineSo how many actual short-term construction jobs (rather than secondary spin-off jobs) would be generated by this project? TransCanada, the Canadian company behind the project that would be shipping the oil through the U.S., has estimated that

the pipeline will create no more than 2,500 to 4,650 temporary direct construction jobs for two years,

or an average of 1,950 jobs each year.

TransCanada has also stated that the total cost over the two years of construction has now gone up from $5.4 billion to an estimated be $8 billion. That’s a lot of money for relatively few jobs. You really have to ask yourself if that is money well spent.

Of course, once the pipeline is operational it will send up to 830,000 barrels of Canadian heavy (tar sands) oil through the U.S. per day to Gulf Coast refineries. That is bound to help the U.S. economy by alleviating dependency on foreign oil imports. Right? Except that this refined product is primarily destined for export to other countries. Don’t look for it to flood American markets and reduce the price of gas at the pumps.

As President Barack Obama stated at his 2014 year-end press conference,

At issue in Keystone is not American oil. It is Canadian oil that is drawn out of the tar sands in Canada. That oil currently is being shipped out through rail or trucks and it would save Canadian oil companies and the Canadian oil industry an enormous amount of money if they could simply pipe it through the United States and all the way down to the Gulf. Once that oil gets to [the] Gulf, it is then entering into the world market and it would be sold all around the world.

CO2In the meantime, mining (yes mining) and liquefying this tar sands oil produces significantly more hydrocarbon emissions than conventional crude oils and is more damaging to the environment.

A study by the Stockholm Environmental Institute concluded that the pipeline would increase global greenhouse gas emissions by as much as 121 million tons of carbon dioxide a year. That is four times the amount originally estimated by the U.S. State Department in its assessment of the environmental impact of the pipeline. As Adam Howard reported for MSNBC,

The results could have a traumatic effect on the planet’s atmosphere, which is already reeling from the prolonged effects of climate change.

Lac-Megantic-Oil-FireThe kind of oil to be shipped through the pipeline is also much more toxic, explosive (recall the catastrophic explosion in Lac-Mégantic, Québec in 2013, and harder to clean up than conventional oil when spilled. As Emily Atken explains,

cold lake tar sands bitumen spill_0When it spills, tar sands oil does not float on top of water like conventional crude. Instead, … it gradually sinks to the bottom. … This makes normal clean-up techniques and equipment of little use.

The XL pipeline is certain to provide increased profits for a few major oil producers, but will have little overall impact on job creation or boosting the American economy. Instead, it will create a greater hazard to the environment and to public safety. The bottom line: it is an ill-conceived, politically motivated, and environmentally hazardous piece of legislation that deserves to die.

President Obama has said that he will veto this bill when it comes across his desk. Let us hope that he is true to his word.

Image credits:Sue Ogrocki/AP; Sustainability Ninja

Obama’s Legacy – He’s Not Done Yet

Obama SOTU 2015-bWhat should one make of President Obama’s latest State of the Union Address? On the one hand it’s easy to dismiss it as being mere words, nicely spoken but without any real import. After all, there’s virtually no chance of the policies he proposed being put into law by the current Republican dominated Congress.

But his speech was not about specific proposals that he wanted Congress to pass. It was about something else; it was about securing his legacy, and about fundamentally changing the course of future public policy in America.

This was made clear by Obama’s choice of words at the very beginning when he said,

We are fifteen years into this new century.  Fifteen years that dawned with terror touching our shores; that unfolded with a new generation fighting two long and costly wars; that saw a vicious recession spread across our nation and the world.  It has been, and still is, a hard time for many.

But tonight, we turn the page.

Tonight, after a breakthrough year for America, our economy is growing and creating jobs at the fastest pace since 1999. Our unemployment rate is now lower than it was before the financial crisis. More of our kids are graduating than ever before; more of our people are insured than ever before; we are as free from the grip of foreign oil as we’ve been in almost 30 years. …

At this moment – with a growing economy, shrinking deficits, bustling industry, and booming energy production – we have risen from recession freer to write our own future than any other nation on Earth. It’s now up to us to choose who we want to be over the next fifteen years, and for decades to come. [emphasis added]

Financial crisis headlineBarack Obama has guided and overseen a dramatic period of change in America’s history that few presidents have witnessed. He will be remembered as the President who took office at a time when the country was teetering on the brink of financial collapse, the country’s largest financial institutions were insolvent, the auto industry was in ruins, millions of people had lost their jobs, and the national debt had soared to unbelievable levels. (Thank you George W. Bush.)

And what action did he take as president? With a Democratic majority in Congress helping him, in his first year in office, Obama

rescued the automobile companies, jump-started the renewable energy industry, imposed new rules on financial institutions and, most dramatically, engineered a major overhaul of the health care system.

That is no small feat. Furthermore,

On his own initiative [through executive action], he ordered major reforms in immigration policy, forged a landmark agreement with the automobile companies on fuel efficiency and proposed tough restrictions on greenhouse gas emissions from power plants.

That’s quite the legacy in just his first two years in office.

Tea Party RepublicanAfter the 2010 elections, when Democrats lost their majority in the House, Obama was not able to accomplish as much. In fact, thanks to an unrelenting onslaught of opposition from the Republican dominated House (invigorated by the Tea Party) he was put on the defensive, trying to simply retain what he had accomplished in his first two years.

No provocative new initiatives were forthcoming in his 2012 re-election campaign, as he appealed to the moderate middle ground of voters. In the 2014 midterm elections he also held back, trying (largely unsuccessfully) to protect Democrats up for re-election in red states.

But since then – with no more election campaigns ahead of him – Obama has gone on the offensive once more. He has in short order announced a new climate deal with China (demolishing the long standing objection that America can’t afford to curb emissions as long as China refuses do the same), entered into talks with Iran to curb their development of nuclear weapons, revealed extensive new immigration reforms, and (after 50 years of a failed embargo policy) begun normalizing diplomatic relations with Cuba.

Obama is determined to leave a legacy behind that will mark him as a real and effective change maker.

Establishing His Legacy

In emerging from the financial crisis, the road to financial recovery was agonizingly slow, hampered in great part by Republican refusal to approve spending initiatives to create new jobs in repairing a deteriorating infrastructure, developing new avenues of renewable energy, and investing in public education.

??????????Instead, Republicans promoted an austerity program of decreased government spending, severe cutbacks in social services to the needy, and continued tax cuts to the wealthy. The U.S. would have come out of its deep recession much sooner and much more robustly if Congress had backed increased social expenditures rather than austerity.

It was almost as if the Republicans wanted to make people more miserable and more desperate in hopes that the economic recovery would fail and people would take their anger and frustration out on the president. It was a cynical strategy, but effective – and it almost worked.

economicrecoveryEven within these constraints, the economy did recover – slowly and painfully while at every turn Republicans gleefully pointed to the continuing high unemployment rate and slow growth in the GDP. But over time the unemployment rate did come down, and the GDP did rise. Now Obama can point to the lowest unemployment rate since before the great recession, and the greatest number of jobs created under any presidency. The stock markets have doubled, economic expansion is now roaring ahead at 5%, and oil prices have been cut in half. The annual deficit has been cut by more than half since Obama took office, and the national debt is now safely under 3% of GDP – right where economists said it should be to get things back to normal.

Is Barack Obama single-handedly responsible for this dramatic turn-around. Of course not. But you know who will get the credit? He will. When people look back in future decades to those frightful days of the second “Great Depression,” they will forget the complexities of all the political infighting, the obstructionism of Congress, the painful sequester forced on the nation, and all the rest.

People will simply remember Obama as the president who pulled the country out of its economic free-fall, who put America back to work, who ended two ill-conceived wars that cost thousands of American lives, who broke the political impasse on immigration, who restored America’s reputation on the international stage, who created the path to energy self-sufficiency, and who (after 40 years of failed attempts by other administrations) finally implemented national health care.

Defining the Road Ahead

Save-the-Middle-ClassAnd now Obama is setting the tone for future public policy in America. The points he outlined in his speech are not policies that he hopes will be enacted by this session of Congress. They look beyond that. They form the framework for a national debate in preparation for the 2016 presidential election.

It is an agenda that Democrats can readily endorse – expanded opportunities for the middle class with the very wealthy paying more of their fair share. Can Republicans embrace such a platform? And if they campaign against it, does that make them the party that only defends the interests of the rich and powerful and doesn’t care about the majority of middle-class Americans? That’s going to prove awkward.

What if Republicans are forced to change their message and (heaven forbid, move leftward) to embrace more progressive social and economic policies?

Following Obama’s speech Brian Beutler penned a very insightful piece for the New Republic. He recalled how back in 2008 Obama told the editorial board of the Reno Gazette-Journal that,

Ronald Reagan changed the trajectory of America in a way that Richard Nixon did not and in a way that Bill Clinton did not.

Beutler maintains that Obama wants to accomplish the same thing – to change the trajectory of America like Reagan did, but in the opposite direction.

This can be seen in Obama’s State of the Union Address. Barely into the speech Obama recounts that

Six years ago today, in the darkest months of the crisis … I stood on the steps of this Capitol and promised we would rebuild our economy on a new foundation.

After reciting a number of his economic initiatives and their success, he concludes by saying,

The verdict is clear. Middle-class economics works. [emphasis added]

The phrase “middle-class” economics is new. We have not heard it before. It is meant to signify the opposite of Ronald Reagan’s famous theory of “supply side” economics that focuses on increasing benefits for the wealthy in the belief that they will then create more jobs with their wealth, and the economic benefits will “trickle down” to those below.

trickle-down-economicsThirty years of economic history have shown that supply-side economics is a bust. The rich have simply pocketed their gains and the middle class has not benefited at all. George W. Bush’s naïve belief that providing further tax cuts for the rich would stimulate the economy has been shown to be completely ineffectual.

Obama is calling for an alternate strategy, one that focuses on providing benefits directly to the middle class to stimulate the economy.

It is an established fact that 70% of the economy rests on consumerism. When consumers have disposable income they will spend it on needed (and desired) goods and services. They will stimulate the economy. They will not hoard the money away like the rich, benefitting no one but themselves. They will not place it in offshore tax havens. And they will pay their fair share of taxes, unlike the super-wealthy who employ a raft of tax loopholes to avoid paying their fair share.

“Middle class economics” means investing in policies that stimulate middle class earnings so that they have disposable income to inject back into the economy. It means raising the minimum wage to a level where “the working poor” can actually live off their income and not be dependent on government supplements to survive.

It means providing equal pay for women. It means better early education and better skills training for better jobs. It means increased child support for working parents. It means having access to unemployment insurance and job retraining when necessary. And it means having health insurance coverage to protect from catastrophic financial loss due to illness (the source of 25% of all personal bankruptcies in the U.S.).

This is to be the focus of the new debate leading into the 2016 elections. This is to be the new direction for America. For decades Americans blithely trusted that Reagan’s tax cuts for the wealthy and deregulation would provide a path to prosperity for all.

We have seen how deregulation led to the massive economic crisis that capped the end of George W. Bush’s term in office. We have seen how under Reaganomics the immensely wealthy have vastly increased their wealth while the middle class has scarcely benefitted and the poor are even worse off than before. In the end Reaganomics generated a massive redistribution of wealth, taking from those who could least afford it and giving it to those who least needed it.

It is time to move back to the center, to restore prosperity for the middle class and provide greater opportunities for those who seek to join the middle class. It is time for America to go in a new direction. And Barack Obama is announcing that path.