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 Richmans' Trade and Taxes Blog

Gov. Perry Is On Track to Create a Million Jobs. Could Be Several Million
Raymond Richman, 10/18/2011

Maria Recio reported in the McClatchy Newspapers on Friday, October 14 (my birthday! And it was a nice gift!) that Presidential candidate Gov. Rick Perry released an energy-centric program to expand offshore drilling and domestic oil and gas exploration that he claimed would create 1.2 million jobs. Perry, who spoke at a suburban Pittsburgh steel mill said he would move to open federal lands to drilling, including Alaska's Arctic National Wildlife Refuge, and curtail the Environmental Protection Agency's regulatory powers.

Perry calls the plan “Energizing American Jobs and Security” and claims that it will “kick-start economic growth and create 1.2 million jobs." Perry said, “We are standing atop the next American economic boom ... energy." “But we can only do that if environmental bureaucrats are told to stand down," he said. "America has proven but untapped supplies of natural gas, oil and coal. America is the Saudi Arabia of coal, with 25 percent of the world's supply. Our country contains up to 134 billion barrels of oil and nearly 1.2 quadrillion cubic feet of natural gas." We said the same on this site several times that removing the restrictions on the drilling of oil on public lands and offshore would create a million jobs. Together with the drilling of natural gas in our abundant shale deposits, it would create an economic boom and millions of additional jobs.

Perry's energy proposal drew fire from President Barack Obama's campaign and environmental groups. "Gov. Perry's energy policy isn't the way to win the future, it's straight out of the past -- doubling down on finite resources with no plan to promote innovation or to transition the nation to a clean energy economy," Obama campaign spokesman Ben LaBolt said. Daniel Weiss of the Center for American Progress Action Fund, said Perry's plan "ignores a clean tech future while returning to a fossil fuel past. ... The Perry plan should be stamped 'Made By Big Oil.” Texas Democratic Party spokeswoman Rebecca Acuna said Perry "wants to abolish the Environmental Protection Agency and run the federal government like he runs Texas." This is the kind of garbage the ultraleft uses to attack the ideas of opponents instead of debating the issues.

It is no coincidence that the principle supporter of the Kyoto treaty and the anti-carbon emissions programs around the world, based on the theory of anthropogenic (man-caused)  global warming, came from the IPCC, a United Nations agency, not from any legislature of any democratic country. Even today, existence of an alternative theory of global warming (and cooling)  based on solar effects  on cosmic rays  bombarding the earth has been ignored by the mass media. As we have pointed out, the trillions of dollars that we and the rest of the world have spent on so-called renewable energy was a waste of valuable resources, lowered living standards of workers in the Eurozone and the U.S., and would be justified only when fossil fuels became more expensive, perhaps in the latter part of this century, if then.

Americans for Tax Reform summarizes Perry as saing:

Department of the Interior has put forth an impossible number of hoops for oil and natural gas producers to jump through. Across town, Lisa Jackson’s EPA has scared America’s job creators into inaction. With a slew of punitive, unnecessary regulations coming down the pipe, America’s manufacturers and energy producers are hoarding capital until they fully comprehend EPA’s compliance costs. 

Perry promises to expedite permit processing and give American businesses the certainty investment requires. We have to note that all the self-styled environmental organizations oppose drilling for oil on public lands but have no objection to granting thousands of acres of public lands for government subsidized wind and solar energy plants, not one of which would have been built without state and federal subsidies. For all practical purposes, as a result of tax credits, those plants pay no state and federal taxes, and if they are built on public lands, pay no property or school taxes.  

Perry proposes to “simplify our distortive tax code through repealing tax credits and subsidies” in a revenue neutral way. Repealing credits and plowing the savings into lower rates would not only simplify the tax code, but make it more fair—a step towards a truly innovative free energy

Rick Perry is the first Texas governor since World War II to reduce general revenue spending. He’s used his line-item veto to cut more than $3 billion in proposed spending – more than all other Texas governors combined.

What makes this more remarkable is that Gov. Perry has done all of this while shrinking government. The last budget he signed reduced state spending by more than $1 billion. He also maintained Texas' view that borrowing is a last resort, as the Lone Star State has the lowest per-capita debt of any of the large states nationally.

So far so good. But Perry has no program for dealing with the outsourcing of American jobs. We’ve lost millions of good manufacturing jobs to China, Japan, and Germany. According to Andy Groves, founder and former CEO of Intel Corp:

In the 1970s, the U.S. computer industry had 150,000 workers. This became two million at its peak but now is back to 150,000. Meanwhile, computers went from a $20 billion to a $200 billion industry. To have that happen and for us to continue to repeat the mantra that innovation and technology will save us, in the face of evidence to the contrary—that was why I wrote about this… most of those jobs still exist—just not here. You can correlate what happened in the U.S. completely to the rise of contract manufacturing [in which a company like Apple designs a product and hands off the production to another company]. One company accounts for 1.1 million computer manufacturing jobs—China's Foxconn.

He writes that Apple, Dell, Hewlett-Packard, and many others have ten times as many employees producing their products abroad as they have in the U.S. Andy Groves believes a tariff should be imposed. That is where we come in.

We have invented the single-country variable tariff which we call the scaled tariff. The tariff increases when our trade balance with a country worsens and decreases when our trade balance improves. We believe it to be authorized under World Trade Organization rules and we believe the President has authority to impose the tariff. There are three countries, other than those selling us oil, with which we have chronic trade deficits: China, Japan, and Germany. None are in a position to retaliate without cutting off noses to spite faces. But that is another story. So long as there is a trade imbalance, the U.S. would receive revenues from the tariff. How many jobs are involved? As many as five -- yes, five -- million as we have pointed out on this site a number of times.

Hopefully, Gov. Perry and the other candidates for the presidency will read this and declare their readiness to implement the scaled tariff if elected. We have no objection to Pres. Obama doing so but he seems committed to sacrifice the American worker on the altar of misguided and untimely wind and solar energy.  

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  • [An] extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. “A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance.” [Balanced Trade entry]

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