The Third Bucket of Fiscal Cliff Negotiations
Most of the discussion in Washington about deficits and debt has been focused on two buckets—spending, including big ticket items of entitlements and defense, and taxes. But U.S. Chamber President and CEO Tom Donohue says that a third bucket should be added to the mix – energy development.
“Energy development is an extraordinary opportunity for America on many levels,” Donohue told a group of reporters. “It will help our economy achieve a stable and inexpensive supply of energy, which would help bring more manufacturing back to the United States. It will help our economy grow and create new jobs both domestically and through a higher level of exports. It will create a larger tax base, higher revenues and direct royalties, all of which will make our deficits lower and reduce debt levels. And, it will bolster our national security and reduce our dependence on unfriendly or risky suppliers.”
A new study commissioned by the U.S. Chamber Institute for 21st Century Energy found that unconventional oil and natural gas development will be responsible for 1.3 million new jobs by 2020, and an additional 1.8 million jobs by 2035. This activity will generate more than $2.5 trillion in tax revenues between 2012 and 2035, according to the study.
Another Chamber study, Project No Project, conducted in 2011 concluded that if the permitting process were accelerated, the planning and construction of 351 proposed energy projects would generate 1.9 million construction jobs and 790,000 permanent jobs.
Moreover, an American Petroleum Institute found that by 2018 another million jobs could be created by encouraging the development of new and existing North American oil and gas, as well as building the Keystone XL pipeline. Doing these things could also add hundreds of billions of dollars over time to federal, state, and local tax coffers.
Donohue urged policymakers to negotiate a "Big Deal" that, in addition to energy policy, includes entitlement reform and comprehensive tax reform. "We can’t tax or even grow our way out of the country’s fiscal mess without entitlement reform," he said. "These programs are on their way to consuming 100 percent of all the revenues collected by the federal government—leaving nothing for schools, roads, defense, or other priorities."
Donohue also outlined the key components of comprehensive tax reform. "We need to broaden the base, lower rates, close loopholes, and simplify compliance. We need to move to a territorial tax system—so that American companies that are now taxed twice can compete with foreign companies that are only taxed once. We need to lower our corporate tax rate, now one of the highest in the world. By expanding the economic pie and creating a rational tax system that accelerates growth, the government will collect more revenues than if it raises rates and smothers growth. History has proved this over and over again."
Chamber Executive Vice President for Government Affairs Bruce Josten added that while progressive groups have demanded protection of entitlement programs, "we have not, and do not intend, to draw lines in the sand ... we are interested in a Big Deal."