While New Hampshire voters were expressing their economic frustration to U.S. President George Bush last month, administration officials hinted about joining the international righteousness contest over global warming. Will the Bush team ever learn?
Hallmarks of this administration's domestic policy have been aggressive reregulation and enthusiastic political compromise. U.S. businesses, therefore, have incurred huge costs to comply with new regulations on everything from employment practice to air quality. Taxes, contrary to the keystone pledge of Bush's 1988 campaign, have increased. And now, in the heady spirit of international accord, Americans soon may have to sacrifice hard dollars to the soft science frightening so many people about planetary temperatures.
THE ECONOMIC RECORD
Thus the economy reels. In January, NatWest Investment Banking Group distributed Democratic Policy Committee figures showing that the past quadrennium has been worse than any like period since World War II for average growth rates in these categories: real gross national product (GNP), real GNP per capita, nonfarm payroll employment, real nonfarm compensation per hour, real disposable income, real disposal income per capita, consumer spending, consumer spending per capita, real nonresidential construction, real residential construction, and nonfarm productivity. The period has been similarly low in the average personal savings rate as a percent of disposable income and average housing starts.
The President seems to think low interest rates and a gerrymandered income tax withholding schedule will reignite the economy and lift his reelection prospects. Yet corporate layoffs continue by the thousands. And the costs of some triumphs of compromise, such as the Clean Air Act amendments of 1990, haven't yet hit with anywhere near full force.
If Bush understood what has happened to his administration he would not have allowed Energy Sec. James Watkins to lovingly embrace energy legislation passed by the Senate Feb. 19. It's another fiasco born of compromise with a hostile legislature, a quaking shadow of what the Bush team had proposed as a national energy strategy incredibly, the legislation contains nothing to promote development of domestic supplies of oil and gas. Nothing! It doesn't allow leasing of the Arctic National Wildlife Refuge Coastal Plain. It extends moratoriums on leasing of the federal offshore. It says nothing about the tax penalties on drilling investments that have independent producers in irons. Oh, yes: The legislation encourages gas consumption. There's nothing objectionable about that or most of the bill's other provisions. Except to outsiders, however, what good are markets in a country that won't accommodate production activities?
IGNORING OIL, GAS SUPPLY
The petroleum industry should not be fooled by promises for support for ANWR leasing and tax relief. The Senate bill is as close as the U.S. government is likely to venture toward an energy policy for a long time. And it ignores domestic supply of two fuels that together account for more than 60% of the U.S. fuel mix.
For Bush, this is no legislative triumph. It's a costly capitulation to Congress that will further depress oil industry employment, let oil imports swell future trade deficits, and renounce economic benefits from domestic resource development. Bush must show that he understands voters don't want to pay for more mistakes like this. He should recant his administration's support for a faulty energy bill. And he should promise to veto any so-called energy initiative that doesn't attend to domestic oil and gas supply.
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
