Right-wing media figures are slamming President Obama for the State Department's decision to reject plans to build the Keystone XL pipeline until a full assessment can be made, claiming that he is “killing jobs.” But they cite industry-funded estimates of job creation that are wildly inflated. Moreover, the administration had long warned that it would be unable to complete the legally required review under the deadline imposed by a GOP-backed provision and would thus be forced to reject the project, and conservative outlets have previously attacked other Obama proposals that experts say significantly boost economic growth.
Obama Admin Had Warned That GOP Deadline Could Make It Unable To Complete Review Required To Ensure Pipeline Meets Environmental Standards
The Hill: “Obama Signs Payroll Tax Bill That Requires Speedy Decision On Keystone Pipeline.” From a December 23, 2011, article in The Hill:
President Obama signed into law a broad payroll tax package Friday afternoon that includes a measure requiring him to make a speedy decision on the Keystone XL pipeline.
The GOP-backed measure requires the administration to make a decision within 60 days on the pipeline, which would carry oil sands crude from Alberta, Canada, to refineries on the Gulf Coast. In order to reject the pipeline, Obama would have to declare that the project is not in the national interest. [The Hill, 12/23/11]
State Department Spokesman: 60-Day Deadline “Would Prohibit The Department From Acting Consistently With National Environmental Policy Act Requirements.” From a December 12, 2011, article in The Hill:
The State Department is warning Republicans that forcing a decision on the proposed Keystone XL oil sands pipeline within two months won't bring the project approval they're seeking.
House Republicans are including a provision in payroll tax cut legislation that would require State to issue a permit for the proposed Alberta-to-Texas pipeline within 60 days, unless the president determines that it's not in the national interest. Senate GOP leaders are also pushing the Keystone provision.
But a State spokesman said Monday that the 60-day time frame would leave the administration unable to issue the permit for TransCanada Corp.'s proposed $7 billion pipeline.
“Should Congress impose an arbitrary deadline for the permit decision, its actions would not only compromise the process, it would prohibit the Department from acting consistently with National Environmental Policy Act requirements by not allowing sufficient time for the development of this information,” the spokesman said.
“In the absence of properly completing the process, the Department would be unable to make a determination to issue a permit for this project,” State added. [The Hill, 12/12/11]
White House Press Secretary Jay Carney: Deadline Makes It “Very Difficult” For State Department “To Say That That Review Had Been Responsibly Achieved.” From a December 22, 2011, Bloomberg Businessweek article:
An effort by Congress to prod President Barack Obama on the Keystone XL oil pipeline gives the administration insufficient time to complete a review that meets environmental laws, White House spokesman Jay Carney said.
Language in a Senate bill extending the U.S. payroll-tax cut sets a 60-day deadline for a permit to be issued by the State Department, and a full review takes longer, Carney said yesterday at a White House news briefing.
“It would be very difficult, as I understand it, for the State Department to say that that review had been responsibly achieved in 60 days,” Carney said. [Bloomberg Businessweek, 12/22/11]
Wash. Post: Administration Officials Have Said Timeline Makes Review “Difficult” Because Firm Won't Have Clarified Pipeline Route Before June. From a January 14 Washington Post article:
Administration officials have said that the truncated timeline makes it difficult to complete a review of whether the pipeline is in the national interest, given the fact TransCanada has yet to outline an alternate route.
TransCanada spokesman Terry Cunha said the company received guidance just last month from the Nebraska Department of Environmental Quality on what areas in the Sandhills were off-limits, adding that the firm will be able to have the new route's outline ready between June and September. [The Washington Post, 1/14/12]
State Department Estimated It Would Need Until “Early 2013” To Analyze Environmental Impact Of New Route Alternative. From the December 12, 2011, Congressional Research Service report “Keystone XL Pipeline Project: Key Issues” :
On November 10, 2011, in response to concerns regarding the pipeline route and actions by the Nebraska legislature applicable to pipeline siting, the State Department announced a delay in its national interest determination to gather additional information necessary to assess a new pipeline route avoiding the Sand Hills. On November 14, 2011, TransCanada announced its decision to work with the Nebraska Department of Environmental Quality to identify an acceptable pipeline route around the Sand Hills. The State Department estimates that the preparation of supplemental environmental analysis necessary for a new route alternative may be complete in early 2013. [Congressional Research Service, “Keystone XL Pipeline Project: Key Issues,” 12/12/11]
Obama, State Department Reiterated That The “Rushed And Arbitrary Deadline Insisted On By” GOP Forced Rejection Of Pipeline
State Department Assistant Secretary Jones: Decision Based “On The Fact That We Don't Have The Time To Get” Necessary Information On Alternative Routes. During a January 18 press call, Kerri Ann-Jones, assistant secretary of the Department of State's Bureau of Oceans and International Environmental and Scientific Affairs, said:
As you know, today the Department of State recommended to President Obama that the presidential permit for the proposed Keystone XL pipeline be denied and that at this time the TransCanada Keystone XL pipeline be determined to not serve the national interest. The President agreed with the Department's recommendation. This recommendation was predicated on the fact that the Temporary Payroll Tax Cut Continuation Act that was passed in December does not provide sufficient time to obtain the information that we think is necessary to assess whether the project, in its current state, is in the national interest.
As you -- many of you know, we made a decision on November 10th that we needed additional information regarding this project, specifically about alternative routes through Nebraska. And we base this decision now on the fact that we don't have time to get that information, information we think is essential for making a well-informed decision. So I think I'll stop there and open it up for questions.
This is a process decision that we made based on the decision that we made on November 10th and the information that we felt we needed to really inform our decision to make sure we had everything we needed to do the best, in terms of looking at this pipeline and determining whether or not it was in the national interest. So the White House made that decision. We, today, recommended to the President that the permit be denied, and also that he determine that it was not in the national interest. The legislation did not give us enough time to really do responsible evaluation of the factors. And so we continue to believe that this has to be done the right way. So from my perspective, this has not been - this decision is based on what we did November 10th, and then the legislation has not given us adequate time to carry that out. [Jones press teleconference, 1/18/12, via State.gov]
Obama: “The Rushed And Arbitrary Deadline Insisted On By Congressional Republicans Prevented A Full Assessment Of The Pipeline's Impact.” From Obama's January 18 statement on the Keystone XL pipeline:
Earlier today, I received the Secretary of State's recommendation on the pending application for the construction of the Keystone XL Pipeline. As the State Department made clear last month, the rushed and arbitrary deadline insisted on by Congressional Republicans prevented a full assessment of the pipeline's impact, especially the health and safety of the American people, as well as our environment. As a result, the Secretary of State has recommended that the application be denied. And after reviewing the State Department's report, I agree.
This announcement is not a judgment on the merits of the pipeline, but the arbitrary nature of a deadline that prevented the State Department from gathering the information necessary to approve the project and protect the American people. I'm disappointed that Republicans in Congress forced this decision, but it does not change my Administration's commitment to American-made energy that creates jobs and reduces our dependence on oil. [WhiteHouse.gov, 1/18/12]
Permit Review Process Was Established By Executive Order Signed By Bush
Executive Order Directs State Department To Review Applications For Presidential Permits When Projects Would Cross International Border. From the December 12, 2011, Congressional Research Service report “Keystone XL Pipeline Project: Key Issues” :
Ordinarily, the U.S. government does not have permit authority for oil pipelines, even interstate pipelines. This is in contrast to interstate natural gas pipelines, which, under Section 7(c) of the Natural Gas Act, must obtain a “certificate of public convenience and necessity” from the Federal Energy Regulatory Commission. Generally, the primary siting authority for oil pipelines would be established under applicable state law (which may vary considerably from state to state). However, the construction, connection, operation, and maintenance of a pipeline that connects the United States with a foreign country requires executive permission conveyed through a Presidential Permit. Since the Keystone and proposed Keystone XL pipeline are designed for the importation of oil from Canada, their facilities require a Presidential Permit.
Executive Order 13337 delegates to the Secretary of State the President's authority to receive applications for Presidential Permits. Issuance of a Presidential Permit is dependant upon a finding that the project would serve the national interest. In the course of making that determination, the state Department is obligated to consider a host of issues related to the proposed project including its potential impacts to the environment, economy, energy security, and foreign policy, to name a few. In that capacity, the State Department is required to consult with relevant federal and state agencies and to invite public comment in arriving at its determination. Ultimately, however, the State Department has discretion in determining what factors to examine to inform its determination of whether a proposed project is in the national interest (i.e., will be granted a Presidential Permit). [Congressional Research Service, “Keystone XL Pipeline Project: Key Issues,” 12/12/11]
President George W. Bush Signed Executive Order On April 30, 2004. [Archives.gov, accessed 1/18/12]
But Conservatives Nonetheless Attacked Obama For “Reject[ing]” Keystone XL Pipeline And “Killing Jobs”
Trump: Keystone Rejection Is “Disgraceful,” Pipeline Would Create “Tens Of Thousands Of Jobs.” From the January 18 edition of Fox News' On the Record with Greta Van Susteren:
VAN SUSTEREN: Well, there's big news today pitting the environmentalists against labor and the Republicans against the Democrats and business against anti-business and everybody else over this Keystone pipeline project. Your thought about the news that it is at least -- no permit is going to be issued at least now for the pipeline.
DONALD TRUMP (Fox News regular guest): Well I think it's disgraceful. And, frankly, we don't need Canada. We should just be able to drill our own oil. But as long as it's there we certainly should have approved it. It was jobs and it was cheaper oil. And it's just absolutely incredible. I guess President Obama took care of the environmentalists. But it is absolutely terrible, and it is not an environmental problem at all, in any way, shape, or form.
TRUMP: It's just a total mess. This is the way our country has been run. It's a laughing stock, Greta, all over the world. All over the world they laugh at us. People tell me about the Keystone from Europe and from other places and from China. And they don't even know what's going on. They can't even believe it. But you know, honestly, we're taking oil from Canada. We're paying Canada a lot of money. We don't even need Canadian oil if we did it right. The really right way is drill our own oil. We have so much of it we don't know what to do. Between natural gas and oil and lots of other things we should be doing our own. But the fact is that Keystone pipeline is a positive. You're talking about tens of thousands of jobs. You're talking about lower oil. And let's have at least the option of taking the oil from Canada, which we don't need if we would do it really right. [Fox News, On the Record with Greta Van Susteren, 1/18/12, via Media Matters]
Jonathan Hoenig: It's “Bewildering To Me” Why Obama Would “Use Force To Block A Company” That Wants To Invest In America And Create Jobs. From the January 18 edition of Fox Business' Cavuto:
NEIL CAVUTO: Alright, so I guess -- I kind of saw this coming, Jonathan, but using the words of the president here in a statement that this was something that was rushed on him by Congress and he wouldn't have it -- I don't know.
JONATHAN HOENIG: Well, why does he get to choose, Neil? I mean, it's not only bad policy from the White House, but it's destructive policy. The president often talks about energy independence, about making big infrastructure investments in this country. But yet for some reason -- bewildering to me -- he's willing to use force to block a company that actually wants to invest in this country. Creating the jobs, creating the energy that could actually bring gas prices down and power the economy forward. It's bewildering to me why he would stand in place of this. [Fox Business, Cavuto, 1/18/12, via Media Matters]
Fox Nation: “Obama Approves Solyndra But Rejects Keystone Pipeline.” From Fox Nation:
[Fox Nation, 1/18/12]
The Daily Caller: “Obama Nixes Pipeline, 20,000 Jobs.” A January 18 Daily Caller article headlined “Obama nixes pipeline, 20,000 jobs” reported:
President Barack Obama used a press release today to blame the GOP for his decision to kill the Keystone XL Pipeline, and its estimated 20,000 construction jobs. [The Daily Caller, 1/18/12]
Geller: “Obama's War On America: Obama Kills Pipeline,25,000 130,000 Jobs, Cheaper Energy.” In a January 18 post on Atlas Shrugs, Pamela Geller responded to the rejection of the Keystone XL pipeline by stating, “Job killer, economy killer, energy independence killer ........... instead he shooses to enrich and embolden funding Islamic supremacist nations with petrol dollars.” [Atlas Shrugs, 1/18/12]
Hoft: Obama “Kills Keystone” And Is “Killing Jobs -- Playing Golf.” In a January 18 post on his blog Gateway Pundit, Jim Hoft announced the State Department's plans to reject the Keystone XL pipeline and commented:
Barack Obama: Killing Jobs -- Playing Golf
With gas prices at record highs -- The Obama State Department today announced that they WILL NOT approve the Keystone Pipeline from Canada.
The Keystone Pipeline project was expected to create tens of thousands of high paying jobs in the oil industry. The project itself would create 20,000 construction jobs.
But it was just a big pipe dream. [Gateway Pundit, 1/18/12, emphasis original]
Conservatives Previously Mocked Obama's Statement That His Proposals That Would Create More Jobs Than Keystone XL
Obama: “However Many Jobs Might Be Generated By A Keystone Pipeline, They're Going To Be A Lot Fewer Than The Jobs That Are Created By Extending The Payroll Tax Cut And Extending Unemployment Insurance.” From a December 8, 2011, statement by Obama:
OBAMA: Keep in mind, on the payroll tax cut, this is something that Democrats and Republicans agreed to last year with little fanfare, and it was good for the economy. And independent economists estimate that for us to not extend it right now -- to not extend payroll tax cut, not extend unemployment insurance -- would have a significant, adverse impact on our economy, right at a time when we're supposed to be growing the economy.
So when I hear the Speaker or the Senate Republican leader wanting to dicker, wanting to see what can they extract from us in order to get this done, my response to them is, just do the right thing: Focus on the American people, focus on the economy right now.
I know the suggestion right now is, is that somehow, well, this Keystone issue will create jobs. That's being determined by the State Department right now, and there is a process. But here's what I know: However many jobs might be generated by a Keystone pipeline, they're going to be a lot fewer than the jobs that are created by extending the payroll tax cut and extending unemployment insurance. [WhiteHouse.gov, 12/8/11]
To see how right-wing media figures responded by downplaying the benefits of extending unemployment insurance and payroll tax cuts, click here.
But Economists Agree That Unemployment Benefits And The Payroll Tax Cut Have A Strong Effect On Job Creation And Growth
EPI: Extending Unemployment Benefits Through 2012 Will Create Roughly 560,000 Jobs. In a November 4 report, Economic Policy Institute (EPI) President Lawrence Mishel and EPI researcher Heidi Shierholz wrote:
While it would cost an estimated $45 billion to continue the extensions, the economic boost would be much greater because this spending would have a large “multiplier” effect. Long-term unemployed workers are almost by definition cash-strapped and have very little choice but to immediately spend their unemployment benefits. Unemployment benefits spent on rent, groceries, and other necessities increase economic activity, and that increased economic activity saves and creates jobs throughout the economy. For this reason, economists, including those at the Congressional Budget Office, widely recognize government spending on unemployment insurance benefits as one of the most effective things that can be done in a recession to generate jobs. Spending $45 billion on unemployment insurance extensions in 2012 would increase GDP by an estimated $72 billion, raising our $15.2 trillion GDP by roughly 0.5 percent. This increase in economic activity translates into roughly 560,000 payroll jobs. In other words, extending the federally funded unemployment insurance extensions through 2012 would not only extend a lifeline to the families of millions of long-term unemployed workers, it would also generate spending that supports well over half a million jobs. If this program is discontinued, the economy will lose these jobs.
Of the $72 billion increase in GDP related to continuing the unemployment insurance benefit extensions through 2012, some 37.4 percent, or $26.9 billion, would be recouped in higher revenues, as more people and firms pay taxes, and in lower expenditures. Consequently, the effective cost to the budget of continuing the UI benefits extension for a year is $18.1 billion instead of $45 billion. This means that the continuation of unemployment insurance benefit extensions through 2012 would save 560,000 jobs at an effective cost of around $32,000 per position. That alone is a good deal, but when we remember that these expenditures would assist millions of families of the long-term unemployed during the worst downturn in seven decades, the case for continuing the extensions could not be more clear. [EPI, 11/4/11]
CBO Scored “Increasing Aid To The Unemployed” As The Highest-Scoring Policy Proposal To Efficiently Stimulate Economy. In a November 2011 report on “Policies for Increasing Economic Growth and Employment in 2012 and 2013,” the nonpartisan Congressional Budget Office (CBO) stated:
Policies that would have the largest effects on output and employment per dollar of budgetary cost in 2012 and 2013 are ones that would reduce the marginal cost to businesses of adding employees or that would be targeted toward people who would be most likely to spend the additional income. Such policies include reducing employers' payroll taxes (especially if limited to firms that increase their payroll), increasing aid to the unemployed, and providing additional refundable tax credits in 2012 for lower- and middle-income households. [CBO, 11/15/11]
According to a table in the report, the CBO estimated that increasing aid to the unemployed would have the greatest effect on GDP per dollar of budgetary cost and the highest cumulative effect on employment of the policy options considered.
Numerous Experts Have Promoted Payroll Tax Cut To Create Jobs And Economic Growth. Cornell University economics progessor Robert Frank, University of Delaware economics professor Laurence Seidman, University of California, Berkeley professor and former Council of Economic Advisers chairwoman Laura Tyson, the Center on Budget and Policy Priorities, New York University's Stern School of Business professor Nouriel Roubini, Nobel Prize winning economist Paul Krugman, former Secretary of Labor Robert Reich, and former Office of Management and Budget director Peter Orszag have all touted the ability of payroll tax cuts to create jobs and increase economic growth. [Media Matters, 12/9/11]
To read more about how unemployment benefits and the payroll tax cut would create jobs, click here.
By Contrast, Pipeline Could Create As Few As 2,500 Temporary Construction Jobs And 50 Permanent Jobs
TransCanada Said In 2010 That Keystone XL Pipeline “Is Expected To Create Over ... 13,000 New Jobs For American Workers.” In a 2010 press release by TransCanada, the company funding the Keystone XL pipeline, touted their connection with various unions and claimed they would “create over seven million hours of labor and over 13,000 new jobs for American workers.” From the press release:
TransCanada Corporation (TransCanada) (TSX, NYSE: TRP) today is pleased to announce a Project Labor Agreement for a significant portion of U.S. construction of the proposed US$7 billion Keystone Gulf Coast Expansion Pipeline Project (Keystone XL). The agreement will provide TransCanada with a capable, well-trained and ready workforce in the U.S. to construct Keystone XL. During construction, the project is expected to create over seven million hours of labor and over 13,000 new jobs for American workers. [TransCanada, 9/14/10]
Cornell University Global Labor Institute: Based On TransCanada's Numbers, “The Project Will Create No More Than 2,500-4,600 Temporary Direct Construction Jobs.” From Cornell University Global Labor Institute's report:
A calculation of the direct jobs that might be created by KXL can begin with an examination of the jobs on-site to build and inspect the pipeline. The project will create no more than 2,500-4,650 temporary direct construction jobs for two years, according to TransCanada's own data supplied to the State Department. [Cornell University Global Labor Institute, September 2011]
Cornell University Global Labor Institute: “Based On The Figures Provided By TransCanada For The Canadian Section Of The Pipeline, The New Permanent US Pipeline Jobs In The US Number As Few As 50.” From Cornell University Global Labor Institute's report:
[T]he potential job impacts associated with KXL construction are quite small, both absolutely and certainly relative to the employment levels estimated by the Perryman study. In comparing these results with those from the Perryman study, it is useful to keep in mind that even results based on the Perryman study would be much lower, once they are adjusted for more realistic project cost assumptions.
Starting with the Perryman study total employment estimated for project construction (119,000 person-years), the Perryman results can be adjusted for more realistic project cost assumptions. Also starting with the $6.6 billion in project costs assumed by Perryman, and adjusting for the $5.4 billion project cost for KXL in the US, the adjusted Perryman result is about 97,000 person-years. Next, instead of assuming a $4 billion KXL US project cost not yet spent, the adjusted Perryman result drops to about 72,000 person-years. And finally, assuming a $3 billion KXL US cost not yet spent or committed, the adjusted Perryman results drops again to 54,000 person-years.
So even if it is assumed the Perryman study provides a reasonable estimate of job impacts per dollar spent on pipeline construction (i.e. 18 person-years per $1 million), total job impact will be much lower than the Perryman results once a more realistic budget is assumed for project construction. And whatever is estimated for total employment impacts, it must be spread over the relevant period in order to meaningfully estimate annual impacts. For KXL construction, the relevant period is at least two and perhaps more likely three years.
In this context, it is also important to consider that almost all of the jobs (direct, indirect and induced) associated with Keystone XL will, of course, also be temporary. The operating costs for KXL are very minimal, and based on the figures provided by TransCanada for the Canadian section of the pipeline, the new permanent US pipeline jobs in the US number as few as 50. [Cornell University Global Labor Institute, September 2011]
For more information about Keystone XL pipeline's potential impact on job creation, click here.