The Morning Bell. 10-17-2012
During last night’s debate between President Obama and former Governor Mitt Romney, Heritage’s policy experts were live-blogging their analysis of the ideas discussed. Below are some of the highlights of our experts’ reactions to the major points made.
Join us today at 11 a.m. ET for a Google hangout as Heritage experts discuss the debate with state and national bloggers. You can watch the hangout on our Google+ page. Submit questions—starting now—on Twitter with the hashtag #HeritageFan.
“Getting Tough on China”: The Truth About Trade
President Obama said during the debate that he signed three trade deals. Not true. Obama was left three free trade agreements on his desk when he took office. Those deals and many others were initiated, negotiated, and signed by President Bush. The one trade agreement that Obama has prioritized, the Transpacific Partnership (TPP) involving now 11 countries, was also initiated by President George W. Bush.
What Obama did was to delay passage of agreements with South Korea, Colombia, and Panama that were already completed. He did so to appease labor unions and others in his political base. During the three years of waiting for the President to submit the U.S.-Korea FTA, the U.S. lost $30 billion in exports.
The United States needs an energetic, committed trade policy. We need a TPP that is truly a free trade agreement and of sufficient scale to make a major impact on the U.S. economy. That means accommodating the world’s third largest economy and U.S. ally, Japan. In means folding in other willing free trade partners like South Korea. And it means putting TPP on a timeline that gets it completed, passed and implemented as quickly as possible.
“Getting tough on China,” something both candidates claimed to aspire to, is good—as long as what is meant by that is ensuring China abides by its international trade commitments. But this is not enough—it is not a trade policy. The U.S. needs to create opportunity with trade, not just manage bad behavior.
– Walter Lohman
Chinese Currency Manipulation and U.S. Employment
Governor Romney suggested that China’s currency manipulation was related to business activity and job creation in the U.S. However, as Heritage’s Derek Scissors showed, there is in fact little to no relationship between China’s currency policy and U.S. employment:
[T]he exchange rate between the yuan and the dollar has no direct effect on American prosperity or American jobs. It never has. Seventeen years ago, China sharply devalued the yuan against the dollar. Yet American unemployment fell for years afterward. Since 2005, the PRC has been slowly raising the value of its currency, which is what protectionists say they want. And American unemployment has soared.
There are, however, other policies the U.S. President and Congress should pursue to return America to a place where businesses want to invest and hire workers. These include pro-growth tax reform, reducing undue regulatory burdens on the economy, and enabling energy exploration and production.
– Romina Boccia
Did Someone Say Libya?
The issue was raised in the debate: What did the Administration do about security before the attack on the U.S. consulate in Benghazi, and how did it respond afterward? It was the question that the President never clearly and explicitly responded to. When it comes to how the White House responded to the attack, the Administration has a lot of explaining to do. Its series of explanations was muddled and misleading.
When it comes to responding to the attack, Americans of course expect that our government will go after the perpetrators. The questions of how our government responded to the terrorist threat in Libya, however, still has to be answered.
– James Jay Carafano
Are Oil Companies Sitting on Leases?
Are oil companies sitting on leases? The short answer is no. President Obama made this statement tonight, and Secretary of the Interior Ken Salazar routinely makes this statement. But as Kathleen Sgamma, Vice President of Government and Public Affairs for the Western Energy Alliance, recently testified:
By looking at the statistics over time, it is evident that industry has become much more efficient over the last several decades. While we used to hold 80,000 leases and produce on 24% in 1988, we now hold just 49,000 leases and produce on 46%. Secretary Salazar’s statements that this shows industry is intentionally leaving leases idle is tired rhetoric that fails to take into account the huge obstacles the federal government places in the way of oil and natural gas producers, and the fact that not every lease has recoverable oil and gas.
Just because oil companies aren’t drilling, this does not mean that no activity is occurring on that land. Environmental review, permitting, seismic research, and exploration may be occurring. But even that fails to address the real problem: The environmental review and leasing process takes entirely too long.
Rather than implementing an efficient leasing process, the Department of the Interior added three unnecessary and duplicative administrative regulations to the leasing process in 2010. Oil companies are not sitting on leases; they are simply not being issued by the DOI, or the DOI is making it more difficult to actually obtain the leases.
– Nicolas Loris
Energy Production on Federal Lands Has Fallen
While President Obama made the familiar statement that oil and gas production is the highest it has been in eight years, Governor Romney was right to point out that this was driven by production on private and state lands. Oil and gas production on federal lands is, in fact, down.
According to a recent report from the Energy Information Administration (EIA), energy production decreased 13 percent on federal lands in fiscal year (FY) 2011 when compared to FY 2010. The official moratorium and de facto moratorium as a result of a molasses-like permitting process reduced planned capital and operating investments by $18.3 billion and cost the Gulf more than 162,000 jobs in just the past two years.
Federal production in the West has experienced a similar fate: The Administration’s delays on permitting oil and gas projects public lands are preventing economic activity. In Utah and Wyoming, for instance, projects held up by the National Environmental Policy Act process are preventing the creation of 64,805 jobs, $4.3 billion in wages, and $14.9 billion in economic impact every year.
– Nicolas Loris
Immigration: Finally, Debate Touches the Third Rail
For the first time in two debates, the issue of fixing our broken borders and flawed immigration system was finally addressed by the two sides that want to occupy the White House. They offered two very different approaches and a distinct choice. One approach is to change the laws to accommodate the unlawful population that is already here—an approach that will not only not fix the problem, it will just make America a magnet for more problems. The other approach is to make the laws work and create a legal system that gets employers the employees they need when they need them to grow the economy and create more jobs.
There are good answers to address these tough problems. What we need in Washington is leadership that is willing to do the job.
– James Jay Carafano
Tax Plan Details: No Taxes on Savings
Governor Romney, when giving more details on his tax plan tonight, discussed that families making $200,000 or less would face no taxes on savings. The Heritage Foundation’s New Flat Tax would deduct savings immediately from taxable personal income, and savings would remain tax exempt until spent on consumption. This would lead to greater financial security for the American middle class by providing incentives for greater personal savings.
The New Flat Tax, as outlined in Heritage’s Saving the American Dream plan, would replace today’s convoluted tax system with a simple, neutral, and transparent tax system that would allow America to achieve its full economic potential.
– Romina Boccia
The Auto Bailout and Bankruptcy
President Obama once more criticized Governor Romney for saying GM should go bankrupt. But Romney tonight finally cleared the record, pointing out that that is exactly what happened – GM and Chrysler DID go bankrupt. But, as Obama confirmed, the administration didn’t stop there – it nationalized the firms. Taxpayers are still some $25 billion in the hole and still own a quarter of the shares of GM. Bankruptcy was the right solution; a bailout was not.
– James Gattuso
For more analysis of the debate, video, a slideshow of photos, and a word cloud of Obama’s and Romney’s answers, visit our Debate 2012 page.
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