Posted by MataHarley on 11 January, 2010 at 1:40 am. 9 comments already!

Obama’s systematic destruction of the
US job market and affordable energy.

It was only in the past week that the less than “stimulating” news from the Dec 2009 unemployment report hit the news. Economists are warning those numbers, when revised by the benchmark revision this month, will be even more startling.

From CEPR’s Dean Baker:

“The economy lost another 85,000 jobs in December, driven by continued job losses in construction and manufacturing. While the current data still show a 378,000 job gain for the decade, these numbers will be lowered by approximately 824,000 when the benchmark revision is incorporated into the data with the release of the January employment report. The data show a decline in private sector jobs of 1,549,000 for the decade. The benchmark revision will increase the private sector job loss for the decade to more than 2.4 million….. The employment to population (EPOP) ratio fell by 0.3 percent to 58.2 percent, the lowest level in more than a quarter century.

Economic Policy Institute’s Heidi Shierholz says the unemployment would have risen to 10.4% if the 661,000 workers were counted instead of being considered a labor force decline. 40% of all are unemployed for more than six months, and the average re’employment time… for those that don’t just give up… is over 20 months.

The Feb 17th passage of the ARRA was designed specifically to “stimulate” the job growth and funnel them to “shovel ready” projects. According to the 12/31/09 update on, $68.5 billion ( a quarter of the allocated $275 billion) has been funded for grants, contracts and loans. Additionally 42% of the $224 billion for entitlements had been funded.

I think we can safely conclude that 10 months and 24 days after enactment, and after disbursement of 1/3 of all ARRA funds, the “stimulus” is considerably less stimulating than advertised. After this most recent BLS report, apparently the POTUS and one of his spending cohorts in chief, Speaker Pelosi, concur.

Knowing the numbers, projected to be 10 times lower, were not going to play well with the American public, they hit the airwaves within days calling for a “jobs bill”.

“We have to continue to explore every avenue to accelerate the return to hiring,” Obama said Friday in response to the report.

Obama has urged Congress to pass a jobs package that includes new infrastructure spending, aid to small businesses, funding for state and local governments struggling to keep workers and incentives for green investments. On Friday, he also called on them to include $5 billion to expand a tax credit for manufacturers who invest in clean energy technologies.

Macabre irony at best. What was the ARRA supposed to be but a “jobs bill”? And while we’re at it, just what was it that Pelosi and her Dem buds passed via party line votes on Dec 16th but yet another job bill? That is if you can call a great deal of funds headed to states in trouble to temporarily bolster their payroll as a “job bill”, along with the usual culprits…. green energy incentives, etc.

“As the old axiom goes, the definition of insanity is doing the same thing twice and expecting different results. With that in mind, it’s astounding Speaker Pelosi would repeat the same mistakes with her second stimulus as she did with her first.” – Congressman Aaron Schock (R-IL), December 16, 2009

Rep. Schock, you may remember, was the young conservative Congressman put on the spot by Obama during his Caterpillar/inaugural victory lap, theatric dog and pony show. Schock showed his cojones then, and continues today.

This new shout out by Obama and Pelosi for yet another spending spree, masquerading once again as a “jobs bill” ( while they studiously dodge the word “stimulus”) becomes even more deliciously absurd on the coat tails of the so-called “job summit” the POTUS held Dec 3rd. You know, the one where he invites “the best and the brightest CEOs, small business owners and financial experts”….. none of which include a single oil and gas executive, or a member of the US Chamber of Commerce.

I’d like to give you a list of who was there, but Mr. Transparency’s handlers would only release a partial list. But we do know Obama had a dandy little lunch with academics, union reps, and some of his big donors. This Sphere article has the most complete list I’ve seen… noting that most were from firms that were doing substantial labor cuts, and had an eyeball on some federal subsidies. Successful private entrepreneurs/job creators don’t need no stinkin’ summits.

The problem with Obama and Pelosi is, they are looking for jobs in all the wrong places… and continue to “stimulate” all the wrong people.


The inherent problem with Obama’s approach to job creation is his mistaken notion that government created green jobs is superior for profitability and economic resurgence. But an analysis by URJC researchers using Spain’s completed, publicly funded alternative energy agenda comes up with a different conclusion in March 2009. Want the soft blow? For every single job created with public funds for alternative energy projects, 2.2 private sector jobs are lost. The hard right to the jaw? Over five are lost when you compare annual productivity over two decades.

In short, and mincing no words, the researchers said simply that the policies and agenda were “…terribly economically counterproductive.”

Public investment in renewable energy has job creation as one of its explicit goals, which, given the current economic crisis, suggests an intention of seeding a future recovery with “green job” subsidies. The problem with this plan is that the resources used to create “green jobs” must be obtained from elsewhere in the economy.

Therefore, this type of policy tends to create not just a crowding-out effect but also a net destruction of capital insofar as the investment necessary must be subsidized to a great extent and this is carried out by absorbing or destroying capital from the rest of the economy.

The money spent by the government cannot, once committed to “green jobs”, be consumed or invested by private parties and therefore the jobs that would depend on such consumption and investment will disappear or not be created.

Investment in green jobs will only prove convenient if the expense by the public sector is more efficient at generating wealth than the private sector. This would only be possible if public investment were able to be self-financing without having to resort to subsidies, i.e., without needing to absorb wealth generated by the rest of the economy in order to support a production that cannot be justified through the incurred incomes and costs. We have calculated that the total public subsidy in Spain, both spent and committed, totals 28,671 million Euros (€28.7 billion or appx. $37 billion USD), and sustains 50,200 jobs.

Note… a public investment of the equivalent of $37 billion sustains 50,200 direct and indirect jobs (including the temporary construction jobs). This taxpayer cost of $737,051 per job doesn’t consider the erasure of funds in the private sector that could be used to create at least twice the amount of jobs – sans public funding, and without incurring higher taxes and piling on national debt.

The numbers worsened after the researchers addressed the annual productivity of the expense. Or, more simply put:

…. compare the average annual productivity that the green job subsidy would have contributed to the economy had it not been consumed in public financing, with the average productivity in the private sector that allows them to keep their job, the latter being ultimately the measure which justifies the creation or preservation of that job.

Since each alternative energy has a different drain on counterproductivity, the report breaks it down via “megawatt destruction” by each energy source – wind, minihydro, and photovoltair. When the productivity comparison was factored in, the job loss in private sector leaped to 5.28 jobs for every single green job. This was obtained by averaging the job destruction of wind (4.27), minihydro (5.05) and photovoltair (8.99) together.

The final section of the 53 page report deals with the distribution of the job destruction across industries, and their potential profitability loss when factoring in increases in rates, taxes and public debt.

From the groups above, it is worth highlighting that some of the most affected industries would be producers of basic iron and steel products (in Spain, it consumed €470.77 million), basic chemical products (€382.13 million), plastics (€297.18 million), manufacture and first transformation of precious metals (€280.58 million) as well as producers of cement, lime and plaster (€202.22 million).

Needless to say, Obama’s plan to create “green jobs” to save the US economy is a two steps forward and ten steps back economic connundrum. Yet despite the economic example of Spain, it is a path of economic destruction that Obama seems determined to follow.


What *does* work is exactly what Obama and Dem cronies so desperately seek to avoid. That gas or oil from shale is cost effective, a job growth machine, and provides affordable energy certainly puts a monkey wrench into the leftist talking points and “global warming” principles. But just as the Spain study above showed the economic folly of the alternative energy agenda on the taxpayers’ dime, we have real life implementation of shale production to examine as well.

A prime example is the Fort Worth Basin in Texas from the Barnett Shale Reserve. Back in Feb of 2008, the shale activity was keeping the North Texas area afloat, and even robust for both drilling and indirect businesses arising as a side product.

The booming energy business is creating thousands of new jobs and business opportunities across the Barnett Shale region, which covers 18 counties and 5,000 square miles in North Texas. The United States may be slipping into a recession, but the North Texas economy remains robust, in large part due to the natural gas drilling and related activity in the Barnett Shale.

This activity in the Barnett Shale area has already created an estimated 55,000-plus new jobs and will spur an additional 53,000 over the next 10 years, according to a 2007 economic study by The Perryman Group. What may come as a surprise, however, is where the new jobs are. They are not just in the oil and gas industry. In fact, the biggest growth area is in retail, which is estimated to see more than 15,000 new jobs over the next 10 years, thanks to all the Barnett Shale activity.

The second biggest growth area over the next decade is also surprising: restaurants and bars, with an estimated 8,000 new jobs. Third place is shared by the construction industry and the oil and gas industry, with about 3,200 new jobs estimated over the next 10 years.

What’s going on here? All the new cash injected into the region’s economy is fueling sales and job growth in virtually every industry, thanks to a phenomenon called “the multiplier effect. The new dollars come from royalty payments to homeowners and local governments, wage increases in growing businesses and new salaries for all the new jobs being created.

While Texas cannot escape the same problems and future with toxic, overpriced real estate we all face, their employment situation fares far better than most other states. As the economic graphs on TexasAhead shows, the state’s unemployment is at 8% to the national average of 10%… and has been below the national average for 35 months running. Additional, Texas added 17,300 jobs in November… more in one state than the entire adjusted national average for Nov of 4,000 that the Dems tout as improvement. In fact, the Barnett Shale, almost single-handedly, reversed a decline in US natural gas production.

But Texas is not the only shale economic “gold mine” in the US… there are huge new fields in Louisiana, Arkansas, Utah, Montana, North Dakota and Pennsylvania as well.

The Obama lip service about clean energy would give one the impression he would favor development oif the shale production leaseholds. But instead of embracing job growth that doesn’t get funded on the backs of the US taxpayer, Obama’s admin has placed obstacles in the path to development.

Within two weeks of assuming office, Obama withdrew some 77 oil and gas leases on US public land in Utah. These were part of a December bid for 116 parcels… needless to say, withdrawing the 77 left only 18,374 acres of the original 148,000+ acre bid. Actor Robert Redford, acting as the Natural Resouces Defense Council, had already raised objections and gotten a court ordered temporary restraining order. The Obama decision spared the actor and company further court challenges until their review was completed.

It took until early October for their decision. 17 parcel leases were okayed, 52 parcels deferred for later killing and/or lease terms correction, and eight parcels were withdrawn. Oddly enough, the FT article by Sheila McNulty seemed to believe that natural gas was “flooding” the market.

Just a week or so after killing the Utah leases, Obama’s Interior Dept again decided to investigate oil shale leases issued in Jan 2007, suggesting the royalty rates and conditions negotiated in the last days of Bush’s terms may be “too favorable”. In what can only be considered political satire today, they were complaining about “11th hour” actions and secrecy. heh

Inbetween all of this, the media and Dem Congressional Majority totally discarded the No Cost Stimulus Act of 2009 by Congressman Rob Bishop (R–UT) and Senator David Vitter (R–LA). The bill’s prime purpose was to expedite the environmental and lease review process, and “create an estimated 2 million jobs, increase gross domestic product $10 trillion over the next 30 years, and lower energy costs—all without a huge expense to the taxpayer.”

Despite all the promises and lip service of the Obama admin to “fast track” energy projects of their choosing (the unprofitable types like solar, new transmission projects, etc), the fact checking on performance sings a different tune. To top off the chutzpah, this admin takes credit for lease revenues they not only did not generate, but are busy thwarting or destroying for future revenue. And of course, the lies and mistruths of existing leases… meaning “develop what you have”, even if it’s aking to sucking blood out of a turnip … perpetuates.

Comes Jan 4th, 2010, and yet another interview with Obama’s Dept of Interior mouthpiece, Ken Salazar. Promises of “reform” still constitute the centerpiece of the interview… sans any details, of course. In light of the definition of “reform” meaning “remaking” for health care, I am justifiably cautious when hearing this word bandied about.

Distinctively missing was any chit chat about speeding up the development process for what the leftist leaders in the US consider politically incorrect, but affordable energy. Judging by the first year of this admin’s term, we can be sure that the “reform” will be anything *but* cost effective. And it’s a guarantee that more cash from the private sector will be diverted, thwarting maximum job growth potential.

What is “absolutely clear” to many of us…. Obama and Pelosi are looking for jobs in all the wrong places, paying too much of our money per job, and handily destroying the private sectors’ chance for effective economic recovery using minimal taxpayer funds.

All in the name of global warming and CO2 emissions? Laughable.

Such bad judgment by our elected officials should be prosecutable under our judicial system.


Other Interesting Reading INRE stimulating “stimulus” efforts

NYTs: “Road Projects Don’t Help Unemployment

McClatchys: “High U.S. debt means slower growth, history suggests”

Business Week via MSNBC: “The rise of the permanent temporary workforce”

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