LSU finance professor Joseph Mason will release a study this Tuesday outlining the effects on America’s economy if two proposed taxes on oil and gas industries are enacted. Mason’s study, released in conjunction with the American Energy Alliance, rebuts provisions announced in President Obama’s Monday press conference on the debt ceiling imbroglio.

In his speech Monday, President Obama criticized “egregious loopholes that are benefiting corporate jet owners or oil companies at a time when they’re making billions of dollars of profits.” Professor Mason’s study examines the impact of ending two of these tax breaks for the oil and gas industries.

One exemption is a domestic manufacturing deduction, while the other is designed to help oil companies reduce their American taxes when they pay taxes to foreign oil-producing companies. Both are two of the largest industry tax exemptions which President Obama is targeting.

Whereas the Obama Administration argues that these provisions will raise roughly $29 billion over the next decade, Mason contends that they would in actuality result in net losses of $54 billion over that time period. The study projects a loss of approximately $341 billion in economic output, 155,000 jobs, and $68 billion in wages – catastrophic numbers in any circumstances.

Instead, Mason and the AEA advocate loosening the restrictions on offshore drilling which have been hampering economic recovery and contributing to higher energy prices. Mason and the AEA have been critical of President Obama’s policies, contributing last year on a report which illustrated the crippling effect of proposed industry taxes

The contentious debt ceiling discussion has been marked by a Democratic focus on raising taxes and vilifying the energy companies as an ostensible solution to the impasse. Mr. Mason’s study demonstrates that raising taxes on oil and gas could actually worsen the problem.

Jamison Beuerman is a contributing writer and policy analyst at the Pelican Institute for Public Policy. He can be contact via email at jbeuerman@pelicaninstitute.org or followed on twitter @jbeuerman.

BATON ROUGE, La. – While hiring illegal immigrants is already illegal, Sen. Neil Riser (R-Columbia) wants all firms that contract with the state of Louisiana to verify residency status of their employees. SB 66 would mandate participation in the federal E-Verify program, following similar legislation passed in Colorado, Georgia, and South Carolina.

From January 1, 2012, those found still employing illegal immigrants would be subject to cancellation of their contract and could be ineligible for further government contracts.

The bill asserts that employment of illegal immigrants obstructs the enforcement of federal immigration law and undermines the security of U.S. borders. The verification system, it continues, will assure “taxpayers that their dollars are not spent in support of such illegal aliens.”

The state government has almost 12,000 such contracts, each worth an average of $1.1 million. That comes to $12.3 billion and around 6 percent of the economy, so this policy, if enforced, could have a noticeable impact on Louisiana taxpayers.

Contractors hire illegal immigrants because they are willing to work below the wages of legal citizens, so without these workers the cost to taxpayers for public projects would tend to rise. Additionally, pushing illegal immigrants out of the labor force would lower the tax base. The Reason Foundation has reported that two thirds of illegal immigrants pay Medicare, Social Security, and personal income taxes, and they cannot avoid sales taxes.

Sen. Riser, however, believes taxpayers are his strongest ally.

“I would say 80 percent of [Louisiana residents] agree with me that Louisiana tax dollars should not be spent… on someone that does not have legal status in the U.S.” He also cites the American Federation of Labor and Congress of Industrial Organizations, with 55 national and international labor unions as members, as a key proponent.

Regardless, evidence from other states suggests widespread non-compliance from employers, a calculated acceptance of the associated risks.

For example, Arizona, along with Mississippi and Utah, has mandated E-verify participation for all employers, not only those contracting with government. Even two years after enactment, Arizona’s largest newspaper, The Arizona Republic, reported that only a third of employers had even signed up, let alone vetted all employees.

In the case of Mississippi, however, Sen. Riser believes the results have been positive, and he has been in contact with the legislation’s sponsor.

“Last year when I spoke with Senator Michael Watson [R-Pascagoula], who sponsored the legislation over there in 2009, he said the only aspect of all he would change is that he would rather it would have taken effect sooner.”

Antony Davies, an economics professor at Duquesne University, Pennsylvania, remains skeptical.

“Requiring that employers verify the legal status of their employees is like requiring that drug dealers verify the number of sales they make each month. To paraphrase from one of my favorite movies, one does not get a permit to do an illegal thing,” he says.

Davies also disputes the notion that immigrants, legal or illegal, are a problem worthy of resistance.

“Workers bring skills and labor. The more skills and labor we have, the more stuff we can produce. As we produce more stuff, the price of that stuff falls, and everyone who buys that stuff is better off.” (Click here for his complete response, and one of his presentations on immigration is below – three minutes.)

Darlene Kattan, executive director of Louisiana’s Hispanic Chamber of Commerce, notes that immigration is under the jurisdiction of the federal government, not the state. Sen. Riser agrees in principle, but “in the face of federal inaction… the states, in my opinion, have the responsibility to ensure jobs… and I feel like those jobs should go to people that have a legal status in the United States of America.”

Kattan also has concern with the accuracy of the E-Verify program. In fact, a report commissioned by U.S. Customs and Immigration (USCIS) found that 54 percent of unauthorized workers still received E-Verify approval for employment.

Oportunidades Nola is an adult education center that assists Hispanics, regardless of their documentation, to integrate into the greater New Orleans area. Its director, Jamie McDaniel says she seeks “to build bridges between the native and immigrant communities,” and she hopes “all residents of Louisiana, who work hard… would be able to work here without being harassed by [USCIS].”

“This country needs an immigration reform… The immigration system, as it stands today, is not serving the best interests of potential immigrants or citizens of the United States… Asking employers to do the work of the federal government with regard to enforcement of immigration laws is very unfair to those employers and is going to promote racial profiling of Hispanic employees, whether or not they have documentation.”

Jacob Hornberger, of the Future of Freedom Foundation, holds immigration and other economic liberties as equal to freedom of speech, religious liberty, and political liberty. Louisiana officials and everyone else, he says, should advocate open borders “as the only solution to the immigration woes that afflict our nation.” (Read Hornberger’s full response here.)

On the other hand, the Eagle Forum – a paleoconservative, traditionalist organization – describes the E-Verify program as a shovel-ready solution to the “immigration crisis.” Its founder, Phyllis Schlafly, has expressed concern about the “loss of U.S. jobs to illegal aliens,” particularly jobs associated with federal “stimulus” funds.

Sen. Riser remains confident of the bill’s passage. After lacking a quorum last week, the Senate Labor and Industrial Relations Committee is scheduled to review SB 66 tomorrow, May 12.

Fergus Hodgson is the capitol bureau reporter with the Pelican Institute for Public Policy and editor of The Pelican Post. He can be contacted at fhodgson@pelicaninstitute.org, and one can follow him on twitter.
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By Daniel M. Rothschild

With the Senate set to create a $30 billion fund for small business lending and House Republican Whip Eric Cantor (R-VA) praising small businesses as “the engine of job creation,” elected officials and their challengers of both parties are scrambling to praise–and give special privileges to–small businesses.

One thing everyone seems to agree on is that small businesses are the key to creating jobs, rallying the economy, and moving America out of the Great Recession.

But economist Veronique de Rugy of the Mercatus Center at George Mason University argues in a new policy brief that this is a misguided assumption based on a misunderstanding of the underlying data.

“Politicians’ fetishization of small business makes no sense when you look at the data,” de Rugy says. “Privileging small businesses over large business may be politically popular, but it’s bad economics.”

According to de Rugy’s analysis, large multinational corporations created jobs more rapidly than many smaller firms in the 1990s, a trend she suggests will continue.

“New jobs are created by both large and small businesses alike,” de Rugy says. “Firms with more than 500 workers account for about half of America’s total employment. There’s no empirical reason to believe that this won’t continue to be the case.”

De Rugy continues, “If the goal is to create jobs, there is no justification in creating policies that favor small firms over larger ones.”

The Small Business Administration defines small businesses as firms with fewer than 500 employees, which de Rugy argues encompasses a wider group of firms than what most Americans would typically consider small. While the term “small business” typically conjurs up images of mom-and-pop stores, in reality relatively few small businesses fit this image.

Moreover, de Rugy argues, current policies are likely to do more to retard small business growth than to promote it.

“Businesses aren’t investing and aren’t hiring because of uncertainty about regulation and taxation,” de Rugy says. “There is almost $2 trillion of capital sitting on the sidelines today. Until there’s more certainty about what Washington is going to do on a host of issues ranging from taxes to health care, businesses will be loath to invest and hire.”

Daniel Rothschild is a Visiting Adjunct Scholar with the Pelican Institute for Public Policy and the Managing Director of the Mercatus Center’s State and Local Policy Project at George Mason University.

Washington, DC—Promoting the tagline, “My Job Matters,” more than 50 Gulf state residents travelled to the Capitol to protest the moratorium and regulatory impediments to drilling in the Gulf of Mexico.

Protesters gave speeches in front of the U.S. Capitol Building, and Texas Senator John Cornyn and former Pennsylvania Representative John Peterson voiced their support. Additionally, individuals lobbied congressional members and staff, shared their frustrations with media outlets, and met with low-tax advocates Americans for Tax Reform.

(Click below to listen to John Cornyn’s speech – seven minutes.)

Event organizers Save U.S. Energy Jobs (a project of the American Energy Alliance) gave time and emphasis to direct victims of the oil spill tragedy. Thomas Clements, owner and operations manager of an oilfield equipment supply firm, supported by his wife (both pictured below), Melissa, was one of many to speak.

“We’ve come all this way to be heard, to ask Congress and Obama to end this moratorium. It immediately affected our business; we have no income coming in… We had orders scheduled for the entire year – on the books, ready. And then when the six-month moratorium came out it cancelled all our orders, immediately. We’re devastated.” The paperwork requirements of the BP fund and the verbal agreement approach of the industry mean that so far he and his wife have not been able to receive any compensation. (Click below to listen to the Pelican Institute’s interview with the Clements – six minutes)

Thirty Louisianans made up the majority of the protest group, but Texas, Mississippi, and Alabama also had members, reflecting a diverse set of constituents and perspectives. Carroll Robinson, for example, is chairman of the Houston Citizens Chamber of Commerce, “the oldest and largest African American chamber in the city, representing about 600 African American owned businesses.”

“[The message] we’re trying to get across is that there are a lot of African American owned businesses that are involved in the oil and gas industry as contractors, subcontractors, and also a lot African Americans that are employed. So the moratorium and [oil-related tax issues] impact a broad part of America… I think the way the message is being portrayed is one dimensional, as only environmental, when in fact there are also economic impacts.” (Carroll Robinson is also an associate professor at Texas Southern University, in the Mickey Leland School of Public Affairs. Click below to listen to his perspective – two minutes.)

Merle Flowers, a Mississippi state senator (R-Desoto County), also made the journey and spoke. “This moratorium has already cost many of our citizens their jobs, and the longer the moratorium stays in place, that job loss number will only increase… Mississippi already has one of the highest unemployment rates in the country. We can’t afford to lose one more job, let alone thousands more jobs… To make matters worse, the Obama administration’s 2011 budget includes provisions that will impose new taxes on domestic energy producers… Any such policy such as this is simply going to shift more platforms abroad and more jobs away from Mississippi and our neighbors in the Gulf Coast.”

Sarah Rhodes, an office manager for a lobbying firm that represents pipelines refineries, and chemical companies, is concerned that Washington leaders don’t “have their hands around the fact that this industry is so important… It doesn’t hit home because it’s not in their back yard.” She already knows of individuals that have lost their jobs and are now migrating out of Louisiana.

Sue Dupont, a realtor and president of the Breaux Bridge Area Chamber of Commerce, Louisiana, has seen commercial real estate sales fall through on account of the moratorium, and “leasing is being affected also… If companies start moving out, we’re going to be losing families… This moratorium needs to be lifted and lifted today.”

The protest came in the wake of good news for the group. Just one day prior Michael Bromwich, head of the Bureau of Ocean Energy Management (formerly the Minerals Management Service), announced that Obama is considering an end to the moratorium earlier than the planned six months. While Bromwich refused to commit to a date, he has initiated and is attending town hall style “fact finding forums” in Louisiana, Alabama, and Florida, with more locations to come. In addition, Senate Majority Leader Harry Reid announced that there would be no action on the oil-spill bill until after the August recess.

Later in the day, Senator David Vitter (R-La) thanked the group for coming to Washington, acknowledged the severity of the situation, and discussed the political realities they face.

“If this moratorium continues anywhere near six months, it will cost us more jobs than the oil ever did, and that’s the simple bottom line… So this is a really really serious challenge. It’s horrible for the country – bad for our country’s economy and energy security. It would be devastating for Louisiana.”

He highlighted that in addition to the official moratorium “there is really a de facto shallow water moratorium too… As a practical matter, new permits aren’t being issued.”

“As if that isn’t bad enough, [the administration] is about to roll out a new [regulatory] rulebook, including for shallow [drilling], and that could take the task from extremely difficult, near impossible, to literally impossible… Every individual little shallow well, a very commonplace thing, but that amounts to a lot of jobs, would take a months and months long [environmental review] process that either is going to slow each of those projects down enormously or shut them down completely.”

According to Vitter, the political climate in the executive branch is the heart of the problem. “If we could pass clear language ending the moratorium, hopefully we’d be building pressure. However as long as [Obama] is president, he has a lot of push back, including the most obvious, to veto the legislation.” However, the only political pressure he can see that “would make a big difference is the price of gasoline at the pump to go right up… Now that’s not going to happen because of the economy. Unfortunately, we’re still in a recession, and world-wide demand is way down.”

Fergus Hodgson is the capitol bureau reporter with the Pelican Institute for Public Policy. He can be contacted at fhodgson@pelicaninstitute.org, and one can follow him on twitter.

In the process of covering the array of protests, town hall meetings, and study announcements surrounding the oil spill, I have had the opportunity to interview a diverse group of individuals. The primary point of concern has been the ongoing moratorium on deepwater drilling in the Gulf of Mexico, and I have sought to clarify why people support or oppose the moratorium and how they respond to the concerns of those with opposing views.

Here is an audio montage of those interviewed, to give you a feel for the personalities and opinions at play. The file includes leaders of industry lobbies, a prominent politician, grassroots activists, and a range of environmental advocacy groups. To avoid preferential treatment, I have alternated the audio clips between moratorium opponents and proponents. (For the most part, these interviews were recorded outside and in public settings, so the audio quality is not perfect.)

Click here to listen to the moratorium montage (approximately 10 minutes)

Those recorded, in the order they appear:

Paul Besse (Volunteer, Louisiana Grassroots Network)

Dan Favre (Campaign organizer, Gulf Restoration Network)

Kindra Arnesen (Fishing company owner and oil spill victim)

Tim Dodt (Member of the Committee to Stop the Gulf Oil Disaster)

Billy Nungesser (President of Plaquemines Parish)

Dan Thelen (Member of the Committee to Stop the Gulf Oil Disaster)

Don Briggs (President of the Louisiana Oil and Gas Association)

Jordan Macha (Associate Field Organizer, Sierra Club)

Jim Funk (President and CEO, Louisiana Restaurant Association)

Rachel Guillory (Gulf States Organizer, Oceana)

For more background on the moratorium, read the related articles below from the Pelican Institute.

Fergus Hodgson is the capitol bureau reporter with the Pelican Institute for Public Policy. He can be contacted at fhodgson@pelicaninstitute.org, and one can follow him on twitter.

LAFAYETTE, La. – On Wednesday 11,000 people gathered in the Lafayette Cajundome to send a resounding message to Washington. The Rally for Economic Survival’s byline was “Lift the moratorium!” and Governor Bobby Jindal summed up the sentiment in the crowd.

“We don’t want more BP compensation checks; we don’t want unemployment checks; we want to get back to work.”

Governor Bobby Jindal lets Washington and his constituents know what he thinks of the drilling moratorium. He repeated the description from Judge Martin Feldman, who struck down the original moratorium: "arbitrary and capricious."

The Louisiana Oil and Gas Association, as chief organizer of the event, stated the concern among attendees was that “the moratorium will destroy tens of thousands of jobs in Louisiana and devastate the economy.” LOGA president, Don Briggs wanted to emphasize that the community came together in support of the event and its theme. “Almost all supplies were offered at reduced rates, and everyone pitched in and helped in their own way to fund this event.” The rally’s website lists more than one hundred financial and organizational contributors.

Alongside the governor, a host of heavy hitters in Louisianan politics and business participated in the event. Speakers included the lieutenant governor, three parish presidents, and industry association leaders for oil and gas, restaurants, and seafood. They emphasized the moratorium’s economic impact, but they also touched on a wide array of issues related to the oil spill.

While the moratorium has changed and has uncertain legal standing, Don Briggs asserted that the concerns of the relevant companies go beyond just the moratorium. “The bottom line is that neither you nor anyone else is going to invest where there is political uncertainty hovering over the billions of dollars at stake. Right now, companies are packing their bags and moving to Angola, the Congo, where the political environment is more favorable, which is really hard to understand.”

“What happened out there was wrong and should not have happened, but you can’t judge the entire industry by that. In the Gulf of Mexico we’ve drilled 2500 deepwater wells. We have the technology. We can put new guidelines that give oversight to make sure that any drilling programs will have all the necessary steps to keep this from happening again. This does not have to happen again.”

Governor Jindal wanted attendees and viewers (4,000 individuals watched online via live feed.) to understand that not only is deepwater drilling on hold, the Department of the Interior has used the permitting process to halt shallow drilling operations as well. Since the Deepwater Horizon explosion, the rate of approved permits has fallen by more than 90 percent. Only four shallow-water projects have received approval in the last three months, after 19 permits in April and 24 in March.

Billy Nungesser, president of Plaquemines Parish, called upon the leaders in Washington to understand how the moratorium contradicts American values. “Look the word up in the dictionary: embargo, ban, prohibit, postpone, halt, freeze. I say stand still; do nothing. Remember Mr. President, we are at war. You don’t stand still. None of these words correspond with the United States I know, or I thought I knew.” Charlotte Randolph, president of Lafourche Parish, echoed Nungesser’s assertion. “Mr. President, you are out of touch with real America.”

Jim Funk, president of the Louisiana Restaurant Association, sought to quell public misconceptions about the quality and safety of fish being caught. “In all the tests that are being been, there has not been one thing found that is dangerous to your health. I mean zero – absolutely none. There has been no impact… It’s safer than it’s ever been. It’s being tested more than it has ever been before. The only hang up right now is the [Food and Drug Administration].”

Cherri Foytlin, a citizen activist and journalist explained the problems she encountered with the BP claims process, how BP is falling behind, and the need to move beyond it. “I put a claim in to BP. That was almost eight weeks ago, and I left no less than ten messages. When I did finally get through I was given a list of things that I need to provide for them.” However, that list included items that were unavailable to her and that required her to wait on government agencies. Through all her troubles she is yet to receive compensation, and her family’s finances are in “ruins.”

Alongside the venting of frustrations and choruses of “Lift the ban,” a little humor and entertainment crept in. As Charlotte Randolph declared that no industry could take a break for six months, one hero-of-the-hour yelled “Let’s see Washington go on a six month break!” to cheers and laughter all around. And before and after the rally local country music hero Sammy Kershaw performed for the crowd.

The Sierra Club's protest in New Orleans, joined by a range of supporting advocacy groups, including Oceana and the Emergency Committee to Stop the Gulf Oil Disaster

Environmental advocacy organizations, including the Sierra Club and the Gulf Restoration Network, held counter-protests outside the event and in New Orleans on the day prior. While creative with the expression of their message, their presence was overshadowed by the show on offer at Lafayette’s Cajundome.

Rachel Guillory, a supporter at the New Orleans protest and a campaign organizer for Oceana, shared her perspective on behalf of an organization specifically devoted to marine conservation and opposed to all new offshore drilling. She is concerned that local politicians accept “too much money from the big oil companies, and it shows… We need BP to establish a separate fund to retrain our workers that are in the oil industry. They’re all out of work right now, and everybody’s really sensitive about the moratorium, but lifting the moratorium is not the long-term solution… We need to retrain our oil workers into clean energy jobs.”

Fergus Hodgson is the capitol bureau reporter with the Pelican Institute for Public Policy and editor of The Pelican Post. He can be contacted at fhodgson@pelicaninstitute.org, and one can follow him on twitter.
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