Pipelines, ?Free Trade,? and Make-Believe Jobs

Pipelines, ?Free Trade,? and Make-Believe Jobs

Mark Engler: Pipelines, ?Free Trade,? and Make-Believe Jobs

Once a made-up number about job creation starts roaming the Earth, it?s awfully hard to kill.

The current ?Exhibit A? for this idea comes from the debate about the Keystone XL pipeline. Construction of this proposed 1,700-mile pipeline, designed to carry oil from environmentally disastrous wells in the Canadian tar sands to refineries in Texas, was considered virtually inevitable just six months ago. But that was before climate change activists revved up an aggressive campaign against it, staged a week of civil disobedience outside the White House, and made the issue a make-or-break decision for Obama with regard to his relationship with the environmental community. Ultimately, the campaigners won a suspension of the pipeline, seriously crimping Big Oil?s plans.

Conservatives have not been happy about this. Currently, they are demanding that the Keystone pipeline be revived. As the New York Times writes in a strongly anti-pipeline editorial:

The Keystone XL oil pipeline has become the House Republicans? weapon of choice in their fight with President Obama over jobs and taxes. Mr. Obama has said he will not make a decision on the pipeline until 2013. The Republicans are insisting that he approve it now and have attached an amendment to a bill extending the payroll tax cut in hopes of forcing his hand.

This legislative booby trap seems unlikely to make it through the Senate, and the president has all but said he would reject it if it does. But this has not stopped the House Republicans, led by Speaker John Boehner, from using the pipeline as a political cudgel?or from wildly inflating its economic benefits.

A central part of the right-wing case for the pipeline is that it will create jobs. Indeed it will. How many jobs, and at what cost, is the subject of debate. And this is where make-believe dies hard.

Bill McKibben, author and leading climate campaigner, has taken on the near-ubiquitous industry claim that the pipeline will create 20,000 jobs. He writes:

Twenty thousand jobs. All summer and fall, while the Keystone pipeline debate raged, that was the one constant….

It lives still….As the U.S. Chamber of Commerce put it last week as it announced its support: ?The $7 billion project is expected to create more than 20,000 jobs during the manufacturing and construction phases.?

Not surprisingly, he explains, the source of the 20,000 jobs claim is a suspect one:

The number came originally from a report paid for by Transcanada, the company building the pipeline. The original State Department review, however, found that the actual number would be 5,000 at best?and these jobs would be temporary, lasting the year or so it took to build the pipeline. (No reporter that I know of ever pointed out the simplest truth: The reason you build a pipeline is because once it?s built, it takes almost ?hundreds not thousands,? according to the Transcanada chief executive officer.)

In addition to McKibben, a few mainstream media sources have called out conservatives for using the inflated number. Washington Post reporters Juliet Eilperin and Steve Mufson debunked the industry study at the root of the 20,000 jobs mantra. Moreover, the New York Times, in its Tuesday editorial, wrote:

Mr. Boehner calls Mr. Obama?s delay ?theatrics? and described the project as a ?no brainer? that will create ?tens of thousands? of jobs immediately. This is a fairy tale, implying not only short-term but permanent benefits. The pipeline company, TransCanada, says the project could create 6,500 construction jobs annually, most of them temporary.

The State Department, the lead federal agency on the project, also estimates 6,500 temporary jobs. And the only independent study, conducted by Cornell University?s Global Labor Institute, concludes that it may generate no more than 50 permanent jobs when the work is done.

Making up job creation numbers for political purposes is nothing new. And, in fact, the Keystone situation actually compares favorably to ?Exhibit B?: the outlandish jobs claims used to justify passage this fall of ?free trade? deals with Panama, Colombia, and Korea.

Measuring the impact of trade on jobs requires a two-step evaluation: First, you measure the amount that a given deal will increase your exports (thereby supporting domestic industry). Then you subtract the amount that it will increase imports (thereby undermining domestic industry). If you end up in the negative, you have a deal that will increase your trade deficit, and you can’t honestly advertise it as a job creator.

And yet that?s exactly what the Obama administration and other ?free trade? boosters did with the Panama, Colombia, and Korea deals. They perpetuated a numbers scam that worked beautifully in the media. I recently discussed this with Global Trade Watch?s Todd Tucker in an interview:

ENGLER: There are serious reports?including a study by the government?s own International Trade Commission?showing that these agreements will increase the U.S. trade deficit, therefore costing domestic jobs. Do you think the White House just doesn?t believe the jobs numbers or that it doesn?t care?

TUCKER: Shortly after President Obama?s December 2010 trip to Korea, a talking point emerged that the trade deals were going to increase U.S. exports and therefore support 70,000 jobs. As it turns out, the administration got that number by looking at just the export predictions?and not the import predictions. Why it was seen as even remotely credible, especially given the number of jobs that we need to be creating, is beyond me….

ENGLER: But do you think they really believe that the deals will create 70,000 jobs, or was that just a statistic created to sell the agreements politically?

TUCKER: Someone at the White House knew what they were doing when they spliced off one page of the official projections from the subsequent page and didn?t look at what the net impact was going to be. That was a decision to willfully distort their own research.

At Global Trade Watch, we tried every day with the reporters who were covering this issue to get this point across. We said, ?Look, we?re not asking you to take our economic projections versus their economic projections, or to engage in some sort of independent econometric investigation. All we?re doing is saying that there are two pages in the government?s own study that you need to look at in order to hold them accountable to the claims they?re making.?

We put this to all the trade reporters, day after day, and hardly a one was willing to call the administration on its own trick. Whether it?s because journalists are stretched too thin at these downsizing publications, or whether they?re actually just being very partisan, for whatever reason the facts just never come out.

I think that if the facts had been consistently reported, we could have had a different outcome. The deals were sold?especially to a lot of the Tea Party freshmen?as something that we needed to do for job creation. If the representatives had realized, ?Oh, wow, the government?s own projections show that this is likely to increase the trade deficit and might cost jobs,? I think the tenor of the debate would have been a lot different.

With Keystone, we can be thankful that a few news organizations have cast a critical eye on the jobs numbers. But that doesn?t mean that conservative make-believe will go away?nor that pundits will be satisfied with imagining a mere 20,000 people employed.

Stephen Colbert recently did a montage of Fox News types tripping over themselves to claim that the Keystone pipeline would create 50,000 or 120,000 or even a million new jobs. ?Those numbers,? Colbert quipped, ?come from the pipeline those experts built from their ass straight to the airwaves.? (Check out the clip, starting at about 1:30.)

If you want to see it come directly from the horse?s mouth, Big Oil?s self-produced propaganda can be found at FuelingJobs.com. Their video argues that Keystone would produce 340,000 jobs, although the text of their website merely claims ?tens of thousands of new jobs,? which seems like a retreat. Although the tone of the industry video is meant to be earnest, its soundtrack (alternating between ominous Middle Eastern music and soaring American melodies) and its depiction of elderly sit-in participants wearing sun hats as ?green radicals? tends toward self-parody. Try as he might to exaggerate for comic effect, Stephen Colbert has little on reality.