On Wednesday Feb. 24, the Paul Gessing of the Rio Grande Foundation and Kevin Hassett of the National Review Institute discussed the impact of the Biden Administration’s energy policies on New Mexico. You can watch the discussion which lasts about an hour below:
This week, President Biden’s nominee for secretary of the Interior, New Mexico congresswoman Deb Haaland, is up for confirmation in the Senate. Haaland, a self-described “progressive,” and a member of the Pueblo of Laguna, would, if confirmed, become the first Native American to head Interior. The Department manages approximately 500 million acres of surface land, or about one-fifth of the land in the United States.
The agency’s work is of interest to all Americans because it oversees more than 400 National Parks, from Yellowstone to White Sands. However, the department is of particular importance to Westerners, as more than 90 percent of the lands it manages are located in the Western United States.
The nomination of Haaland makes a certain amount of political sense for President Biden, allowing him to place a Native American in a position of leadership over Interior’s vast network of Native reservations. These reservations, including the Navajo Reservation in Northwest New Mexico, remain among the deepest pockets of poverty in the country. The fact that no Native American has ever managed those reservations is indeed worth remedying.
But Interior is a large department with many lands of varying purposes, and Western resource-intensive states including New Mexico have already seen the Biden administration act in ways that will do significant harm to their economies.
At Interior, Deb Haaland would be a cheerleader for Biden’s early anti-energy policies and would likely look for opportunities to expand upon them. She has taken radically anti-fossil-fuel positions throughout her political career. In 2016, prior to being elected to Congress, Haaland traveled to North Dakota to cook food for the protesters demonstrating against the Dakota Access Pipeline. She stayed in the camps for four days that September.
In May 2019, the newly minted congresswoman told The Guardian, “I am wholeheartedly against fracking and drilling on public land.”
Are Haaland’s positions and opinions based on sound science and history? In a 2019 Los Alamos Monitor story, Haaland claimed that “climate change in the U.S. started when Europeans arrived and started killing the buffalo.” Considering the numerous, dramatic changes that were a feature of the climate in prehistoric North America (and everywhere else on this planet), Haaland’s understanding of environmental forces is a bit off.
Given her radical views, it is not surprising that Haaland has been a strong supporter of the Green New Deal. The ambitious plan put forth by Represenative Alexandria Ocasio-Cortez (D., N.Y.) and others would cost trillions in subsidies and lost economic activity. Among the plan’s radical proposals is a mandated shift to 100 percent renewable electricity by 2030 and an increase in the top marginal tax rate to 70 percent.
On day one, the Biden administration pulled the permit for the Keystone XL pipeline. While this pipeline won’t directly affect energy-producing states, the cavalier approach to the permit raised red flags. Shortly thereafter, the Biden administration placed a moratorium on new oil and gas leases on federal lands. If confirmed, Haaland would be a staunch defender of such policies.
Haaland’s home state, New Mexico, is particularly impacted by what happens at Interior. The state has the third-highest Native American population in the U.S. and also happens to be the state most financially dependent on energy produced on federally managed lands within its borders.
According to the American Petroleum Institute, a ban on federal oil and gas leases could cost New Mexico 62,000 jobs, reduce state revenues by $1.1 billion, and reduce oil and gas production within the state by nearly 50 percent.
With Haaland’s nomination up this week and Biden already taking an aggressive anti-energy stance, it is ironic Haaland wasn’t Biden’s first choice for the job.
In fact, according to several New Mexico media outlets, Biden initially offered the position to New Mexico governor Michelle Lujan Grisham. On December 2, media outlets reported that Lujan Grisham had been offered the top job at Interior but turned it down. Lujan Grisham has never stated publicly why she refused the job, although she is just halfway through her first term in a “blue” New Mexico where she likely expects to be reelected in 2022.
As has been the case since the early days of Biden’s run for the White House, identity politics loom large for him. The president seemingly had the Interior secretary set aside to be filled by a Western, female, minority Democrat. A few weeks after Lujan Grisham turned him down, Biden settled on Haaland for the post.
The case for the slot at Interior being based purely on demography is buttressed by the fact that Lujan Grisham and Haaland have very different views regarding federal-land management. While both are New Mexican females (one Hispanic and one Native American), they exemplify opposite wings of the Democratic Party on energy.
From 2013 to 2019, Lujan Grisham represented the same Albuquerque-area congressional district as Haaland does now (Haaland will relinquish the seat if confirmed), and took a practical, moderate view on energy. This moderation is notably reflected in her 2015 vote to repeal the ban on crude-oil exports. She was one of just 26 Democrats in the House voting to repeal, with 153 of them voting to keep the ban in place.
Lujan Grisham continued to express moderation on energy issues when she moved into New Mexico’s Governor’s Mansion in 2019. During her time in office, she has expressed strong support for the state’s oil and gas industry and even said she’d consider asking for a waiver in case of a federal leasing ban.
As a governor concerned about her state’s economic and financial interests (and one who enjoys having oil and gas generate anywhere from 30 to 40 percent of her state’s budget), Lujan Grisham has attempted to placate environmentalists in her political base without doing serious harm to the state’s most important industry. Based on President Biden’s early energy policies, Haaland seems to make a better fit for the administration.
Senator Steve Daines (R., Mont.) has announced his opposition to Haaland’s nomination. Montana’s junior senator signaled he would not only vote against her confirmation, but also attempt to block her nomination from advancing.
“I’m deeply concerned with the Congresswoman’s support on several radical issues that will hurt Montana, our way of life, our jobs and rural America, including her support for the Green New Deal and President Biden’s oil and gas moratorium, as well as her opposition to the Keystone XL pipeline,” Daines said in a statement. Is that enough to stop Haaland from taking her radical policies to Department of the Interior? We should all hope so.
In New Mexico, when politicians talk about “diversifying the economy,” they usually mean “finding new taxes in order to spend more money.”
That’s partially because we have so many state and local government workers (let alone federal employees and contractors). Even a global pandemic can’t stop New Mexico from growing as the map below from The Washington Post shows.
While most other states saw reductions (often major) in state government employment, New Mexico’s already-bloated government workforce grew by 4%. That is tied for the fastest growth in the nation.
Adding insult to injury, while their numbers grew, the Legislative Finance Committee in New Mexico’s Legislature planned to give pay raises to state government employees in the budget currently being discussed in Santa Fe. Gov. Lujan Grisham gave fat pay raises to her inner-circle although (to her credit) the Gov.’s budget DOES NOT have broad based pay hikes.
In the last month, New Mexico and the United States as a whole have witnessed unprecedented attacks on the traditional energy sector. Nationally, President Biden’s ban — for now, just described as a pause — on new oil and gas leases on federal lands has been well documented. So too has his revoking of the permit for the Keystone XL pipeline.
While such decisions are undoubtedly popular with radical environmentalists and their well-funded allies, it is hard to see how they — or anyone likely to follow them — will achieve the reductions in CO2 emissions necessary to make any difference to the climate. Look, for example, at the impact of the Keystone XL pipeline decision. With no available pipeline, Canada and its oil producers will simply load their oil onto trains or trucks, relying instead on modes of transport that are more risky and less energy-efficient. Indeed, doing so will involve higher greenhouse-gas emissions than the pipeline would have, especially considering the pipeline developers’ recent promise to use only renewableenergy to operate the project.
Overall, less than 10 percent of American oil and gas comes from federal lands. Cutting production from them won’t have a real impact on producers on private and state lands, nor will it reduce demand for foreign oil. Nevertheless, this new policy could end up inflicting significant economic pain on an already shaky U.S. economy.
Even if a relatively small amount of U.S. oil and gas production comes from federal lands, bans or restrictions there will have a disproportionate effect on a good number of states and their economies (like my own in New Mexico). Half of New Mexico’s oil and gas production — much of it fracked — is on federal land. Long-term curtailment of oil and gas drilling on federal lands would devastate the state’s budget.
Not to be outdone by the Biden administration, the Democrat-dominated legislature here in “deep blue” New Mexico is considering a number of proposals of their own. (Mind you, the state is one of the poorest in the Union and, thanks to fracking, is the country’s third-largest oil producer.) Chief among them is legislation that would require all new construction (homes and schools) in New Mexico to incorporate solar panels and mandate that 75 percent of all state-government vehicles be electric-only. Another bill would require dramatic reductions in “carbon intensity” for vehicles purchased by everyday New Mexicans. The technology to reduce carbon-intensity of New Mexico vehicles is left unsaid because the regulation would oblige fuel producers to work this out for themselves.
Writing for the Albuquerque Journal, two Democratic state legislators explained the proposals:
By requiring fuel providers that refine, blend, make or import fuel used in New Mexico to gradually reduce the carbon intensity of the transportation fuel itself, we can reduce emissions by 4.7 million metric tons in carbon dioxide equivalent by 2040. That’s like taking 44,000 cars off the road every year for 15 years. A clean fuel standard would not apply to retail gas stations or cause cost increases at the pump.
Yet, the heavy-handed, economy-killing efforts in New Mexico and in various state capitals across the country will do little to rein in global CO2 emissions. In fact, CO2 emissions are already being curbed in the United States through a combination of market forces and government policies. The real problem is that emissions are exploding elsewhere, most notably in China.
In late 2020, Forbes noted that U.S. CO2 emissions already comply with the Paris agreement. Goosed by an 11 percent drop in CO2 emissions in 2020 due to COVID-19–induced travel reductions, the United States has seen emissions drop since the mid 1980s. Nowadays, despite a population that is 40 percent larger than it was in the mid 1980s, U.S. CO2emissions are approximately the same as they were back then. This is a remarkable feat.
Indeed, the combination of a long-term shift in electricity generation from coal to natural gas (in no small part thanks to fracking), along with the energy efficiency generated both by market competition and regulatory pressure, fuel-mileage mandates, and the Clean Air Act, have made the United States a more CO2-efficient national economy.
China, on the other hand, is not just rapidly increasing CO2 emissions, it is massively expanding coal-fired electricity production. According to Voice of America, “China put 38.4 gigawatts (GW) of new coal-fired power capacity into operation in 2020, more than three times the amount built elsewhere around the world and potentially undermining its short-term climate goals.”
Furthermore, according to research released on Wednesday by Global Energy Monitor, China’s coal-fired fleet capacity rose by a net 29.8 GW in 2020 (including decommissions), even as the rest of the world made cuts of 17.2 GW.
China, which still has millions of citizens living in real poverty, certainly has a right to develop its economy. But if the Biden administration is serious about addressing climate change, it ought to use the bully pulpit to cajole China to move toward lower CO2 intensity. After all, China is already the global “leader,” with CO2 emissions approximately doubling those of the United States. Those emissions rose even during the pandemic year of 2020.
Even if the Biden administration and states such as New Mexico make a concerted and focused effort to reduce CO2emissions (an open question to say the least), the United States won’t be able to halt climate change. Any CO2reduction we make is only displaced by a doubling from China, who seems more serious about developing its own economy than the Biden administration and many “blue” states like New Mexico are about theirs.
President Joe Biden and New Mexico governor Michelle Lujan Grisham telling us to pay more for energy while destroying thousands of energy jobs is a hard pill to swallow even if we were to make serious progress toward achieving our climate goals. But to do immense damage to the U.S. and New Mexico economies while allowing American progress on CO2 emissions to be undermined by our economic and geopolitical rivals in China is woefully misbegotten.
It has now become an article of faith on the left in New Mexico that Gov. Bill Richardson’s 2003 tax cuts were a failure.Several tax hike bills including (at least) two that would raise New Mexico’s personal income tax rate have been introduced this session including:
SB 89: Sen. Bill Tallman’s bill to increase New Mexico’s top personal income tax rate to 6.5%;
You MAY recall that the Richardson cuts took New Mexico’s top income tax rate from 8.2% down to 4.9% over 5 years where it was until 2019. The cuts ALSO cut capital gains tax rates in half. These were REAL tax cuts and they passed the Democrat-controlled House without a single dissenting vote and passed the Senate by a margin of 39 to 2 and were signed into law on Valentine’s Day, 2003.
Richardson and Were Richardson’s tax cuts REALLY a failure? No. In fact, none other than the liberal “fact checking” site PolitiFact said that Richardson’s job creation claims (made in advance of his 2008 reelection campaign) were “mostly true.”
Statistics from the Bureau of Labor Statistics indicate that New Mexico gained 75,800 jobs from December 2002 to July 2007, which is slightly lower than Richardson’s claim.
As our friends at FactCheck.org note in this article , Richardson has consistently cited the higher number, even when the actual number was lower.
For our ruling, however, we’ll rely on the current 75,800 and call it mostly true.
PolitiFact further quoted none other than NMSU economist (one of NM’s top economic gurus) Jim Peach approvingly.
Peach said Richardson’s tax incentives and income tax cuts have created a favorable atmosphere for business that is a stark change from the state’s mentality in the mid-1970s, when state officials refused to provide help to a promising young company named Microsoft.
The climate here has changed considerably since then, Peach said. Bill Richardson has been a big part of that. He’s not the whole story, but he’s been a big part of it.
The fact is that if Richardson were governor today he would be too conservative for New Mexico’s Democratic Party on both guns and taxes.
Shortly before the Biden Administration imposed a moratorium on oil and gas leasing on federal lands, the Foundation’s president Paul Gessing joined the Institute for Energy Research podcast to discuss New Mexico’s energy portfolio and what possible consequences the state could face from a ban on hydraulic fracturing instituted by the Biden administration.
Click below to listen:
The following appeared in Las Cruces Sun News on Sunday, January 24, 2021.
To say that this is an unprecedented legislative session in New Mexico is an understatement. After some public debate over how and when the Legislature was going to meet, the Democrats who overwhelmingly control both houses have decided to plow forward with an entirely “virtual” session.
The Roundhouse is closed to the public and if you want to engage with legislators or committees you need to get online and watch, testify, or send emails or calls to their offices. By itself this COVID-related change is both dramatic and problematic.
Then, in apparent reaction to the US Capitol riots of January 6 and the supposed threat of violence at state capitols across the nation, the Roundhouse has been fenced off with dramatically-enhanced security measures implemented to the point that only legislators and staff can get near the facility. We don’t know how long these measures will be in place, but this simply can’t be the “new normal.”
For all its many flaws New Mexico’s Legislature has traditionally been among the most open and accessible in the nation. We have advocated the addition of remote testimony in this vast, sparsely-populated State, but never at the expense of having in-person access completely eliminated during a session.
All advocates for open government must be vigilant in making sure that this crisis not be used to limit open government and transparency in our State.
And then there is the economy. We certainly want New Mexicans to be able to get back to work as quickly as possible. But as the Legislature meets to discuss long-term policy changes in our State we need to agree on a few important facts which undergird our economic situation and have done so for many years.
- We know New Mexico is an impoverished state. Too many of our citizens and especially young people face hardships in the best of times. Of course, those problems have been worsened by the pandemic and the political reaction to it.
- New Mexico lacks something called economic freedom. According to an annual report from the Canada-based Fraser Institute, a free market think tank, our State is the 42nd-most free state in the nation. Our neighbors are all much freer. Worse, because data are not available instantaneously the data available are for 2018, Susana Martinez’s last year in office. We have seen a dramatic erosion in economic freedom under the current Administration. Lack of economic freedom has real impacts on people. The study found an 8.1% reduction in median incomes in the least free states.
- New Mexico’s tax burdens are heavy. Because it is poor and federal taxes are “progressive” many tools claim our State has low taxes. In reality, according to the Federation of Tax Administrators, when ranked as a percentage of personal incomes, New Mexico’s state tax burden is 7th-highest in the nation.
- Given our heavy tax burden it will come as no surprise that state and local spending is high. In fact, according to com consuming 22.98% of our overall economy, New Mexico governments spend a smaller share of the economy than only West Virginia and Alaska.
During this 60-day legislative session we expect a slew of tax hikes, spending programs, and new regulations to be considered and passed. Unfortunately, those mostly take us even further in the wrong direction and will further make us an island of relatively slow economic (and population) growth and poverty in the American Southwest.
Paul Gessing is president of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility
As the first-ever “virtual” New Mexico legislative session kicks off we believe it is important for New Mexico policymakers to have some basic information about New Mexico’s economy.
- New Mexico tax burdens are not low relative to neighboring states. The chart below is from the Federation of Tax Administrators. With far heavier tax burdens than its neighbors, New Mexico’s tax burden ranks 7th-heaviest among states.
- According to the website US Government Spending state and local spending in New Mexico is far higher than in neighboring states as a percentage of the state economy (GDP). The data are constantly being updated, but New Mexico consistently has the biggest-spending state and local governments in the US.
- When it comes to raising the minimum wage, mandatory paid sick leave, or a variety of other economic policies, New Mexico lags dramatically. The data in the Fraser Institute analysis below is from 2018 which is the final year of Susana Martinez’ time in office. New Mexico desperately needs MORE economic freedom, not less.
4.. We already know New Mexico is among the poorest states in the US. If the Legislature is serious about reducing poverty and improving outcomes for children and the rest of the population (regardless of race or gender) it needs to have a serious conversation about economic freedom issues. like taxes and regulations.
Anyone who has lived in or even visited Albuquerque as a young person has visited Cliff’s Amusement Park. Once upon a time it was “Uncle Cliff’s.” The place has been a local fixture for more than six decades.
It is also in danger thanks to the mismanagement of our state, most notably by our governor during the COVID 19 situation, but Cliff’s also faces longer-term problems thanks to the anti-business attitudes of increasing numbers of state and local politicians.
Policymakers seem bound and determined to force Cliff’s Amusement Park out of business, thus destroying a place that holds cherished memories for generations of New Mexicans.
Most pressing is the dire need for the park to simply reopen. Thanks to Gov. Michelle Lujan Grisham’s orders, 2020 was the first time the park did not open for an entire season. Forty-six of the 50 states have allowed amusement parks to open. Not New Mexico.
Yet for locked down businesses like Cliff’s, costs continue to mount. Cliff’s sits on prime Albuquerque real estate between San Mateo and I-25. Property taxes and maintenance bills continue to mount even if revenues dry up.
Despite a national plan presented to the governor under which the park could open safely, they were prohibited from doing so. Disney World and all of Disney’s properties in Orlando have been safely operating for months, as have various Universal Studios properties. Ohio’s Kings Island and Cedar Point parks both opened this past summer as did parks in numerous states throughout the nation.
A few months ago, my family visited the Great Wolf Lodge in Scottsdale. The park has a near-exact replica of the water area found at Cliff’s, but bigger and indoors. Again, as with the amusement parks that have opened, there have been no reports of COVID-19 outbreaks at these facilities. My family included.
There is no use worrying about 2020, but Cliff’s typically opens in April and that is not far off for a park that hires hundreds of local teenagers on a seasonal basis every year and had to lay off 20 full-time employees last year.
In October, Gary Hays, the head of Cliff’s, told KOAT, “I honestly don’t know if we can survive without opening up (next year).” And, unless something changes – and soon – it would seem that Cliff’s and numerous other entertainment venues, including the Albuquerque Isotopes, will remain closed for the foreseeable future, possibly permanently.
Under the governor’s red, yellow, green rubric, Cliff’s and other entertainment venues won’t be able to open even when their respective county gets into the green zone. Currently, every county in the state but sparsely-populated Catron is in the red.
And that’s not all, even if the governor were to come to her senses and allow Cliff’s and other recreational facilities to open tomorrow, the policies being imposed in Albuquerque and Santa Fe are causing businesses like Cliff’s to suffer “death by a thousand cuts.”
Mandatory paid sick leave, which has been repeatedly rejected at the city level, will now be considered in the Legislature. The state’s minimum wage just rose from $9.00 to $10.50 an hour and is on its way to $12.00 an hour in a few years. There is serious talk of further increasing the minimum wage again this session.
Cliffs’ workforce consists of 98% teenagers. They are the state’s largest employer of young people and – not surprisingly – have been hit especially hard by the pandemic and economic shutdowns. Even if the park opens on time and as usual this spring, the hostile policy climate is making business for Cliff’s and other small businesses more difficult each year.
Do we really want a Cliff’s-sized hole in the middle of Albuquerque? If the park closes, the prime real estate will be filled by warehouses or fast food joints, but an unfillable hole will remain for this and future generations of New Mexico youth.
The Rio Grande Foundation is an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.