Taken from Ed Dolan's Economonitor blog:
Version 40.0 of Ed's book There Aint No Such Thing As A Free Lunch was published by Searching Finance in September 2011
The administration is coming under increasing pressure to accelerate approval of the Keystone XL pipeline, designed to carry increased U.S. imports of bitumen from Canadian oil sands.
The latest form of pressure is a Senate bill that would fast-track KXL in exchange for a two-month extension of the payroll tax cut and other items. After some resistance, it now appears the House will go along with the proposal. It is a bad idea.
What’s wrong with the Link?
The new legislation proposes a trade-off of short-term economic stimulus for fast-tracking a long-term project that is vehemently opposed by environmentalists.
Part of the problem is that so little is being offered. Short-term tax cuts are among the least effective forms of fiscal policy.
Has everyone forgotten the Bush administration’s one-shot tax rebate in the spring of 2008? It shot one big hole in the budget, reducing future fiscal room for maneuver, but it created only the most transient of boosts to economic activity.
On top of that, social security itself is in need of long-term restructuring. Undermining its funding in the name of short-term stimulus just doesn’t make sense.
The obsession with short-term issues is not a partisan problem, nor is it confined to Congress. Senate Democrats and Republicans joined in a rare display of bipartisanship to propose the tradeoff of a payroll tax extension for a pipeline decision.
The White House also seems to be looking only at the short-term issues. In urging approval of the Senate bill, they asked people to send in dramatic stories of how big a difference $40 per week would make to their lives, while staying quiet on the long-term environmental issues raised by KLX.
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