The American Interest
Analysis by Walter Russell Mead & Staff
The President’s Dilemma: Rebuild the Middle Class or a Unicorn Hunt

Here at Via Meadia we’ve been following America’s energy revolution with great interest, but the MSM isn’t doing enough to cover some of the political fallout. The shale gas bonanza has pitted President Obama’s economic instincts against his need to appeal to his environmentalist base. In an excellent new piece at the Daily Beast, Joel Kotkin has some interesting things to say about Obama’s difficult choice:

With America about to join the ranks of major natural-gas exporters and with the nation’s rising oil production reducing imports, the energy boom seems poised to both boost our global competitiveness and drive economic growth well above today’s paltry levels.

This puts President Obama in a dilemma. To please his core green constituency, he can strangle the incipient energy-led boom in its cradle through dictates of federal regulators. On the other hand, he can choose to take credit for an economic expansion that could not only improve the lives of millions of middle- and working-class Americans, but also could assure Democratic political dominance for a decade or more.

The ideological stakes for the green movement are tremendous. Greatly expanded American fossil-fuel production violates the “peak oil” mantra that has underpinned environmental thinking for decades and undermines some of the core rationale for subsidizing expensive renewables such as solar and wind.

Ultimately the decision on embracing an energy-led growth strategy may well determine whether President Obama can improve middle-class prospects. In the coming months, he will need to choose between pleasing the green purists around him and generating a long boom that would elevate him to Mount Rushmore levels and assure his party’s political dominion for a generation.

The energy revolution has indeed given the President a tremendous opportunity for growth, but Obama will have to disappoint his vociferous green base to take advantage of it. His decision to reject the Keystone XL pipeline was a mistake; now he’s been given another chance to choose American prosperity over base pandering. Let’s hope he chooses wisely.

There are ways to capitalize on our energy resources while following policies that could continue America’s remarkable track record of declining greenhouse gas emissions. And by developing and exporting shale gas technology to China (which is believed to have more shale gas than any other country on the planet), the American energy revolution could drastically change the global carbon picture. Cheap gas would sharply reduce China’s dependence on coal, just as it has reduced our own country’s appetite for the black stuff. And shifting our current tax system to include a revenue neutral carbon tax (cutting other taxes to match revenue raised through the carbon tax) would, given our new abundance, keep US energy prices lower than world levels even as it stimulated conservation and research into alternative methods — and pushed the U.S. toward the post-industrial, low carbon economy of the future.

In any case, Kotkin captures the President’s dilemma: caught between the political interests of his party and the economic interests of the middle class on the one hand, and the short sighted but vociferous green lobby on the other.

Read the whole thing.

Published on December 7, 2012 8:06 pm