Obama Wants Long-Term Infrastructure Plan, Not Keystone
Policy + Politics

Obama Wants Long-Term Infrastructure Plan, Not Keystone

If there were any lingering doubt about whether President Obama might support the $8 billion Keystone XL pipeline project, he convincingly dispelled it at his Friday year-end White House news conference. He dismissed the project as “not even a nominal benefit” to the U.S economy or consumers.

“There’s been this tendency to really hype this thing as some magic formula to what ails the U.S. economy, and it’s hard to see on paper where exactly they’re getting that information from,” Obama said.  He offered a litany of criticisms of the long-standing proposal by TransCanada to transport crude oil from Alberta’s oil sands across the U.S. to Gulf Coast refineries.

Related: Obama Says U.S. Congress Could Tackle Tax Reform in 2015   

“That oil currently is being shipped out through rail or trucks and it would save Canadian oil companies and the Canadian oil industry enormous amounts of money if they could simply pipe it all the way down to the Gulf,” Obama told reporters. “It’s very good for Canadian oil companies, and it’s good for the Canadian oil industry but it’s not going to be a huge benefit to U.S. consumers, it’s not even going to be a nominal benefit to U.S. consumers.”

At best, he said, the project would create just a couple of thousand construction jobs that would disappear after the project was completed. That is a far cry from the tens of thousands of well-paying jobs that the oil industry and allied labor groups have projected, pumping billions of dollars into the still recovering U.S. economy.

Related:  Keystone Pipeline: Job Creator or Environmental Menace?    

The president renewed his call to Congress to work with him next year to enact legislation that links corporate tax reform with a major new program of highway, bridge and other infrastructure construction. If a deal were struck, he said, the new construction projects would generate as many as a million new jobs in the coming years and reverse a decades-long erosion of middle-class jobs and incomes.

“We’re going to have to invest in the things that secure even faster growth in higher paying jobs for more Americans,” Obama said. “And I’m being absolutely sincere when I say I want to work with this new Congress to get things done, to make those investments, and make sure the government is working better and smarter.”

Early this month, Obama voiced concern about economic competition from China in speaking out on the need for major new investments in U.S. infrastructure to keep pace with rival countries and keep the economic recovery on track. 

“It makes no sense that we have a first class economy with a second class infrastructure,” Obama said in a speech to the Business Roundtable in Washington.

Related: Fix Infrastructure Now, or Apologize for It Forever   

After failing to win congressional support for his proposal for pumping $302 billion of federal funds into highway and mass transit projects last summer, Obama appeared pessimistic during his speech that the new Republican Congress will be willing to support a major increase in tax revenues to finance a long-term undertaking.

However, Rep. Paul Ryan (R-WI), the incoming chair of the tax-writing House Ways and Means Committee, said in an interview with Politico that using some of the money raised in any overhaul of the corporate tax code to fund infrastructure projects is “something we’re going to have to explore further — I’m not pre-judging.”

The idea promoted by the White House to link tax reform to infrastructure construction is highly controversial among some conservative Republicans who view the diversion of tax revenues to construction projects as tantamount to a tax increase. However, Ryan signaled he was intrigued with the idea.

“The question is: Is there a way to get what we would think of as Phase I of a tax reform done?” he told Politico. “We need to explore that — I don’t know that there is a way — but we need to explore if there is a way.”

Related: Senate Rejects Keystone and Landrieu in Squeaker Vote   

Meanwhile, Obama is kidding himself if he thinks he can talk the new Republican Congress out of its support of the Keystone pipeline – a project that has become a mainstay of the GOP’s playbook for economic growth. Indeed, the Republican-dominated House passed a measure last month, 252 to 161, to bypass the president and authorize the project. Thirty-one Democrats supported the measure.


Whether it’s the Keystone pipeline or tax reform, the country is anxious to see if the GOP and President Obama can cooperate on any legislation. If they can break the ice on even one bill in the newly divided government, a little bit of faith could be restored in the Federal government.

Because the pipeline crosses the U.S. –Canadian border, it is deemed an international project that is subject to the approval of the State Department and White House. There is plenty of support in the Senate as well for overruling the president, although that chamber fell one vote short of the 60-vote super majority that was needed to pass the bill.

Last February, the pipeline project cleared another major hurdle when the State Department released a report that found the proposed 875-mile pipeline probably would not alter global greenhouse gas emissions. But it did rekindle a long-simmering dispute over the potential economic benefit of the plan.

Senate Minority Leader Mitch McConnell (R-KY) and House Speaker John Boehner (R-OH) made plans shortly after the Nov. 4 election to bring up the Keystone Pipeline measure again shortly after the new Republican Congress takes office in January.

Although the president on Friday made much of several flashes of bipartisanship during the final days of the lame duck session – including passage of a $1.1 trillion spending bill for the remainder of the fiscal year -- Obama is almost certain to veto the Keystone pipeline bill if it reaches his desk.

Top Reads from The Fiscal Times