3. Drill, responsibly, drill. Obama has tried an expanded oil-exploration bargain before, but the massive spill in the Gulf of Mexico scuttled it. BP's summerlong gusher last year exposed serious flaws in how the government polices deepwater drilling, including an insufficient corps of safety regulators and an embarrassing failure to anticipate that new technologies to drill several thousand feet below the ocean surface might also bring new risks. While the Interior Department revamped its oversight procedures, permits for Gulf drilling slowed and, with them, job-creation potential.
Accelerating Gulf oil and gas permitting would result in 230,000 new jobs in 2012 and leverage $19 billion in capital investment over the next three years.
Interior has completed its safety review and requested $358 million for fiscal 2012 to hire more regulators and implement stricter drilling standards, a $119 million increase from fiscal 2010. Republicans should grant the request. In exchange, Obama should turn up the heat on Interior to fast-track permitting as much as the oversight infrastructure allows. The energy consulting group IHS CERA estimated last month that accelerating Gulf oil and gas permitting "to levels that support the oil industry's capacity to responsibly explore and operate" would result in 230,000 new jobs in 2012 and leverage $19 billion in capital investment over the next three years. Government royalties from the increased production are estimated at $6 billion a year, which would pay for the most gold-plated safety regime Interior could ask for--and maybe even help fund some of those housing bridge loans.
4. Welcome a new wave of immigrants. If you take McConnell's Machiavellian creativity on the debt limit--the idea to let Obama ask Congress for more borrowing authority, for Congress to reject it, and for Obama to veto that rejection--and apply it to America's consumer-demand problem, you just might find a clever agreement on one of Washington's most polarizing issues. Bonus: You'll create a lot of jobs.
A persuasive body of economic research suggests that one of the easiest ways to boost consumer demand would be to allow a couple of million additional consumers into the United States. A flood of immigrants would boost growth; economists who have studied immigration and its economic impact suggest that the newcomers wouldn't drive down wages or employment for everyone else. Adam Ozimek, an economic consultant and blogger at Econsult in Philadelphia, wrote recently, "Immigrants buy stuff; that means businesses sell more, and they need to expand and hire new workers." The big economic lift would stem from the simple fact that all of those immigrants would need to live somewhere, thus boosting the housing market. A Swiss National Bank study from last year found that an immigrant influx equal to 1 percent of the population in a given Swiss region created a 2.7 percent increase in housing prices.
The creativity comes from how the government chooses which immigrants win the right to join the incoming tide. Some could be selected for citizenship through a lottery. In the spirit of American capitalism, others could buy citizenship at an auction. As economic blogger Matthew Kahn suggested last month, "The United States does have a product that the rest of the world wants. It is called a 'U.S passport.' " Each new one could fetch an average of $250,000 at auction, Kahn estimates. U.S. employers, which are both flush with cash and worried about the thinness of America's ranks of engineers and other highly skilled workers, could buy spots for would-be citizens who would help their businesses. Would-be entrepreneurs could borrow money or recruit venture capital to sponsor themselves. A million citizenships averaging $250,000 each would raise $250 billion--money that the president and Congress could agree to devote exclusively to paying down the national debt.
5. Unleash energy companies' spending power. Late in 2010, Midwest mega-utility Exelon announced that it would start spending $5 billion on renewable-power generation, energy-efficiency efforts, and other clean-energy projects, which the utility said would create "thousands of jobs." Few other utilities have announced investments anywhere near that large, even though the nation's power plants are aging and electricity demand is projected to rise. The disconnect is one of the easiest-to-spot examples of the "certainty" problem that Republicans often complain about--and it's fairly easy to remedy.
Exelon CEO John Rowe likes to point out that utilities face a "train wreck" of multiple new environmental regulations in the next decade, along with a vague sense--but no concrete indications--that Congress will eventually put a price on carbon dioxide emissions. The multiple unknowns create a near-paralysis for an industry that invests on decades-long time horizons. Utilities don't know which types of power plants will be affordable or even feasible to operate down the road, so they're hesitant to make big bets now. If they build more coal or natural-gas capacity, which is mostly cheaper today than renewable power such as wind or solar, utilities might get socked by regulations or carbon pricing down the road. If they had a better idea of what's to come--specifically, the knowledge that renewables, which are costlier today, will necessarily form a growing share of the nation's future electric mix--they would be more likely to invest in those sources now, when idled construction workers could use the work.
One of the easiest ways to shore up certainty for utilities would be a "Clean-Energy Standard"--a mandate that a certain percentage of each utility's power generation come from low-carbon-emission sources. The percentage would ramp up over time. Under current technology, clean energy is often more expensive than, say, coal-fired electricity, but a phased-in standard would allow utilities time to increase electric prices incrementally; a well-designed standard with flexibility (for regions most dependent on fossil fuels today) could blunt much of the long-term impact on consumers. Meanwhile, the new construction could start right away. Such a federal mandate, says Joshua Freed, vice president for clean energy at the centrist Democratic think tank Third Way, "would provide a clear signal, without costing any money, to the private sector to invest in wind, solar, or any of the other technologies that are coming on line today." Several large utilities say that the resulting certainty would spur billions of dollars of investment and drive job growth.
6. Explore other deals. Obama and Republicans could seek common ground elsewhere, too: freezing or repealing some federal regulations (the National Labor Relations Board has several that the business community would love to vanquish); enacting German-style labor laws to encourage job-sharing, in which businesses keep workers on the payroll but reduce hours across the company to prevent layoffs; and extending payroll-tax cuts or enacting new ones designed to encourage businesses to hire the long-term unemployed (Obama has pushed that last idea for some time now). Lawmakers should look for more ways to boost exports, to unleash corporate investment, and to unlock credit for start-ups.
If Washington's top political and policy strategists can't find some way to compromise on any of these ideas, they should take a day off--only one--and draft a list of new possibilities. Then they should reconvene, or call in their super committee and lock its members up until they reach consensus.
It doesn't matter where everyone meets, but it would be nice if the room had a big bank of phones. That way, if job-creation talks stall, everyone could leave the table and dial for a while. Across America, 14 million unemployed workers would be happy to take their calls. They're bound to be full of ideas. Unlike the folks in Washington, they have thought about almost nothing else these last few months.
This article appeared in the Saturday, August 6, 2011 edition of National Journal.