Blue Collar Conservatives: Recommitting to an America That Works (17 page)

The company did well throughout the 1960s and 1970s. Though growth had slowed somewhat by 1981, when James finished school and went to work there, it was still the same company he had known as a kid. By the late 1980s, however, competition from overseas was taking a toll, and the company was hiring fewer and fewer people. By 1990, the factory was no longer viewed as a good, reliable employer for local young men and women graduating from high school. Its export market had disappeared, and more of the company’s domestic customers were choosing the more affordable products of offshore manufacturers.

In 1995, the company was sold to some out-of-town investors who had purchased similar businesses and thought they could run them more profitably. The new owners froze wages, cut benefits, and laid off 20 percent of the workforce. James hung on to his job, but it was a different place. Everyone anxiously waited for the other shoe to drop. Orders continued to decrease, and the factory was down to just one shift. In 1996, the company picnic was canceled to save money.

James and Susan had their first child, Jason, in 1997, and Thomas was born in 1999. In 2004, the aluminum company’s owner filed for Chapter 13 bankruptcy and laid off many more employees. The company never recovered, and one day in late 2008, as the Great Recession set in, James showed up to find the factory doors locked and the lights off. The company had gone into Chapter 7 bankruptcy, and its assets were being liquidated. James had been earning $22.50 an hour with a company-provided health insurance plan. Now it was all gone.

There weren’t many other careers for which James was qualified. Acquiring a new set of skills would be expensive, and he felt a little old for that anyway. After a feverish search, he took a job at a home-improvement store thirty miles away. The pay was just $12.50 an hour, with no benefits in the first year. Five years later he’s still there, making $14.25 an hour. Susan works as a nurse at an elementary school, and the two incomes are just enough to get by. They have cut back where they can—summer trips to the lake, dinners out, gym memberships, and contributions to their retirement plans. There’s nothing set aside for the boys’ college, and the idea of ever retiring seems like a joke.

The once-proud factory town where the Harrisons live is littered with home foreclosures. Financial stress has weakened marriages, and many families are falling apart. Social
problems that James and Susan hardly knew about when they were growing up—drug abuse, domestic violence, out-of-wedlock pregnancy—are commonplace now.

The factory towns in western Pennsylvania that I represented in Congress in the early 1990s were filled with thousands of families like the Harrisons. Those people have been forced into lower-paying service jobs, or they have to make the long commute to Pittsburgh for work.

Nearly nine million jobs have been lost since the beginning of the Great Recession.
¹
For some, it seems like American economic decline is the inevitable new reality that we’ll have to get used to. I don’t believe it. When I was in Congress, I was told that the jobs Pennsylvania had lost weren’t coming back. And guess what—that was wrong. Yes, Pittsburgh’s mills are gone, but their places have been taken by office parks, high-tech manufacturers, and, of course, Walmarts, Cinemark Theatres, and Home Depots. The report of Pittsburgh’s death was an exaggeration. But what about the little towns built around one factory, or the rural areas that lived on mining or timber? In the small cities and towns of the Rust Belt, people had started to accept the inevitability of decline, but something has happened to change that. Now many rural areas are witnessing growth, and it is spreading to the cities. What happened?

That boom is coming from oil and gas development, made possible by hydraulic fracturing (“fracking”), which releases oil and natural gas from shale rock formations. It turns out that the United States is the Saudi Arabia of shale rock. Fracking has filled North Dakota with good-paying jobs and reduced the state’s unemployment rate to 2.6 percent.
²
North Dakota shouldn’t be alone. There are substantial deposits of shale oil and gas in the Rust Belt states of West Virginia, New York, Michigan, Pennsylvania, and Ohio. Even President Obama has acknowledged that there is probably enough American natural gas, in deposits such as Pennsylvania’s Marcellus Shale formation, to last us a hundred years.
³

On the campaign trail in 2012, I met Dick Holcombe from rural Sullivan County in northeastern Pennsylvania, which is ground zero for Pennsylvania’s shale gas boom. After traveling the world for his career in business, Dick returned home to Sullivan County to start an e-commerce services company. It has been successful and is now the largest private employer in the county. Dick could have gone anywhere, but two things drew him back home—caring for his aging parents and shale. He understood the potential of the fracking revolution for the region. As he puts it, he wanted to see what happens when a fifth-generation dairy farmer becomes a millionaire overnight. He got back to Sullivan County just in time—there have been plenty of millionaire dairy farmers to observe.

Many families he knew growing up, particularly the dairy farmers and small-mine operators, were land rich but cash poor. Families that had been scraping by for generations are now millionaires because of gas leases, and land values have risen beyond anyone’s expectations. Fortunately, the values that saw these families through the tough times when manufacturing and farming were in decline are guiding them through the boom times now. Prudence and a sense of perspective are critical for families who have in effect won the lottery because of a gas lease.

Aside from the increased traffic on the county’s scenic roads, not much has changed. Many dairymen are still farming. The small coal operators are still mining and finding additional uses for their equipment in the shale industry. What has changed is the return of a sense of value and purpose.

Most people thought that America had left places like Sullivan County behind. Dick Holcombe knew that wasn’t true. America hasn’t left Sullivan County behind, because Sullivan County
is
America.

Mahoning County, Ohio, where the Harrisons live, is atop the western end of the Utica Shale, a major new source of oil. Energy companies have now invested millions in evaluating the area and are planning to move aggressively into the region. As it did in North Dakota, shale oil could create an economic boom not only in the energy sector but in all the businesses
that will grow or be created as workers and new residents flock to the area. The eastern Ohio economy, which has been a drag on the state for decades, could become the state’s economic engine all because of oil.
⁴

Shale oil and gas could transform the rural and Rust Belt regions where many of the deposits lie. You would think that reviving these communities and encouraging domestic energy production would be a national priority. Yet the Obama administration, incredibly enough, is trying to sideline the fracking revolution, which is providing abundant new sources of clean-burning, affordable natural gas. Most environmentalists didn’t oppose natural gas ten years ago, when it was three times the price it is now. These liberals never want to see the words “affordable and plentiful” in the same sentence with “fossil fuels.”

Obama’s most notorious attack on the fossil fuel industry has been his refusal to permit the construction of the Keystone pipeline, which would transport oil from Canada and the Bakken Shale in North Dakota and create thousands of jobs.
⁵
But there have been numerous other decisions that have destroyed American jobs or shipped them overseas. His moratorium on oil production in the Gulf of Mexico after the BP oil spill turned into a “permatorium,” according to the people I spoke with in Louisiana.
⁶
In spite of Obama’s best efforts, oil and gas production is up, but only on lands owned by private citizens. It is down on government-owned land both on and off shore. This de facto moratorium is a triple
whammy for the average American—fewer jobs, higher energy prices, and higher budget deficits because of lost revenue from drilling.

When so many Americans are hurting, why would a president act so irresponsibly? Because the Obama administration is filled with environmental extremists, “true believers” who are committed to the eventual elimination of fossil fuels no matter the human cost. And that cost is enormous. It’s not just in the energy industry itself that jobs are at stake. Every business in the country is affected—from farming to high tech to manufacturing. Especially in manufacturing, where American workers are up against foreign competition, energy costs can determine whether jobs stay in America or go overseas. In many manufacturing industries, energy contributes over 15 percent of a product’s cost.
⁷

If restoring the American Dream is our goal, restoring our manufacturing industry must be an essential piece of the plan. Most American businesses have to compete against other American businesses. The government might make life difficult for them with excessive taxation and regulation, but at least the competition is up against the same thing. But manufacturers face foreign competitors that operate under different rules and with different costs. Many foreign manufacturers enjoy government subsidies and weak environmental and labor laws.

That is why I think we need to look at the manufacturing sector of the economy differently from other sectors. When it comes to foreign competition, our government has a legitimate role in laying down laws that even the playing field. For much of our history, American manufacturing was protected by tariffs. Today, many of our manufacturers lose business and jobs not because they are uncompetitive but because of misguided government regulations.

Most people assume that foreign manufacturers’ biggest advantage is cheap labor. A study sponsored by the National Association of Manufacturers in 2003 attempted to quantify the competitive disadvantage of U.S. manufacturers against their top five competitors. The study considered all the major costs, including labor, energy, raw materials, taxes, regulations, and litigation. It determined that U.S. manufacturers had a 22 percent cost disadvantage
excluding
labor costs.
⁸
High wages are not costing us jobs. We’re losing jobs because of high corporate tax rates, excessive regulatory burdens, and other anti-business policies coming from Washington.

Our single largest disadvantage is our corporate tax rate, the highest in the industrialized world. It’s so high that even President Obama has considered trimming it. So let’s reduce the corporate tax to a flat rate of 20 percent with no fancy deductions, no loopholes—just a 20 percent net income tax. But
reducing
taxes isn’t enough; to create a boom in manufacturing jobs in the United States, we should
eliminate
the corporate tax for manufacturers. That will attract investment
capital to American manufacturing plants, and capital creates jobs. If we could do only one thing to make our manufacturers more competitive, eliminating the corporate tax would be it.