The Congressional Budget Office (CBO) estimates that repealing the Affordable Care Act and replacing it with the Republican American Health Care Act (AHCA) would reduce federal deficits by $337 billion over 10 years. That figure includes spending an estimated $361 billion over 10 years to pay for the Republican plan’s refundable tax credit intended to help people afford insurance coverage.
However, Republicans, who tend to be fiscal hawks, haven’t proposed any revenue stream that would come close to covering that cost, nor the other costs in the bill.
The good news is that President Donald Trump has proposed opening up more federal land and offshore for oil and natural gas exploration. That new federal funding stream could be dedicated to funding the cost of the AHCA.
But that’s not the whole story. While most of those years hovered around $11 billion, the federal government took in $24 billion in 2008 alone, nearly twice the next highest year (2006).
Why? The Department of Interior implemented a bonus bid system, in addition to royalties and rents, that allowed companies to bid more if they thought the federally owned site in question would be especially productive. However, when the Obama administration came to power in 2009, it shuttered the program.
However, that report was produced four years ago. While it envisioned an expansion of federal leasing, it may not have imagined the expansion possibilities under a Trump administration.
The CBO implies the government would need about $36 billion a year (for 10 years) to cover the cost of the Republican health care tax credit. So could the IER estimate of $12 billion to $15 billion additional annual federal revenue be doubled in an aggressive lease expansion program?
I think it’s possible now that the U.S. is expanding both crude oil and liquefied natural gas exports.
As Forbes contributor Jude Clemente pointed out last month, the U.S. is set to rival Russia in exporting crude oil and natural gas. “The U.S. is now slated to have the capacity to export 10-12 Bcf/day of LNG to the world by 2020, this is 1/3 of the current global market and a boom from virtually nothing a year ago…. In fact, U.S. LNG is so desired in Europe that some nations have offered to accept higher prices for it, willing to lose money to lower the reliance on Russia.”
And with respect to crude oil Clemente writes, “Moreover, in the past two weeks or so, the U.S. had been exporting 1 million b/d of crude oil, up from basically nothing (or at least only to Canada) 14 months ago.”
The benefits to the economy—and to the federal budget from the increased lease and royalty revenue—cannot be overstated. And with growing export possibilities, there will be markets for U.S.-produced energy.
There have been spills of fracking fluid, but a recent Environmental Protection Agency study demonstrated those were almost always small, local spills, completely contained and the result of human error.
Republicans need a new revenue stream to pay for their health care bill, and expanded oil and gas exploration could provide much, and perhaps most, of that funding. It’s a win for the health care industry, the energy industry and the U.S. economy.