Author: Brigitte S.

By Senator Doug Mastriano

The arrival of COVID-19 brought to light several underlying issues in America. But perhaps the issue that has been most exposed is our overreliance on products made outside of our borders.

International disruptions such as pandemics, natural disasters, and political upheaval significantly impact our nation’s supply chain of goods. The result of that disruption is stunted economic growth and increased prices for American consumers.

During my travels around Pennsylvania, it has been hard to ignore the abandoned factories and hallowed out towns throughout our Commonwealth. Once vibrant communities were replaced with vacant lots and blight. Parents had to say goodbye to their children as they moved far away to find any kind of stable employment. Drugs usage and welfare replaced prosperity and family building.

It wasn’t always this way. Pennsylvania towns used to be a “keystone” to America’s ability to make products desired around the World. Our iron and steel once built the Golden Gate Bridge, the Hoover Dam, and the Empire State Building.

In 1999, manufacturing jobs accounted for 865,000 jobs in PA. By 2019, that figure shrunk to 575,000.

The transition of jobs from the manufacturing sector to the service sector had a disproportional effect on men without a college degree in our Commonwealth. Their lack of a degree and unique specific skillset made it difficult to find other good paying and fulfilling jobs.   

Fatal foreign policy mistakes by the federal government and the failure of Pennsylvania’s state leaders to replicate pro-business polices implemented in other states were significant factors in the downfall of our manufacturing sector.

Many economic analysists point to the early 2000s as a consequential period that accelerated the decline.

20 years ago, the World Trade Organization made the fateful decision to admit the People’s Republic of China as member nation. The same WTO that oversees the global system of trade rules and regulations. China’s entry also granted them permanent “most favored nation” status in trade with the United States. Prior to its WTO entry, that status had to be approved on an annual basis by US Congress.

The monumental economic and political effects emanating from China’s entry into the WTO continue to reverberate today.

It opened the floodgates for foreign trade and investment into China’s markets. Most significantly, it led to China’s domination in the manufactured goods export market. China’s share of global manufacturing exports went from 4% in 2000 to 15% in 2020.

China’s advantage of an overabundant labor force, lax labor laws, and large government subsidies give them an unfair advantage when it comes to attracting companies to manufacture goods on their shores.

America’s trade deficit with China grew by over 400% from 2001-2018. According to a study by the Economic Policy Institute, this amounted to the loss of 3.7 million overall American jobs from 2001-2018.

While international agreements, automation, and changes in technology were factors in the decline of manufacturing in PA, our state leaders certainly didn’t do any favors to keep the jobs we had or attract new investment.

While the manufacturing sector largely contracted in northeast states like Pennsylvania, other states adapted their business policies and found ways to attract new investment opportunities.

Ball State University’s Center for Business and Economic research conducts a comprehensive nationwide manufacturing industry scorecard every year dating back to 2009. The scorecard examines factors such as tax climate, regulatory environment, and human capital.

Every year, Pennsylvania has received a grade of “C” or worse when it comes to manufacturing health. Conversely, states like Michigan, Kentucky, and South Carolina receive an “A”.

Michigan, Kentucky, and South Carolina all saw an annual average manufacturing growth rate of 2% or more since 2009, according to the U.S Bureau of Economic Analysis. Meanwhile, Pennsylvania’s growth was anemic at less than 1%.

How do we make more Pennsylvania more attractive to prospective manufacturers? Let’s start with much needed regulatory reform.

Pennsylvania was rated at #35 in the nation for regulatory environment, according to Forbes Best Business Ratings.  With over 153,000 regulations on the books, we have one of the most burdensome regulatory codes in the country. It would take an individual about 713 hours—or just under 18 weeks—to read the entire Pennsylvania Code.

Review, modification, and rescindment of onerous regulations can be the genesis of a manufacturing resurgence. There is a cost to every regulation. That cost is exacerbated when the regulation is no longer needed. Regulations need to be reviewed on a regular basis to determine if they continue to be needed, require modification, or require termination. By creating a consistent review schedule, the General Assembly can determine whether a regulation should be continued, modified, or terminated.

Additionally, creating a “2 for 1” model (removing 2 regulations for any new regulation) is something we should adopt here in Pennsylvania. 

We also must improve our permitting process. Members of the General Assembly often hear from prospective employers who ask, why does it take so long to get a permit? Where does my permit stand? What is the holdup?

We saw this issue in practice when U.S. Steel decided to pull out of a $1.5 billion investment in the Mon Valley Works in Braddock, PA. After delays in getting approvals and permits, US Steel called it off and the region lost out an opportunity to gain hundreds of good paying, blue-collar jobs.

Passing legislation to create a tracking system for permit applications and permit and third-party review of permit decision delays will go a long way to address concerns of business owners & bring greater transparency to the permitting review process.

We need to make our state a more attractive tax climate.  Our current Corporate Net Income Tax is the second largest in the country at 9.99 percent. For comparison, Arkansas’ corporate tax rate of 5% recently helped them land the most advanced steelmaking facility in North America that is expected to produce 3 million tons of advanced steel per year.

Reducing the corporate tax burden by at least 2 percent here will help us compete with other states to attract prospective manufacturers. Thankfully, it appears that this idea is starting to gain bipartisan support.

But I also believe that a corporate tax reduction should be contingent on employers agreeing to retain or attract a certain number of jobs in the Commonwealth. We must ensure these companies are doing their part to invest in our people.

Will Pennsylvania’s manufacturing employment and output ever return to its heyday? Not likely.

But there are steps that our Commonwealth can take now that will instantly make us a more attractive location for manufacturers to grow and invest. Pennsylvania manufacturing sector once powered America into the Industrial Revolution and helped her become the “Arsenal of Democracy” through two World Wars.

We can lead the way once again in reshoring jobs to America and stabilizing our supply chains in the long run.

The Roman philosopher, Cicero, told a story of how King Dionysius answered a courtier, Damocles, who thought that ruling a realm was easy. In response to this, Dionysius switched positions with Damocles. But Dionysius ordered that a sword be suspended above Damocles’ head, held in place by a single strand of hair from a horse’s tail. It was then that Damocles realized the dangers that came with ruling a kingdom and happily remained a courtier. The moral of the story is that danger “hangs by a thread” and a miscalculation could result in catastrophe.

The bellicose rhetoric of Vladimir Putin and his horrific invasion of Ukraine has put both Europe and the world in a dangerous position.  A misstep of appeasement, or alternatively, going too far, could plunge the region into a catastrophic expanding war.  The historic case of 1938 stands in the way, where weakness from “the West” emboldened Adolf Hitler.   The cost of capitulation and appeasement was a costly world war. The lesson of this experiment with appeasement is best summed up by Winston S. Churchill, “An appeaser is one who feeds a crocodile, hoping it will eat him last.”

Putin wants “neutral (puppet) states” as a buffer around his country and has gone so far as to call for a return to a 1994 status quo.  The “status quo” was Europe before NATO expansion into Eastern and Northern Europe.  This demand harkens back to a Soviet era when Moscow dominated and controlled the countries along its border.  Yet, these nations rightly want self-determination and not to be a puppet state like Belarus, where the shots are called in Moscow.  To safeguard their future, these nations usurpingly are eager for both NATO and EU membership.  NATO provides a security umbrella while the EU offers a path to economic prosperity.

In the meantime, the war rages with Ukrainian armed forces putting up an impressive defense of their nation from Russian aggression.  Putin is only able to fund his war in Ukraine via oil and gas revenues which have gone from about $70 billion annually in 2017 to around $120 billion last year.  This is driven by increased energy costs and diminished production in the United States.

Although the war in Ukraine is largely a federal issue, there is much that can be done here in Pennsylvania.  In the short term, our state must divest from all Russian financial interests and instead seek to invest in companies here in the Commonwealth.  The idea that state revenue is used to invest in foreign adversaries such as Russia defies reason. And while we are at, we should seek to divest from the Chinese Communist Party as well.

The next step is to immediately withdraw membership from the Regional Green Gas Initiative (RGGI), a New England version of the Paris Climate Accords that will cost our state $461 million this year, according to the governor’s own budget. This misguided plan will hurt the hard-working people of our state with higher energy costs, and with little demonstrable benefit to the environment. 

For the long term, it is high time to unleash the potential of Pennsylvania’s energy sector.  We are blessed with abundant resources in the form of natural gas, coal, and oil.  Production is suppressed by numerous state and federal regulations that must be rolled back now to increase domestic production.  Pennsylvania is number two in natural gas production in the US and third in coal.  But overregulation and taxation are driving our energy sector to neighboring states with more friendly business climates. If the potential of our state’s energy sector is unleashed, we can bring prosperity back to our state, help the United States become energy independent, and become a net exporter of energy to our allies in Europe.  This will indirectly limit Putin’s expansionist wars by reducing his leverage over Europe (via Russian oil and gas exports) in addition to bringing down energy costs here in the commonwealth.    

Years of neglect and absent leadership in Pennsylvania has contributed to making our state one of the most regulated and heavily taxed in the nation.  The drain on young people leaving the state is a direct result of tax and spend policies that make it too daunting to live and prosper in our commonwealth.  A good place to start relieving some of the tax burden is to pass Senate Bill 813, a Gas Tax Holiday for Pennsylvanians.  As gas prices continue to skyrocket, reducing our absurdly high gas tax will provide at least some immediate savings for consumers at the pump.

Another measure is legislation that I will be introducing in the next week to roll back the regulations limiting the growth of our energy sector.  The “PA Energy Independence Act” will stabilize energy costs for Pennsylvanians, protect against economic and international volatility in the long term, and utilize Pennsylvania’s unique natural resources to finally cement the commonwealth as a premier energy powerhouse.

More can and should be done to stabilize our state’s economy to help our people weather the international storms and uncertainty.  Acting on commonsense legislation is where we can start to get the government off our backs and out of our wallets. 

Energy costs are exploding across the nation, with oil costing an astounding $120 a barrel.  The crunch is felt at the pumps with gas now costing a record $4.17 a gallon in Pennsylvania.  This only adds to the economic pain and crippling inflation ushered in by the Biden Administration that has hurt the wallets of Pennsylvanians.

The situation unfolding in Ukraine has been horrifying for Americans to witness and made worse by the fact that our misinformed “leaders” have emboldened Vladimir Putin by giving him the resources he needed to build and expand his armed forces. 

In less than a year, America went from energy independence to now importing nearly 600 million barrels of oil from Putin’s Russia. The new revenue into the coffers of the Russian government allows them to spend it on weapons and other military equipment. America has indirectly poured billions into Putin’s war chest. 

A perfect example of this occurred in 2016 during a particularly long cold snap in Boston, Massachusetts.  Running out of fuel for energy and desperate for a source, Boston did not turn to Pennsylvania for its natural gas. Instead, they turned to RUSSIA! 

It didn’t have to be this way, but shortsighted policy decisions have gotten us to where we are today.

The Keystone Pipeline, unilaterally stopped in Biden’s first days in office, was to provide 800 million barrels of oil per year.  To appease the progressive “green new deal” wing of his party, Biden put an end to what would have been a gamechanger for North American energy independence. This action was taken despite the fact that pipelines are proven to be 1,200 times safer than a truck, 39 times safer than rail, and 17 times safer than barge when it comes to transporting crude oil.

Instead of commonsense actions to confront out energy woes, the Biden Administration is pleading with a dictator in Venezuela and a King in Saudi Arabia to produce more energy.  This is either a sign of madness or ignorance, as we have what we need here in the United States and in Pennsylvania to fuel our nation and many of our allies in Europe.

Sadly, state leadership in Pennsylvania has also held back the potential of our domestic energy industry.

Pennsylvania has the potential to be an energy producing powerhouse. We are blessed with abundant untapped energy resources We are second in the nation for natural gas reserves and third in the nation for coal. But what benefit do we enjoy from this? 

Tom Wolf’s oppressive and cumbersome fees, taxes, regulations, and restrictions have handicapped the potential of our energy sector.  Many companies in the energy sector simply look to invest in more energy friendly neighboring states like Ohio and West Virginia.

Tom Wolf’s parting gift to the people of Pennsylvania was his unilateral (and probably unconstitutional) decision to join the Regional Green House Gas Initiative (RGGI).  This Northeast version of the Paris Climate Accords will cost the people of Pennsylvania an estimated $461 million dollars a year with no demonstrable benefit to anyone in the state.  Wolf’s RGGI is also projected to immediately result in plant closures and job loss on a mass scale.

Short sighted energy policies have impacts well beyond the energy sector. Low- and Middle-income seniors on fixed incomes cannot afford skyrocketing energy costs to keep the heat on in their homes.

Our already deeply damaged supply chain system cannot afford rising costs to transport goods across the country.

It is time for direct action as politicians like Tom Wolf run around wringing their hands and doing nothing to help the people of our state. 

First, it is time to move SB 813 which would create a “Gas Tax Holiday” for Pennsylvanians. This bill that I introduced over the summer would slash the ridiculously high gas tax and instantly reduce costs at the pump. 

Additionally, the governor must suspend his fees and regulations that are driving up the costs on our energy sector to keep it operational.  This includes immediately withdrawing Pennsylvania from the Regional Greenhouse Gas Initiative. We are losing out on potential investment to competition from other states and even other nations.

Finally, we need to open more of our lands for fracking and drilling. The blessing of Marcellus Shale in Pennsylvania is still underutilized with untapped deposits of natural gas. We need to make it enticing for companies to invest money and equipment in developing those lands.

With these basic steps, Pennsylvania can be the spark that ignites American energy independence and gets us off Russian oil and gas forever. Our future and the future of our allies depends on it.