Everyone is probably a little wrong. Including me. (I know, not a very compelling hook for a post… but hear me out.)

First, to state the obvious, I have been an outspoken critic of what I call the data center ‘gold rush.’ I have watched Meta receive generous 30-year property tax abatements and a state sales tax exemption to build a huge data center on valuable farmland in my hometown, all for what will likely amount to relatively few permanent jobs after construction ends. I have written about the environmental problems inherent with building huge gas-fired power plants, which could drive up costs for residential utilities directly or indirectly through competition for equipment and construction labor (new gas plant costs are at a 17-year high this month). New large-scale fossil-fuel electricity generation for new data centers will also introduce new emissions to areas that previously had none. In some parts of the country, water use and discharge are massive concerns. And, personally I think that, like in any ‘gold rush’ where subsidies are available and people want to get ‘in’ on the next big thing, some data center projects are snake oil who won’t return positive ROI for their communities. I remain staunchly against taxpayer subsidies for data centers, which offset their purported local economic benefits, and I support bans on tax exemptions for data centers, like the one Ohio Governor Mike DeWine enacted in May.

I also believe New York went too far this week in its new 1-year moratorium on all data center construction.

The main argument for a comprehensive data center ban is that AI developments are outpacing our ability to effectively regulate the technology. This logic is seductive except it only holds if we fully understand the potential problems that AI presents and can weigh them against the innovative societal benefits not yet realized.

Let’s start with the obvious negative effects. Yes, we all probably agree that AI deep fake political campaign ads are bad for democratic society. Or that AI being used as a substitute for access to professional therapists or mental healthcare is psychologically and potentially physically harmful. AI algorithms that train on facial recognition data to grow the surveillance state are positively dystopian. Rising energy prices are a huge concern that financially burdens American households. Displacing art and expertise based on human emotion and experience feels soulless. Concentrating more power in the hands of powerful, wealthy, unelected technology companies, and their CEOs, is extremely concerning and worthy of regulation. We can actually study and attempt to correct these problems directly with policy.

Data center bans are lazy substitutes for smart, popular and more difficult to enact policies.

In a weird way, the very real problems with data centers that I listed above are actually the winning issues for politicians. A data center ban is a lazy, one-size fits all populist substitute for doing the hard work of creating robust digital privacy laws and enforcing them, of reforming the healthcare and education systems to make mental healthcare more accessible and less stigmatized, of improving environmental laws and enforcement, of conducting permitting reform to facilitate more timely construction of more clean energy (including nuclear power). A data center ban also dodges the underlying need for campaign finance reform to reduce technology company influence over our elections, which could open the door for trust-busting big technology firms. Many of them are functionally some combination of computing companies, retail companies, advertising companies, movie studios, broadcast companies, music publishers, search engines, travel agencies, space companies, telecom companies, pharmacies and grocers all rolled into one. (Paging Lina Khan!)

If I had to guess, more privacy, more healthcare access, less money in politics, updating and enforcing clean air and water laws, more renewable energy, and less omnipotent giant tech companies are widely popular political positions across party-lines. And these are policies voters can be for instead of just being against data centers.

Some data centers are necessary to capitalize on the positives of AI. (Yes, AI has positives.)

No doubt the introduction of AI to the masses has been extremely sloppy and, rightfully, has made a poor first impression. That was probably unavoidable. Personally, despite its immense faults and threats, I am still glad that AI became accessible to the public early-on, rather than being hoarded and manipulated as a private monopoly by the world’s biggest companies without anyone’s understanding.

The problems with nascent AI have been well-documented; AI-generated text, images, and videos have polluted our digital spaces and feeds, aiding in the spread of misinformation and crowding genuine human art. AI has also given companies in certain sectors pause in hiring, creating friction in the labor market particularly for new college graduates who began their computer science degrees 4 years ago, two months before OpenAI publicly launched ChatGPT. These are, again, all very serious problems.

But AI is also being deployed quietly, every day, in fields that are making immense progress. Healthcare providers are using AI to more quickly diagnose diseases and personalize treatment. AI has promise to drastically reduce vaccine development timelines and increase the pace of pharmaceutical breakthroughs for chronic diseases, like cancer. And, while layoffs and economic turmoil have dominated headlines for big software as a service (SaaS) firms, small businesses are reporting benefits from AI, where owners and employees can now quickly create their own solutions rather than rely on expensive subscriptions to cloud-based software they do not permanently own.

Losing the AI buildout to China is far worse than winning it.

The best way for these good innovations to continue and grow is for AI to be housed transparently in America, where AI companies and users can be subject to American privacy laws, environmental protections, and the U.S. Justice System. The worst way for these innovations to occur is for them to rely on the cheaper Chinese AI models that businesses are already turning to. Chinese law makes personal data collected by AI companies far more accessible to their government.

By many accounts, China is already winning many key facets of the 21st Century Economy. Chinese adoption of robotics has helped continue their manufacturing dominance. China also dominates the battery supply chain, which is essential for both affordable electric vehicles (EVs) and reliable renewable energy buildouts in areas of the U.S. with intermittent wind and solar generation.

Data centers are the next frontier of China’s industrial and technology policies and one of the few future technology points where they don’t already hold an advantage over the United States. Rather than ban data centers, China is working to solve environmental and grid capacity problems by pushing data center development westward into parts of the country with more wind and solar potential, away from coastal dense populations.

But the U.S. (for now) holds an advantage in data center capacity in a global market that is projected to grow immensely in the next decade. U.S. tech companies have the capital and willingness to build data centers and ensure that American (and global) citizens have access to AI technology housed and regulated by American laws that can be revised by democratically elected officials. This is inarguably better than subjecting our digital lives to a state-controlled AI enterprise in China. A U.S. moratorium on data center development (even a short-term one that delays construction) would be disastrous for any American citizen that uses the internet and would all but hand over the keys to the digital future to Xi Jinping.

My proposed (albeit incomplete) policy goals for the AI buildout:

I do not claim to be a universal expert, but I have followed, and often engaged in, the AI and data center discourse. I have generally been critical of data center projects, in particular the ones that get local and state subsidies. That is because I see and believe in the problems and existential dangers that an unregulated AI buildout presents.

But I have also come to adopt a more nuanced (and thus, probably unpopular) set of beliefs that I share below in no particular order. I think these are at least a good and rational starting point for discussing and debating about AI and data center policies. Maybe some of my thoughts end up being wrong, but the discussion needs to be had. I’m also not suggesting that any of these are politically “easy” but, hey, we need to get back to a place in our governance where we actually try to do hard things that are often better for everyone than the easy, quick fix (like data center bans).

• Strengthening privacy laws to protect Americans data. This could include preventing AI companies from collecting certain data about users or preventing chat logs from being used to train models or being shared for advertisement purposes without consent, particularly for minors. We could examine regulating what data is collected, where and how it is stored, how it is utilized, and how long it is kept.

• Eliminating local and state subsidies for AI. City, county, and state governments face budget constraints that the federal government (via deficit spending) does not experience in the same way. If investing in AI data centers is a national security concern (and I believe it is), then the national government should bear the cost of any needed subsidies. At the local and state level, these exemptions mean that local services (schools, fire and police, roads, health) don’t get to directly share in any prosperity that AI brings. Since AI uses local resources, it should pay local taxes. Additionally, any local tax exemptions that go toward buying equipment manufactured outside of the taxing region or paying out-of-region workers represent a net outflow of money from communities. Most communities where data centers are being built don't manufacture the gas generators or the computer chips, nor do they have a huge local supply of idle skilled trade workers. (Most models that estimate economic benefits assume construction labor is perfectly elastic.) This means many tax exemptions for data centers are forgoing revenue for local resident services to subsidize equipment manufactured out-of-state (or country) and pay out-of-state workers.

• Tie any federal subsidies or tax credits to renewable practices and net-contribution to energy supply. A major concern around data centers is that a huge growth of fossil fuel generation will blow up any kind of progress toward decarbonization. This is a legitimate concern, and data centers that more heavily rely on renewable generation and batteries should be rewarded. Data center projects that contribute back to the grid financially or with energy should be rewarded even more. In this way, any subsidies are A) federal, so they don't leak out like they do for counties or states, B) directed toward a national security priority, C) addressing an environmental concern, and D) supporting grid reliability. Four potential birds with one (well-thought out) subsidy stone.

• Encourage investment in data center equipment and renewable component manufacturing. I’ll caveat this by saying that I’m personally against corporate welfare in the form of large tax incentives. The CHIPS and Science Act in 2022, for example, didn’t fully understand the technological landscape or where the industry was innovating toward. The law passed, and boom! AI launched shortly after it was enacted and it now represents a large, often inefficient allocation of resources toward outdated technology and needs. But if proponents of this version of industrial policy feel they must subsidize something, then onshoring semiconductors, solar panels, and battery components has far more strategic and widespread economic benefit than just directly subsidizing one end-use in data centers.

• Strengthen, monitor, and enforce environmental laws. Data centers should be required to be transparent about and accountable for their power consumption, water consumption, waste water disposal, and any emissions from fossil-fuel generation. The government should hire actual independent scientists (not ideologues) to study and monitor waste, consumption, and emissions and enforcement with noncompliance should actually be meaningful.

• Regulate advertising and algorithmic transparency. People should know how they are being served content and how feeds are being manipulated and whether companies paid for their content to be placed more prominently in front of eyeballs. People should know if any AI models have political or social bias in their results. People should know if content was generated by AI or not. This is not an easy thing to regulate, but bringing some sort of 21st century version of the fairness doctrine to the digital space seems crucial.

• Increase research grant funding to non-profit and public academic institutions to use AI in scientific research. Rather than allowing for-profit companies to initially dominate AI-driven scientific developments, keeping critical knowledge and discoveries in the public domain is crucial. This gives the public a stake in the technology and allows for more equitable commercialization (yes, eventually it has to be scaled for some sort of reasonable profit in the market).

The final two thoughts, I’ll put in their own section as these are more controversial and “big picture” political problems. I won’t pretend I know how to solve them but addressing them head-on is a debate everyone should welcome.

• Reforming political campaign finance (personally, I’d like public finance). None of these policies can be meaningfully crafted and passed if our politicians (and thus, regulators) remain captured by tech industry dollars. When a billionaire can use his own fortune to steer an election result favorably for his companies, the system is never going to work whether we ban data centers or not.

• Which leads to… antitrust updates. Many of the companies pursuing AI investments are simply too big and influence too much of the U.S. economy. It is difficult to imagine a new market entrant competing in the social media advertising space with Google or Meta. AI has the potential to compound this problem. I am not a lawyer, nor an antitrust expert. But I found this piece convincing, particularly in its conclusion that “the consumer-welfare standard cannot aptly outline the competitive dynamics of generative AI for digital platforms. If antitrust is to remain a meaningful check on Big Tech’s market power, antitrust must develop tools that account for algorithmic market structures, predictive systems, and the ways in which AI reconfigures both competition and harm.”

This post has now dragged on for far too long, but I think that also illustrates my opening point. Nuance is bad politics but good policy. Rather than haphazardly ban data centers for short-term populism points, we need to engage in the dozens of micro-debates around the complexities of data centers and AI to clarify benefits, study and reduce negative externalities, and advance real solutions to lead the AI landscape with democratic values at the forefront. This is an arduous task that requires more attention to detail than our politics has been able to muster for the better part of a decade, though, and time will tell if we can meet the challenge.

Cheap energy has always been good politics. Almost every American voter feels the pinch when heating and electric bills rise. Like the snake oil salesmen in the Old West, American politicians have always confidently sold too-good-to-be-true corporate concoctions and foreign policy poultices to cure our energy ailments.

The problem is that political slogans don’t capture the complex reality of reliably delivering energy to hundreds of millions of people on demand. For example, “energy independence” was once an evergreen applause line at the rallies of both major American political parties. As the governor of California in 1974, Ronald Reagan warned that failure to achieve energy independence would lead to “coercion and blackmail” by foreign adversaries. Thirty years later, in 2004, both Senator John Kerry (who would later become the Special Presidential Envoy for Climate in 2021) and his opponent, President George W. Bush, campaigned by promising to deliver energy independence.

It didn’t happen in 1974, nor in 2004. But by tapping into the popular and quintessentially American belief in self-sufficiency, the slogan of “energy independence” conveyed a tantalizing, albeit false, premise: if only America could wean itself off Middle Eastern oil, then our energy prices would automatically come down and our country would be somehow immune to the turmoil of foreign affairs.

Now, nearly half a century since the term was first in vogue, America has, against all odds, theoretically achieved energy independence. (In practice, technical refinery complications mean that we still need to effectively ‘swap’ our oil on the global market). We have become the world’s top oil and gas producer. But instead of getting cheaper, energy prices have stubbornly climbed higher for American households. Why?

Our last election was no different than 1974 or 2004 in this regard. “Unleashing American Energy” joined “energy independence” and “drill, baby, drill” as the latest slogan from the campaign trail. As a candidate in 2024, President Donald Trump promised that his policies would cut Americans’ utility bills in half within one year of his return to the White House. His administration has, uncreatively, worked to fulfill his promise by following a failed playbook for ramping up oil and gas production, even as the U.S. has already hit record levels of output.

But despite the President pushing for even more fossil fuel extraction by fast-tracking oil and gas development on federal lands and proudly unveiling plans for giant new foreign-owned gas power plants, most of us are paying more for our utilities one year later, not less. My own natural gas bill rose by more than 25% in February as an arctic blast of bitter cold descended on much of the U.S., sending temperatures to near zero for several weeks. But beyond just weather, the story is much the same across the Ohio River Valley, where electricity and natural gas prices have soared in recent years under both Presidents Biden and Trump. Even West Virginians, who live in the heart of Appalachian gas and coal country, have had to sacrifice other basic needs to keep their lights and heat on.

How is it that America can be producing more energy than ever before, yet our utility bills continue to rise? And, more importantly, what is the likelihood that this administration will be able to deliver on its lofty campaign promise by sticking with its current policies?

It needs to be said upfront that our energy system is almost infinitely complex. It’s so complex, in fact, that you could spend a lifetime studying it and still not understand all of the intricacies and idiosyncrasies. One of the reasons I enjoy being an economist, though, is that even the most complex systems have to stand up to logical scrutiny and the basic forces that drive our economy. The numbers, so to speak, still have to add up, and incentive structures that politicians create with regulation and tax policy still need to align with real human behavior.

And, from this economist’s point of view, there are several glaring reasons to be doubtful about the ability of Washington’s new energy policies, touted as “unleashing American energy,” to deliver lower bills, and thus more disposable income, for Americans.

1. Exporting more liquified natural gas (LNG) puts Americans in direct competition with foreign consumers for gas, raising prices.

The promise that we can simply drill and frack our way to lower energy prices relies on a bad assumption. While introductory economics suggests that drilling more and increasing the supply of fossil fuels theoretically reduces prices, that is only true if the demand for energy grows more slowly than the supply of gas. These simplified scenarios are illustrated in the figure below, which may give you flashbacks to (or nightmares about) economics class. Nevertheless, their explanatory power is important, and their lesson is critical to debunking this false promise.

In reality, demand is always changing simultaneously with supply. And demand plays a huge role in price determination. This is because 1) demand can (and often does) grow faster than supply chains can ramp up to meet it, and because 2) more drilling costs companies more money, which makes expansion profitable only when demand and prices are already relatively high or rising. This is made even more complex by the fact that oil and gas companies often operate their lowest-cost, highest-output assets first, making additional drilling marginally more expensive when they do have to ramp up to meet more demand. A nuanced, but important point that can be summarized by: drilling more is typically more expensive for companies.

Private energy companies simply aren’t going to voluntarily or preemptively choose Scenario 1 in the image above. If demand were hypothetically constant, “drill, baby, drill” would flood the market for oil and gas, deflate prices, and reduce the company’s own profit margins. Why would they do that?

Such a scenario would be a great windfall for us consumers, but in the real world, production decisions tend to lag price changes. Companies look to increase oil and gas production after demand goes up, which doesn’t really help the average household’s bill. A more realistic example is shown in Scenario 2 above, where demand growth outpaces supply growth and prices still increase, even with more drilling.

For real-world evidence, look no further than this winter, when natural gas prices have spiked despite a general upward trend in gross natural gas withdrawals (supply) over the last 2 years. In the graph below, I chart the daily Henry Hub spot price in blue from January 2023 to January 21, 2026, and then scale and overlay U.S. natural gas withdrawals in red on the right-hand axis.

The dotted trendlines for the data have a positive slope and suggest that both the supply of gas (either from production or storage) and the price of natural gas are increasing. This is precisely the opposite of the “drill, baby, drill” argument in Scenario 1 that politicians make to justify more fracking and drilling. We are pumping more oil and gas than ever before, yet prices have gone up, not down. Why?

Simply put, demand has gone up faster.

Many factors determine the demand for natural gas, but two likely culprits can be identified in the January 2026 short-term energy forecast from the U.S. Energy Information Administration (EIA), which predicts further rising prices and storage declines in the future.

Electricity generation and pipeline exports have ticked up, but the war in Ukraine and subsequent loss of Russian gas for Western European countries have helped to spur a surge in U.S. liquified natural gas (LNG) exports. The same snake oil salesmen who sold the promise of American energy independence are now selling that same American energy outside of America. And simply fracking for more gas won’t solve our affordability problems if the new gas is sold abroad.

During the Biden administration, pauses on new LNG export terminals were enacted, with President Biden explicitly noting at the time that the impact on energy costs for Americans was a factor that would be evaluated by the government during the pause. The negative environmental and climate impacts of the huge LNG terminals, such as in Cameron Parish, Louisiana, where projects have received billions in state and local subsidies, were also a major consideration in the pause. The Trump Administration has since reversed that pause, and LNG exports are expected to continue to rapidly grow. At a basic level, this means that despite U.S. companies producing more natural gas, Americans will find themselves competing for that new supply on the global market, with Europe and Asia poised to import more LNG than ever in 2026, according to Bloomberg News.

Competing in a global market for gas is problematic for U.S. households, since many of the countries buying American gas are already accustomed to paying much higher prices than U.S. consumers are. The figure below shows a sample of average natural gas prices per kilowatt-hour by country from the middle of 2025. If markets proceed toward an equilibrium “global price,” similar to how oil prices work, we would likely see the world price of natural gas settle in the middle between the U.S. price and the higher prices in Europe and the Asia-Pacific.

In other words, consumers in Europe and Asia could still pay more than what we pay in America, on average, and it would still be a price reduction from what they pay right now. Unless we expect private oil and gas companies to turn down customers willing to pay higher prices, Americans may see their costs bid up as export markets grow.

2. Other administration policies, like promoting data centers, enacting tariffs, and opposing clean energy, are creating headwinds for new capacity construction.

First, the proliferation of electricity-guzzling artificial intelligence (AI) data centers across the United States is increasing overall electricity demand and, thus, demand for natural gas used in power generation. Market forecasts have projected that the AI data center sector will continue to grow, with hundreds of millions of dollars in planned data center investment across U.S. communities over the next four years. This is happening even as local communities struggle with the negative consequences and the current lack of a profitable business model for AI companies.

For example, in Homer City, Pennsylvania, a former coal plant is being repurposed into a natural gas-powered data center complex, which has been heralded as an excellent energy investment with no evidence to suggest it will help lower energy prices for residents. And, despite promising over a thousand jobs, the reality is that even the biggest data center projects rarely employ more than one or two-hundred people once they are built. This has led residents to wonder whether the benefits of the Homer City project will actually flow out of state to large technology companies, in much the same way that the largest economic benefits of fracking have generally left the region. It’s worth noting that, if that is the case, all of the Ohio River Valley states currently abate sales and use tax for data center construction and equipment – a significant possible source of revenue for schools, roads, and public services. Abating local tax dollars for projects where the benefits largely leave the state is just not a sound economic development strategy.

Even if data centers are required to generate their own electricity “behind the meter” using private power plants, as the President vaguely announced in his recent State of the Union Address, they would still need to burn natural gas to make that electricity. Thus, even if data centers don’t directly or immediately increase electricity costs on the grid, their additional need for natural gas could still contribute to higher fuel costs for the rest of our power plants. We haven’t seen fuel costs drive up prices significantly yet, with the majority of current electricity price increases being related to transmission and distribution buildouts. But, in time, if the data center buildout materializes at a large scale, we could end up with even higher electricity rates.

Second, even if the future baseline grid load is met by natural gas, renewable energy and storage offers a potential pressure release valve for times of global volatility. While it is a popular political talking point to say that the costs of the renewable energy transition have generally caused higher utility prices, there’s little evidence to support the claim. While generation costs have been relatively flat, transmission and infrastructure buildouts, large capital investments in aging coal plants, geopolitical turmoil, and a lack of supplementation from renewable energy have largely created our region’s energy affordability crisis.

In fact, states with some of the largest shares of their electricity coming from renewable sources have maintained lower consumer prices than areas of the country rich in oil and gas, as shown in the figure below.

I caution that this feat isn’t replicable at the same cost everywhere; the Southwest is much sunnier, and the plains states are much windier than the Midwest, reducing the required capital costs with fewer panels or turbines required to generate the same amount of energy more consistently. A few things stand out, however. First, a few pretty populous states like Texas, Oregon, and Minnesota have achieved below-average residential electricity rates with above-average shares of their electricity coming from wind and solar. And Minnesota and Oregon can hardly be accused of being perpetually sunny places.

I also highlight California on the chart, in the interest of transparency. While it is the most populous state in the country with one of the largest renewable shares of electricity production, it has been far above the average U.S. electricity rate since the 1980s. Explanations for this trend that predate renewable energy adoption include aging infrastructure, wildfire mitigation costs, and pricing by privately owned utilities. It’s also worth noting that Californians also use less electricity than the average American, likely owing to some combination of the temperate climate and energy efficiency measures. I note this because I am not arguing that renewable energy is a “silver bullet” for energy prices or reliability, but it is generally cheaper to build in the short term and a strategic component of long-term price stability.

Renewable energy also has a feature that works to the advantage of consumers in a globalized economy: it is largely consumed locally. Electricity from solar arrays or wind turbines isn’t easily loaded on ships and sold on global markets like natural gas or oil. That means that, when it comes to renewables, Americans could truly be energy independent and wouldn’t directly compete in a global market with foreign consumers. It also means that the price of renewable electricity doesn’t have to factor in the billions of dollars in capital spent by companies to build expensive LNG terminals.

Recent empirical work has also found that increasing renewable energy’s share of power generation in importing countries reduces the overall global demand for LNG, suggesting that they are at least partial substitutes for consumers. This means that investment in renewable energy is another plausible mechanism to reduce overall natural gas demand and lower the price of the gas that America needs at baseline. By phasing out federal funding and tax credits for investments in clean power generation and decarbonization in last year’s One Big Beautiful Bill Act and by promoting the construction of new mega gas-fired power plants, the administration is kicking the ball into its own net, so to speak, when it comes to building an affordable energy future.

The final headwind that the administration has created for itself is the haphazard and broad implementation of tariffs. Tariffs raise prices by either making imports more expensive or by allowing domestic producers to raise their prices to match the new, higher import prices. The Trump Administration’s tariffs went into effect in a staggered fashion, largely in April 2025, May 2025, or August 2025, depending on the industry and country.

I noted earlier that most of the cost of electricity price hikes has been due to transmission and distribution construction—the transformers and power lines that process the electricity generated from power plants and deliver it to homes, businesses, and factories. The graphs below look at the producer price index (prices received by the seller) for three related industries: electricity transmission, control, and distribution, turbine generator sets, and construction material manufacturers.

In all three cases, large price spikes begin after April, May, or August in 2025, which generally corresponds with the administration’s tariffs taking effect. This suggests that the administration’s tariffs have at least partially contributed to our rising utility costs by making the construction of new gas generation and new transmission and distribution infrastructure more expensive. Evidence shows that these higher costs for utility companies are ultimately passed on to household and industrial consumers in the form of higher prices, fees, or riders.

In a sense, while the administration may say that they are pursuing policies to “unleash American energy” with their left hand, they are rapidly attaching new chains with their right hand through a variety of misguided policies. These include:

• Promoting LNG export terminal expansion to sell more natural gas abroad.

• Encouraging data center construction by tech companies, which compete privately for natural gas, even with behind-the-grid electricity generation.

• Ending incentives for investment in less-volatile, cheaper, and locally consumed renewable electricity.

• Enacting global tariffs that raise the costs of the materials and equipment needed to grow and expand our electric grid.

Combined, these policies mean that even if we “drill, baby, drill,” the gas that we produce will very likely either be sold on a more expensive global LNG market or the plants, transformers, and powerlines needed to convert it into usable electricity will cause more prices increases, offsetting the effects of extra production.

The truly bleak scenario is the one where these forces all work simultaneously, perfectly aligning in the future to increase gas costs, raise construction costs, delay timelines, and close the door on alternative, supplemental sources of local clean energy. If you’re a private oil and gas company or a shareholder, this may be just what the doctor ordered, but for the rest of American households and businesses, this policy concoction will likely become more poison than cure, leading to even higher utility bills in the future.

I’ll provide an overview followed by a few quick personal thoughts on some industry trends I’ll be monitoring over the coming months.

First, I’ll let the BLS data speak for itself:

Now, a few key storylines I’m watching:

1. The news media have correctly highlighted that healthcare and social assistance were the biggest drivers of January’s net-positive job growth. This is no surprise, given that the healthcare industry overall continues to face drastic national labor shortages of doctors, nurses, and other providers with large numbers of job openings.

2. Manufacturing job growth was slightly positive following an uptick in factory orders coming out of December. This follows 26 months of decline in which the U.S. economy has shed over 200,000 manufacturing roles since 2023. We haven’t seen the kind of manufacturing “renaissance” from tariffs that was promised last April on ‘Liberation Day,’ although I suspect this month’s number will be used as a political talking point to suggest that tariffs are starting to work. I’ve been an outspoken critic of the chaotic and haphazard implementation of President Trump’s trade policies, so I’ll be monitoring this sector closely in the next few months to see whether January is the beginning of a new trend or just a blip from supplier reorders after the holiday season.

3. Although some analysts are wish-casting a small impact from artificial intelligence (AI), the impact is only likely to increase as the year goes on.

   Yes, the top-line jobs number was positive. But healthcare and services are much harder to automate than, say, the Information and Financial Service sectors that lost jobs in January. We’ve seen big tech companies queue up more layoffs for 2026. In late January, Amazon announced 16,000 layoffs as part of efforts aimed at reducing corporate bureaucracy. It shed about 14,000 roles last October in a previous round of layoffs. Other financial and technology companies like Citibank and Angi have announced coming layoffs, citing both AI directly and a need to carefully assess needed skills moving forward. Meta has plans to lay off approximately 1,500 workers in its virtual reality division as it shifts resources toward investments into datacenter and AI buildouts.

   Microsoft’s AI boss has recently predicted the mass automation of white-collar jobs, and the reveal of Claude Opus 4.6 by AI company Anthropic rattled the stock market earlier this month; the mass loss of software development jobs is perceived as a real risk to previously stable career pathways. In a recent World Economic Forum survey, 41% of responding companies said they planned to reduce their workforce due to artificial intelligence by 2030, as AI capabilities rapidly advance from chatbots and content creation to completing and automating multi-step coding, writing, and organization tasks.

4. The government job loss this month (~42k) was driven primarily by ~34,000 lost federal jobs as employees who accepted deferred resignation options from the Trump administration fell off the payroll. Although it’s politically popular to criticize bloated federal spending, the federal workforce supports a huge number of jobs both directly and indirectly all over the country. Every federal employee in a county largely lives locally, pays bills locally, and spends their money locally at other businesses. Economists call this the multiplier effect, and as we see large-scale federal workforce reductions, there will be negative ripple effects in unexpected places.

In short, although the headline jobs number was positive, the job growth last month was driven by healthcare and social assistance, and shows some concerning underlying trends in sectors that have traditionally employed recent college graduates. I’d still characterize this job market as largely frozen; it’s possibly the worst time to be a new, non-healthcare college grad seeking an entry-level position since 2009. That serious labor market friction has important consequences for the economy as a whole and could affect the political environment in the short-term as we head into this year’s midterm elections. I’ll be monitoring these “easier-to-AI” sectors closely throughout this year.

For more discussion on the AI-reckoning that could be coming for white-collar jobs, and how that could dramatically impact the economic and political environment, Ryan Zickgraf has an excellent new piece here that a colleague forwarded me and I’ve subsequently shared widely.

But it’s become much more personal as I watch heavy equipment tear up the earth, lights that could drown out the starry country sky, and hundreds of trucks and machines whir and roar in a 146.8 acre farm field just a few miles north of my hometown of Bowling Green, Ohio. Located just off of interstate 75 in Middleton Township in Wood County, the field sports an iconic white barn painted with a bright yellow smiley face that says “Hi! Joe and Gertie” that my school bus used to regularly pass by on field trips.

Why has this AI data center come to my hometown?

Even I’m not totally sure. Meta’s site says “Middleton Township stood out as an outstanding location for Meta to call home for a number of reasons. It provides good access to infrastructure and renewable energy, it has a strong pool of talent, and the company has found a great set of community partners that have helped us move this project forward.”

A seemingly a polite way to say, “there was cheap land and infrastructure for us to use.” And the statement about “access to renewable energy” is confusing, given that we now know that the data center is being powered with a behind-the-meter private 350 MW single cycle natural gas-fired power plant.

Meta’s location reasoning appears even less sincere when you click over to its other data center site pages. There, you can read a similar (or even an exact copy) of the same paragraph when they discuss other small communities across the country. I’ve copy and pasted a small sample is below:

• “Rosemount, Minnesota stood out as an outstanding location to call home for a number of reasons — it provides good access to infrastructure and renewable energy, it has a strong pool of talent, and we have found a great set of community partners that have helped us move this project forward.”

• Indiana, and Jeffersonville in particular, stood out as an outstanding location to call home for a number of reasons — it provides good access to infrastructure and renewable energy, it has a strong pool of talent, and we have found a great set of community partners that have helped us move this project forward.

• “Richland Parish is an outstanding location for Meta to call home for a number of reasons: It has great access to infrastructure, a reliable grid, a business-friendly climate, and wonderful community partners that have helped us move this project forward.”

It seems quite dystopian to me, actually, to read nearly identical corporate phraseology over and over on a tech company website and knowing that behind each bland, vague, repeated paragraph there is a real place like the one where I grew up with real residents, real children and families, and a rich local history and fierce community pride.

But like most things in America, it seems that these communities are now viewed as commodities — resources to be used in the pursuit of growth and profits. And often their own elected officials appear eager to sell them in the name of ‘economic development.’ So eager, in fact, that the community leaders in my town subsidized Meta’s $800 million data center investment. In 2023, Wood County Commissioners approved a 75% property tax abatement for 15 years for the project granted to a company developing the site for the Meta datacenter called Liames, LLC. Although local public school districts like Otsego and Eastwood have negotiated side payment agreements, that money allegedly won’t start materializing until at least 2030.

The corporate giveaways don’t stop there, though. Ohio taxpayers helped fund over $2 million in roadwork partially to “accommodate entry and exit to the Liames LLC site from State Route 582” where an estimated 1,000 vehicles a day coming and going at peak construction. A tax increment finance (TIF) agreement is in the works, which would be another 15 year tax subsidy granted by Wood County to help with project capital costs. Seemingly, this would grant a tax abatement of some sort to the data center property for 30 years in total. And while the exact state exemption details and numbers for the Wood County data center aren’t publicly known yet, Ohio at large was estimated to grant data center projects over $123 million in state sales tax exemptions in just 2024 and some datacenter projects claim job creation tax credits, exempting 75% of their state commercial activity tax for up to 15 years.

All of this possible subsidization, seemingly in the name of creating what Meta promised will be 100 permanent jobs at the site long term. You’d be forgiven, like me, for wondering whether the millions of tax dollars potentially being abated along with the state infrastructure money might have been better spent directly supporting local residents, entrepreneurs and small businesses, instead of first passing county money through a 1.7 trillion dollar company and hoping that good jobs come out the other end. Economic studies have shown that small businesses generally support more net job creation in the local economy.

New information to the public seems to come on delay.

Despite giving away local tax revenues and state taxpayer dollars and despite disrupting county residents and scenic farmland with more traffic, light, and noise, the real kicker came when the project filed paperwork to build a single cycle 350 megawatt natural gas plant to power the electricity-hungry datacenter.

Despite all the talk about “renewable energy” being a reason for the data center’s location, a 350 MW natural gas plant would represent a huge new investment in fossil fuel generation capacity. If we (very) conservatively assume that roughly 200 homes at peak demand can be powered by 1 MW of electricity, then Meta’s proposed power plant alone would be capable of powering 70,000 homes. The 2024 US Census estimates are that Wood County, OH only has over 58,000 homes, in total. In other words, this isn’t a small thing. The datacenter gas plant is big enough that it could hypothetically likely power every house in the county if it were on the grid. This is far more power than the array of solar panels also planned for the site.

This fossil fuel build up for data centers isn’t just occurring in my hometown. Global Energy Monitor, a nonprofit organization that tracks oil and gas developments, found that in 2025 the U.S. tripled the capacity of gas-fired power plants in planning or production. In total, if all of that new capacity actually comes online, it would represent 252 gigawatts of new fossil fuel based production. The U.S. currently has roughly 565 gigawatts of natural gas fired plants online, in total. They find that more than one-third of this new planned capacity is slated for behind-the-grid datacenter projects like the one near Bowling Green.

I won’t fully dive into the energy affordability crisis we are experiencing in Ohio, with electricity rates rising as much as 44% for some customers. But I do want to note that the other two-thirds of the planned gas generation capacity could have real consequences for our utility bills. While fuel costs may represent a portion of recent price hikes, construction of new plants to help meet growing demand along with the transmission, and distribution infrastructure are usually passed onto consumers in the form of access fees and riders. This can directly increase household bills. Although the project in Bowling Green is behind the grid and won’t directly compete with local customers, that also means that the power generated at the site won’t be able to be sold back onto the grid to help increase supply or lower prices, either.

And you might say, “okay, well, that’s fine. They’re paying to build their own power plant and so it doesn’t help or hurt our local electricity bills.” Which would be a fine interpretation, if there weren’t nonmarket externalities that might negatively effect the community.

The costs of net-new air pollution for residents should be considered.

Here, we arrive at the crux of my concern. Air quality is what we economists consider a “public good”, which is something that we all collectively share and therefore have a collective responsibility to manage and maintain (hence, the name of this newsletter). Nobody owns the rights to the air we breath. But the data center site in Bowling Green appears to be planning to use a single-cycle turbine system, which is less efficient at converting fuel into electricity and, consequently, may need to burn fuel (and therefore emit) more often.

The paperwork, which was filed with the Power Siting Board of the State of Ohio and was subject to an automatic approval process on February 3, 2026 with no required public hearing under Ohio law, reported that, “Regulated pollutants that would be emitted by the facility include particulate matter (PM), particulate matter less than 10 microns in size (PM10), particulate matter less than 2.5 microns in size (PM2.5), nitrogen oxides (NOX), sulfur dioxide (SO2), carbon monoxide (CO), volatile organic compounds (VOCs), total hazardous air pollutants (HAP), formaldehyde (CH2O), and carbon dioxide (CO2).”

I’ll provide a quick rundown from the U.S. EPA:

• Particulate matter, particularly 2.5 microns, is the leading cause of haze in the U.S. and can exacerbate issues for people with lung diseases or chronic respiratory conditions like asthma. The U.S. EPA notes that these particles can travel long distances in the wind and settle on the ground or surface water, leading to acidification or damaging sensitive farm crops or forest plants.

• NOx are a class of nitrogen based molecules. The U.S. EPA notes that “breathing air with a high concentration of NO₂ can irritate airways in the human respiratory system. Such exposures over short periods can aggravate respiratory diseases, particularly asthma, leading to respiratory symptoms (such as coughing, wheezing or difficulty breathing), hospital admissions and visits to emergency rooms.” NOx can also interact with atmospheric molecules and lead to acid rain.

• Volatile organic compounds (VOCs) are chemicals with low solubility and high vapor pressure, found as fuel byproducts, the fumes on common human-made substances like paint or lacquers or pesticides. Some varieties include chlorine-based compounds, like chloroform and other organic compounds like benzene and formaldehyde. Different VOCs have been found to have short- and long-term health effects, with some appearing as carcinogens (cancer-causing agents) animal studies.

• Hazardous air pollutants (HAPs) are pollutants that are either known or suspected to be linked with cancer or other serious human health effects, such as reproductive effects or birth defects, or adverse environmental effects. Examples provided by the U.S. EPA include asbestos, dioxin, toluene, and compounds that contain heavier metals such as lead, chromium, mercury, and cadmium. (A full list of 188 current HAPs identified by the EPA can be found here.)

• Carbon dioxide is a known greenhouse gas, contributing to climate change and shifting global weather patterns.

The paperwork notes that the planned plant would be classified as a major emission source under the Ohio EPA Title V Operating Permit program. To be classified as a “major emission source” under this program, would mean that a plant’s potential maximum emissions meet at least one of the criteria below:

• 100 tons per year or more of any one regulated pollutant [particulate matter less than 10 microns in diameter (PM10); nitrogen oxides (NOx); sulfur dioxide (SO2); carbon monoxide (CO); volatile organic compounds (VOCs); and lead (Pb)]

• 10 tons per year or more of any one hazardous air pollutant (HAP)

• 25 tons per year or more of any two or more HAPs — U.S. EPA currently lists 188 HAPs (PDF) in Section 112 of the 1990 Clean Air Act

I want to be fair and accurate, here, and avoid any impression that I’m trying to claim that the gas plant will be spewing uninhibited raw pollutants into the air or cause hysteria. That is not the case.

The report on the data center site directly notes that “Uncontrolled emissions of regulated pollutants from select turbines are expected to be greater than 10 tons per year and may be required to meet Ohio EPA’s best available technology (BAT) mandates.” This means that the gas plant turbines would be fitted with with a selective catalytic reduction (SCR) system to reduce emissions of NOx through a series of chemical reactions that end with nitrogen gas and water as the end products that are emitted from the stack into the air. Each gas turbine would also be likely equipped with oxidation catalysts to reduce emissions of CO, VOCs, and formaldehyde. Studies have shown that these types of mitigation technologies have been able to keep hazardous pollutants likes VOCs and HAPs under legal limits at other gas-fired plants.

But, I do think it’s important to question whether the benefits to the community outweigh the costs on the whole. Pollution reduction below legal limits does not equal pollution elimination. There is still, very likely, going to be a net increase in air pollution above the prior status quo, when the site was a farm field, to say nothing of truck engines and generators during construction. And some health studies have found higher NOx and and particular matter emissions near power plants to be correlated with higher emergency room visits among those with respiratory conditions or the elderly, which could be real costs that translate into lost hospital and urgent care time and resources and health insurance premiums. Residents, in my view, have a right to ask questions and fully understand potential risks from breathing in new molecules in their air, even if those new molecules are under the limits set by legislators.

Additionally, there is little mitigation for carbon dioxide. That means that the carbon footprint of the plant will be quite large, contributing to more greenhouse gas emissions and potentially accelerating the effects of climate change and irregular and sometimes extreme weather patterns.

Do the benefits outweigh the costs for local residents?

The main local benefit, from the currently available information, seems to be the roughly 100 promised jobs at the site long term and the short-term construction jobs (thought its not clear what percentage of those are being taken by Wood County residents.) And then, down the road, the associated income and sales tax associated with the spending those 100 employees do in the local economy. It’s up in the air how much money from the project stays and circulates locally and how much flows back out, extracted along with the data, into the rest of the country and world.

The project also really needs to be considered in context of the AI boom or so-called “bubble”. And, like most booms, there’s always a looming fear of a coming bust. It remains true that no company in America is yet profiting purely on its AI work. The predicted boom for business productivity has yet to materialize across many sectors of the economy. But companies like OpenAI, the owners of ChatGPT, are burning through cash spending hundreds of billions of dollars in data center buildouts, trying to win an AI arms race against behemoths like Microsoft, Google, and Meta who generate revenue from other sources like ads. OpenAI announced plans to test advertising in ChatGPT in January.

And the data center race is hard one to win, since scaling up an AI product to more users requires even heavier investment in expensive capital equipment like computer chips, data centers to house them, electricity to power them, and water to cool them. And even if a particular company “wins” the data center construction race now, chipmakers like NVIDIA and TSMC are constantly innovating and the hugely expensive AI chips may only last for between 5 and 10 years, likely requiring billions in ongoing investment in new technology much more frequently to keep up. Given that Wood County’s tax incentives can potentially last for 30 years, understanding the full picture of the risk and potential profitability (or lack thereof) of AI and data center business models is critical due diligence for local leaders to do.

After considering the potentially millions in taxpayer subsidies, potentially millions in lost tax revenue, and the potential environmental and air quality changes, its fair to ask whether the benefits to the local community really do outweigh the various financial and hidden costs. And to ask whether the benefits will continue and data center employment will remain resilient to market changes for the lifespan of the subsidies. These are part of a bigger question: who benefits the most from the large-scale buildup of data centers across the rural areas of our country? Other communities should beware of a pattern emerging where most of the pollution stays but the benefits flow out of these communities and back to the subsidized tech giants. Then, the data center buildout will start to seem more exploitative than advantageous for small towns across the country.

Trump is right; $600 billion is indeed a very big number. And announcing massive, impressive investments into U.S. tech facilities is all the rage in Silicon Valley and on Wall Street. Emboldened by the widespread adoption of artificial intelligence (AI), all of the big players — Apple, Google, Intel, Amazon, Meta, Microsoft, and OpenAI—have lined up PR for huge promises to construct data centers and tech manufacturing sites across the country. Many of these are accompanied by large public tax incentives and subsidy packages. Zuckerberg’s own comments were reminiscent of another massive surprise investment promise when Trump announced a $500 billion joint AI investment project between OpenAI, Softbank, and Oracle on the day after his inauguration. Almost nine months later, that venture, called Stargate, has so far launched a site in Abilene, Texas, for which it has secured roughly $15 billion in funding — only about 3% of its total announced investment.

That’s not to say companies aren’t spending at all. In 2024, big tech companies spent roughly $180 billion on data center construction. This investment comes with good reason: the demand for data center services remains high relative to supply, which is driving rent costs up and hamstringing growth right as companies are in a race to dominate the relatively new markets for AI. The map below uses announcement data directly from four of America’s largest technology service companies (Amazon, Google, Meta, and OpenAI (Stargate)) to illustrate recent major data center announcements that have occurred just since the start of 2024.

The data for this map comes directly from the four major companies’ PR announcement pages and only includes projects for which the companies published announcements during 2024 or 2025. (Google and Meta should actually be applauded for maintaining maps of their proposed investments alongside currently operating sites.) The data excludes vague investment promises for which a specific location has not been announced (i.e., it only considers OpenAI’s commitment to be $15 billion rather than $500 billion since, at least publicly, $485 billion remains unfunded or unspecified.)

Altogether, the announcements and groundbreakings in 2024 and 2025 total $131.4 billion in data center investment by these big four companies. Not all of that has actually been spent, since not all of the projects have actually broken ground. This number also doesn’t fully align with the $180 billion industry estimate cited above, probably since a) I don’t include data centers from smaller companies, and b) data center construction takes time, and spending on previously announced projects probably carried into 2024. I’m not aiming to be comprehensive, but am simply trying to underscore that in the prior 2 years alone, there has been a large amount of money promised by tech companies to communities across the country for data center construction. And all of that still pales in comparison to the grandiose announcement Zuckerberg made to Trump at the White House.

A few things I take away here:

1. I’m not denying that companies are very much pursuing data center expansion and, in many cases, are breaking ground on these sites. There is some justified concern about whether the data center fad could wear out if the AI gold rush stops… well, rushing. This concern has been fueled by reports like one last spring that Amazon was pausing some leasing negotiations, but I see no real evidence (at least yet) to doubt that, in general, these announced data center projects aren’t proceeding.

2. But most of these announcements used boilerplate PR language. For example, Meta used nearly identical wording promising $800M in investment and 100 jobs for each of its sites in Bowling Green, Aiken, Montgomery, Jeffersonville, Rosemount, and Cheyenne. (See examples below.) Whether or not data centers—which are not labor-intensive to operate once the servers are up and running— actually deliver much in terms of permanent job creation and income for local residents is very much up for debate. Their net economic benefit is especially in question if, like in my home state of Ohio, they get public subsidies from taxpayers.

   Alas, that’s an analysis for a future post. At a minimum, I think Meta’s PR folks are being somewhat lazy here, and the announcements imply that Meta didn’t bother to conduct unique economic impact studies for each community, which differ in their regional and local economic conditions.

   

   And the final takeaway…

3. Zuckerberg’s spontaneous promise to Trump that Meta is investing $600 billion by 2028 is absolutely bonkers.

Let’s dig in on #3.

I’m not calling Zuckerberg a complete liar. I do believe Meta is increasing its investment in data centers. It would be corporate malpractice for one of the nation’s largest technology and social media companies to NOT increase its access to AI server capacity. But I think putting an unrealistically aggressive timeline of 24 months on that investment (which coincidentally falls before the next presidential election) is where the hot mic promise starts to become an unbelievable statement aimed at an audience of one in the White House.

A $600 billion investment by just Meta in the next 2 years would be an increase of over 330% of the total announced and sited data center investment by America’s four flagship tech service companies in 2024 and 2025. Using the average investment of $5.7 billion per project from the map data above, Zuckerberg’s announcement would mean 105 new data center projects in the next 2 years. In 2024 and 2025, the four companies combined to publicly announce 22 projects, and Meta itself features 7 investments on its spotlight newsfeed. This would mean that Meta is planning to make a ~1500% increase in the next 24 months over what it announced in the prior 21 months, assuming each site carried at least that average datacenter project cost.

The promise is just too large, too fast to be believable. Most of us are not Silicon Valley CEOs and are used to thinking in hundreds or thousands of dollars; that makes the scale of these economic development promises hard to really fathom. To put the promise in context, $600 billion would make Meta’s data center announcement the 15th-largest state economy in the country by GDP, sitting between Michigan ($706 billion) and Colorado ($553 billion). GDP measures the final value of all goods and services produced in the state for an entire year. In other words, the Zuckerberg off-the-cuff statement means that in the next 24 months, Meta will invest more money into data centers than all of the workers and companies in 35 other states each produce in a year — which, it’s worth repeating, would also be a 330% increase in the total spent by all of the big tech companies on data centers in the past 21 months.

We’ll have to wait and see whether Meta delivers on this massive investment promise in the next 2 years or whether Zuckerberg’s hot mic statement gets walked back. Personally, I chalk it up to another CEO wanting to announce another impressive, giant round investment commitment for good PR and political favor. The proof will be if the rubber — and money — ever actually meets the road.

A brief review…

In January 2022, U.S. chipmaker Intel announced that it would be building its ‘most advanced’ semiconductor manufacturing facility in Ohio. Semiconductors, or ‘chips’, have been a hot button topic in the U.S. as geopolitical tension continues to rise in Asia, where the vast majority of chips used in U.S. consumer electronics are currently produced by companies such as Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung.

The announcement of Intel’s $20 billion facility in the Columbus-region was heralded by both Democratic President Joe Biden and Republican Governor Mike DeWine as a landmark event that would shepherd in a new so-called “advanced manufacturing” revolution and bring a booming tech economy to the Midwest. Shirts even sprang up at local stores emblazoned with the term "Silicon Heartland”. But, like a Cleveland Browns’ quarterback jersey, it seems that “Silicon Heartland” is just another name in a long list of places around the world who tried —and failed— to replicate the economic development strategies of Silicon Valley in California.

Intel’s planned factory in Ohio is heavily subsidized. The state signed an agreement with Intel in 2023 to provide $600 million in public funding for the project. But that doesn’t even include over $400 million that the state’s taxpayers are putting up for roads and infrastructure around the site nor does it count the $300 million that the state is spending to build a water reclamation facility. In July 2024, over 200 farmers and local business owners showed up to a hearing to push back on a proposed wastewater treatment plan for the region to accommodate Intel’s plant. Together, this total of $1.3 billion in direct and indirect taxpayer subsidy doesn’t even include the property tax exemptions at the county or local level. The City of New Albany approved a 30-year, 100% tax abatement for Intel in June 2022. JobsOhio, the state’s quasi-private economic development organization, has awarded intel over $20 million in grants. JobsOhio, notably, is funded by the state’s tax on alcohol sales and its not entirely clear how taxpayers in Cleveland, Youngstown, Toledo, or Cincinnati directly benefit from a heavily tax-exempt Intel plant outside of Columbus. But I digress…

At the national level, Chips Act, passed by Congress and signed into law in August 2022, provides $39 billion in federal dollars for subsidies to chip manufacturers as well as 25% federal tax credits for manufacturing equipment. Intel’s portion of the grants, according to the Department of Commerce, total $11.5 billion for its projects across the country.

As an aside, it’s equally important to note that, despite domestic semiconductor manufacturing being often referred to as a “national security issue”, more U.S. dollars are flowing to foreign companies Samsung and TSMC than to Intel. Furthermore, China still dominates the market for the rare earth metals and minerals that go into semiconductor production. Importing the ingredients from China just to ‘cook’ the chips here— on the taxpayer’s dime— doesn’t solve any of the real national security issues.

All told, Intel’s $20 billion “investment” in Ohio looks to be costing taxpayers somewhere around $7 billion, give or take, once you consider local, state, and federal subsidies, grants, favorable loans, exemptions, and credits. And it will continue to cost local taxpayers more as they figure out how to absorb and pay for new infrastructure demands and accommodate increased traffic; Intel isn’t going to build new highways, airports, transmission lines, and sewer systems out of its own pocket. Local residents and small businesses will compete with Intel for land, materials, and labor. Young farmers east of Columbus have already faced rising land costs as speculators bid up prices, squeezing their ability to expand (a phenomenon economists call ‘crowding out’). As realtors hopefully eyed a housing boom, the frenzy around Intel has done nothing to help the homeownership affordability crisis in the region, although current property owners looking to sell have certainly benefitted from the hype.

When I present to local audiences throughout Ohio, I often ask “how would you allocate $7 billion to help make Ohio a better place for families and young people to live and work?” Nobody ever says, “give it all to one company for one factory in one part of the state.” And, as I often tell folks, when Joe Biden and Mike DeWine both politically agree on the same thing, publicly, everyone else should be skeptical.

Intel’s technological (and financial) woes

Now, you might be asking, “why is subsidizing an advanced technology industry a bad thing? Isn’t it in our national security interest to make our own semiconductors?” The answer is, yes. But the problem is that Intel is not a good company to bet on when it comes to the technology itself. Once an industry titan, the company’s struggles over the past decades have put it at a strong disadvantage as compared to its competitors. Taking a look at the company’s stock price, investors feel the same way. When the Ohio plant was launched, Intel’s stock price sat near $55 per share. As of this writing, it is less than half that. A recent Wall Street Journal article revealed that Qualcomm had approached Intel about a takeover..

The issue with all of this is that Intel, despite an aggressive turnout strategy, has been left behind by global tech developments. More than one Ohioan has lamented to me lately that they wish Nvidia — a chipmaker whose chips are considered industry leading technology for generative artificial intelligence (AI) — had been the one to invest in Ohio rather than Intel. Nvidia’s stock price was just under $30 at the time Intel announced its Columbus factory. As of this post, it sat at over $140 per share and has been a Wall Street darling for the past two years. It is also important to note that Nvidia is a chip design company — they outsource the actual manufacturing of their technology. TSMC is the primary manufacturer of Nvidia chips.

In the race to supply data centers run by Amazon, Google, and Meta with the most advanced chips as demand for streaming, cloud services, data storage, and computing power grows, Intel has been losing. Their CEO had hoped to not only invest and use government support to grow their own chip business but also break into the foundry business, enabling them to manufacture chips for designers like Nvidia themselves.

The problem is that the name of the game in semiconductor manufacturing is making things smaller and smaller. Fitting more transistors onto a chip increases its computational power and speed. There are entire engineering textbooks covering why and how, but suffice to say for now that Intel now lags its major competitors, who produce smaller, faster and more powerful chips. For example, TSMC’s most advancec chip manufacturing tech is at the 3 nanometer (nm) level. Intel is currently still working with 5nm tech and just rolling out 3nm chips soon. In this industry, several years of lag as tech customers seek faster, more efficient solutions, can feel like being decades behind. And, as a result, competitors like TSMC have grown their customer base in the foundry market on the back of more advanced technology. Intel hopes that the new plants it is building will allow it to catch up and siphon U.S. customers away from foreign chip makers. It is a big bet for the federal government to make with taxpayer money. And, if it pays off, Intel shareholders stand to benefit far more than the average U.S. citizen.

So far, the results have not been promising. In July, Gina Raimondo, the U.S. Secretary of Commerce urged big tech company executives from Apple, Google, Amazon, and AMD to buy more U.S. chips, including from Intel. They told her what is obvious to anyone who pays attention: tech companies are not going to buy inferior technology just because it is made domestically and the government invested in it. In August, Intel announced it was laying of 15,000 workers as part of a plan to save $10 billion while it waits for new facilities to come online. In October, the company announced delays to its Ohio site coming online.

In the final days of the 2024 Presidential Election, President-Elect Donald Trump panned the CHIPs Act. In an interview with popular podcaster Joe Rogan, Trump noted that “We put up billions of dollars for rich companies to come in and borrow the money and build chip companies here, and they’re not going to give us the good companies anyway.” Instead, Trump claims that tariffs alone will incentive foreign market leaders in the chip industry to locate their manufacturing in the U.S. This claim is also dubious, and perhaps deserves its own future post.

For now, the Biden White House rebutted candidate-Trump’s claims. “In the two years since the CHIPS Act was passed, the U.S. semiconductor industry has created 115,000 jobs and had more investments in factory construction than it did in the previous 24 years combined,” Natalie Quillian, the White House deputy chief of staff, was quoted saying in the New York Times. “We’re confident in the success of the CHIPS and Science Act.”

The only problem? The semiconductor industry hasn’t created 115,000 jobs since late 2022 (remember, Intel announced 15,000 layoffs…). This is incredibly easy to fact check. It’s not clear how the White House got their numbers— they didn’t say. Presumably they are trying to count all of the construction and auxiliary jobs for the various facilities around the country that the legislation subsidizes. It’s important to note that while those jobs are important for workers, they are A) largely temporary and B) do not offer the same pay and longterm compensation nor encourage tech workers to in-migrate to the region — which would be the key driver of any local economic growth that occurs.

Direct semiconductor manufacturing and equipment manufacturing employment is down since the CHIPs Act passed.

Data from the U.S. Bureau of Labor Statistics Quarterly Census of Employment and Wages (QCEW) shows that, since 2001 U.S. Semiconductor manufacturing has declined by over 38%, from 643,352 employees to 393,396. Manufacturing of semiconductor machinery is up by roughly 6,000 employees in the same time span. Since the start of 2023 after the CHIPs Act’s passage, U.S. employment in semiconductor manufacturing is actually down.

Even without downloading and analyzing the QCEW data, a simple Google search of the Federal Reserve bank data would have visualized this. The New York Times did not ask the White House for evidence of the “115,000 new semiconductor industry jobs”.

Since his election on November 5th, President-Elect Trump and U.S. House Speaker Mike Johnson have walked back their talk about a full repeal of the CHIPs Act. Uncertainty abounds, especially for local officials in Ohio and in other states where investment has been promised. But in reality, Trump’s initial promise may have actually been the right instinct — even if replacing the legislation with new tariffs is also a misguided solution.

Policymakers must become more educated and informed about the technology that actually underpins so much of the modern economy. The same playbook of throwing billions of taxpayer-dollar giveaways at the biggest name companies who promise the most domestic job growth will simply not pay off if those companies can’t deliver the actual cutting-edge technology that the market demands.

The result is an unmitigated policy disaster for climate change and clean energy, the future of the Supreme Court, European stability, and the protection of minority and women’s rights at the federal level. It may also become an economic disaster, depending on how many (and how haphazardly) of his campaign promises Mr. Trump attempts to fulfill. If your social media feeds were anything like mine these last two days, they were full of progressive and liberal friends “disappointed but not surprised” that this has happened… again. Others were in full panic, dread, and despair, ready to “fight” and “resist” Mr. Trump’s democratically-given second term. Blame was quick to be cast on the Democratic Party’s messaging and Harris campaign’s strategy. More in-fighting, hand-wringing and soul-searching is sure to follow for America’s new minority party in the coming weeks.

But here is the cold, sobering, and harsh reality: at some point in the last 15 years, the Democratic Party stopped being democrats.

So far, little evidence exists that Kamala Harris’s traipsing around Pennsylvania and Wisconsin with Liz Cheney changed any voters’ minds. Ms. Cheney was formerly the third most powerful Republican in the House and is the daughter of former Vice President Dick Cheney — a chief architect of America’s misguided war in Iraq and boondoggle in Afghanistan — both of which cost thousands of American military lives and millions more civilian casualties. These ultimately resulted in the birth of ISIS and Joe Biden’s eventual withdrawal from Afghanistan, returning it to the Taliban the same as in 2001. Ms. Cheney’s involvement, often heavier than Harris’ own VP pick, is shocking for a party whose biggest star — Former President Barack Obama — was nominated primarily because of his staunch opposition to Ms. Cheney’s father’s wars. Now, as Mr. Biden is unable (or unwilling) to curtail Israel’s use of American-made bombs on Gaza’s civilians and as Mr. Trump has claimed victory partly on his promise of “no more endless wars”, the Democratic Party has somehow become the party of the military industrial complex. The party’s paltry imitation of George W. Bush’s Republican party, however, seemingly comes without any natural base of support from…Democrats.

Ms. Harris’ campaign began joyfully. She drew praise for picking a progressive blue state governor and football coach as her VP, eschewing other establishment picks and presidential hopefuls with Wall Street donor ties. Her running mate highlighted his free school lunch program, his climate actions, and his protection of LGBTQ and women’s rights in Minnesota in the weeks leading up to his selection. “Oh yes, I’m such a socialist monster, feeding kids so their bellies are full so they can go learn,” Mr. Walz said on TV. It was a good comeback to tired and constant Republican attacks that Democrats are “communists and socialists”. But then, the Harris campaign seemingly chose to never really highlight Mr. Walz's progressive credentials again. He barely mentioned them in his lone debate with Trump’s VP pick, JD Vance.

Instead, Ms. Harris’s campaign slipped into the same, haggard routine that had plagued the candidacy of Joe Biden: trying to convince Americans that electing Donald Trump would be the end of our entire democracy. She backpedaled her opposition to fracking to appeal to voters in Pennsylvania and promised to become “tough on illegal immigration” while running ads low on substance and high on fear. Mr. Trump, by contrast, also ran bombastic and untruthful ads but focused his swing-state ads largely on immigration and rising grocery prices. As has often been the case in his political career, Trump occasionally diagnoses a problem correctly and then offers the entirely wrong prescription to cure it. The version of the future he painted if Harris were to win the election was equally bleak and hateful, but ultimately more believable to the average voter. This election was the third in a row that national democrats have called “the most important in our lifetime.” Voters should be forgiven for not believing them, even if they’re right.

The Democratic Party must use this moment as a reflection point. Many have mistaken the core lessons from Mr. Obama’s successful campaigns in 2008 and 2012 to be that a highly “message tested” pitch and knocking on as many doors as possible is the secret to winning. Ms. Harris’s failed campaign, despite a ‘ground game’ arguably stronger than Mr. Obama’s, shows that not only do you have to reach the voters — but you have to have something positive to offer them when you do. It is not enough to just be against the other side. Your campaign must be inspiring and have soul. The message and the candidate must be authentic.

Democrats have controlled the White House for almost 75% of the last decade and a half. In that time, monumental legislation has passed, including a slate of progressive climate and industrial policy under Mr. Biden’s infrastructure bill and Inflation Reduction Act. But, in reality, despite 12 years of Democratic presidencies, I can think of one—maybe two— true changes that have trickled down to the average working class American’s kitchen table. The largest came in 2010 — nearly 15 years ago — when the Affordable Care Act guaranteed health insurance access for Americans with preexisting conditions. The policy became so wildly popular that Republicans were politically unable to repeal it when they last controlled the whole of government in 2017.

In this campaign, such vision was lacking. Where was a commitment to end violence abroad and find resolutions to the conflict in Ukraine and Gaza? Where was a commitment to protect U.S. workers from foreign competition and secure our supply chains against further disruption from China? Where was a bold proposal for paid family leave and universal access to childcare? Where was the even bolder commitment to advance clean energy development and enforce environmental regulations? Where was the coherent explanation for how Democrats would protect bodily autonomy and advance LGBTQ rights? Where was the plan for making social security sustainable and protecting retirement benefits? Where was the plan to continue to address the rising costs of healthcare? Where was the plan to actually bring down housing prices, expand supply, and help more Americans achieve home ownership? Where was the concrete proposals to close the wealth gap and address racial inequality in our economy and our schools?

These plans undoubtedly (hopefully) exist somewhere, either buried in an online platform or in the minds of Democratic policy advisors. But they were not highlighted and no path forward was coherently offered to voters. Over a billion dollars in campaign fundraising was spent to scare voters about Mr. Trump’s version of America rather than inspire them to support Ms. Harris’ vision.

What, then, is the path forward?

Democrats must become Democrats again. They must offer a positive and achievable progressive vision of the future to voters, and in particular to working class voters of all races and genders in both urban and rural communities. Calling a portion of working class voters racist and misogynistic isn’t a viable path to political victory. In fact, in the absence of inspiration, it is clear that many diverse voters in the ‘big tent party’ have grown curious about what might be on offer in the other tent. This is evidenced by Mr. Trump’s improvement in 2024 with some minority voters, young voters, and yes, women.

In 1932, when accepting the Democratic Party’s nomination at the convention, amidst a backdrop of economic depression and rising fascism and instability abroad, Franklin Roosevelt ended his address with this:

“Never before in modern history have the essential differences between the two major American parties stood out in such striking contrast as they do today.  Republican leaders not only have failed in material things, they have failed in national vision, because in disaster they have held out no hope, they have pointed out no path for the people below to climb back to places of security and of safety in our American life.

Throughout the nation, men and women, forgotten in the political philosophy of the government of the last years look to us here for guidance and for more equitable opportunity to share in the distribution of national wealth.

On the farms, in the large metropolitan areas, in the smaller cities and in the villages, millions of our citizens cherish the hope that their old standards of living and of thought have not gone forever. Those millions cannot and shall not hope in vain.

I pledge you, I pledge myself, to a new deal for the American people.”

Mr. Roosevelt went on to occupy the White House for more than three terms as President and drastically reshape the federal government and American life. Democrats now find themselves in the position of 1932 Republicans. They must extend hope to voters, as Mr. Obama did, and “point out a path for the people to climb back to places of security”, as Mr. Roosevelt framed it. They must, like FDR, offer a true new deal to the American people in farms, cities, towns and villages. And they must do it soon, lest Mr. Trump’s vision of America continue to fill the void.

Billions of dollars worth of clean energy projects have stacked up following the passage of the Inflation Reduction Act (IRA) and the Bipartisan Infrastructure Law (BIL) but one of the major bottlenecks has remained federal permitting. Even as huge investments are made in solar, wind, hydrogen, and hydroelectric infrastructure, we need to build new infrastructure much more quickly to carry clean energy across the country. But a new proposal in the Senate to speed up infrastructure permitting offers far bigger giveaways to oil and gas producers and will make it harder to regulate pollutants and hold companies accountable.

What is ‘permitting reform’ and why does it matter?

Transmission infrastructure is the backbone of the American electricity grid. You’ve probably seen transmission lines running alongside highways or cutting through stands of trees, supported by massive towers. These carry electricity away from wherever it is first generated to what are called substations (you’ve probably seen these too). Transmission lines run at high voltages over long distances. Once electricity reaches the substation, it is converted to lower voltages for distribution to utility customers. A recent study from Princeton University estimates that failing to grow transmission infrastructure faster than its current pace (1% per year) would cause nearly 80% of the emissions reductions promised by the IRA to go unmet by 2030.

Here’s the problem: building massive transmission infrastructure to carry electricity is extremely complicated. It’s complicated to connect new projects to the grid. It’s complicated to solve legal, environmental, land, and cost problems. It’s complicated to coordinate among multiple counties’, multiple states’, and the federal government’s regulations. And these complications mean that things happen slowly. Sometimes very slowly. Permitting reform is the term generally used to describe streamlining the complicated hoops that new infrastructure and energy projects must jump through before they can be built and begin operation.

However, permitting reform isn’t just something that Democrats want to expedite the new grid infrastructure needed to meet President Biden’s Inflation Reduction Act goals and combat climate change. The desire to speed things up has traditionally been bipartisan, but for different reasons and in different ways. Traditionally, Republican elected officials have pushed for permitting reform to increase oil and gas drilling opportunities, particularly on federally owned land and offshore sites. Republicans have also long been advocates for legal reforms, reducing the ability of energy projects—like pipelines and wells—to be challenged in court on environmental grounds.

Permitting reform has been so important to Senator Joe Manchin (I-WVa) that it was part of the carrot used to entice him to vote for the IRA in the first place, back in 2022. Manchin’s own permitting reform bill was stymied by Senate Republicans back then. Now, Manchin has worked with Senator John Barrasso (R-WY) to put forward a new framework for permitting reform. The Energy Permitting Reform Act of 2024 (EPRA) passed out of Senate committee today with a 15-4 vote and now heads to the full Senate for consideration.

Is it good? Is it bad? What might its impact be?

What does the Energy Permitting Reform Act (EPRA) of 2024 do?

ERPA would make changes aimed at streamlining energy and infrastructure projects in multiple ways:

• Judicial and legal changes

• Renewable energy on federal lands

• Oil and gas leasing on federal lands

• Oil and gas drilling on nonfederal lands

• Mining

• Natural gas exports

• Transmission

Judicial and legal changes (Section 101)

• Reduce the statute of limitations to 150 days (down from 6 years) for filing lawsuits against a federal agency after it either approves or denies a permit for an energy or mineral project.

• Establishes a 180-day (6-month) deadline for agencies to act on a remand (when a decision is sent back to an agency by a court for further consideration or a permit is vacated). There is currently no deadline for federal agencies to act on court remands.

• Creates an expedited review requirement, where courts must prioritize reviewing agency permitting decisions for energy or mineral projects.

While these reforms may at first glance help reduce uncertainty for developers, they also dramatically reduce the window to meaningfully challenge projects that could harm the environment, effectively helping fossil fuel companies avoid legal and environmental accountability.

Renewable energy on federal lands (Sections 206 & 207)

In 2024, the Department of the Interior (DOI) announced that it had met its own goal of 25 gigawatts (GW) of renewable energy production permitted on federal lands. Section 207 of the EPRA requires that DOI increase its goal to 50 GW of renewable permitting on federal lands by at least 2030.

EPRA also:

• Establishes application timelines for renewable projects requiring federal land right-of-way.

• Requires an annual geothermal lease sale (currently required once every 2 years).

• Requires annual offshore wind lease sales over the next 5 years (currently 3 scheduled) and requires leases to be at least 400,000 acres.

Oil & gas drilling on federal lands (Sections 201, 204, 301)

• Clarifies a requirement that the Department of the Interior cannot lease federal land for wind or solar projects unless 50% of the proposed lease land was offered for oil and gas leasing in the previous year.

• Sets timelines on federal review of coal lease applications. Applications must be reviewed within 90 days and a decision must be made within 90 days of an environmental review.

• Requires one oil and gas lease sale in the Gulf of Mexico per year for the next five years (currently 3 scheduled). Sets the minimum acreage of a sale to 60 million.

Again, we see provisions that are quite favorable to the oil and gas industry. Although including a (very modest) provision about renewable goals for federal lands in the bill is nice, we see that these renewable leases are undermined by effectively requiring chunks of that land to first be offered to oil and gas companies.

Oil and gas drilling on non-federal lands (Section 203)

• Removes requirements for federal drilling permits on land that the federal government does not own 50% of the subsurface mineral rights to or in cases where drilling occurs on non-federal land but then goes horizontally through federal land.

The argument here is that projects should only need state permits, not state and federal permits. In reality, this represents quite the coup de tat for the oil and gas industry. It is not hard to imagine that certain states will heavily favor oil and gas companies in the permitting process. It’s also easy to imagine a scenario where state regulators are more susceptible to pressure to ease requirements or change state permitting laws to be more environmentally lenient.

Mining (Section 210)

• Allows mill sites to be used on mineral lands (currently only nonmineral federal lands).

Liquified natural gas (LNG) exports (Section 601)

Things get a little more complicated in this section of the EPRA. President Biden made news in January 2024 when he temporarily paused liquified natural gas (LNG) export approvals, facing calls to review their ultimate emissions impacts. In July 2024, a federal judge issued a stay, un-pausing LNG approvals.

What is an “LNG export approval”? If the US has a free trade agreement with another country, exporting LNG to that country has long been automatically determined to be “in the public interest”. This complies with The Natural Gas Act of 1938. If a country receiving our LNG exports does not have a free trade agreement with the US, then the Department of Energy must review and approve or deny the exporting agreement by declaring it to be in the public interest or not. These “public interest” determinations are made after a full environmental review under the National Environmental Policy Act.

The EPRA would:

• Require a decision on public interest within 90 days of the submission of environmental review documents.

• Establish a 90-day timeline for the review of previously approved LNG export authorizations, after which projects with no decision would be automatically approved.

Although this provision mostly deals with things that occur after an environmental review, the automatic approval after 90 days is controversial. In cases where environmental reviews are highly complex, a full and fair review for consideration by the Department of Energy may have difficulty meeting the deadline, resulting in automatic approval in situations where it may not be merited. Conceivably, the Department of Energy can increase its staff to meet this new requirement, but it’s hard not to view the requirement politically, putting pressure on the department to approve more LNG export projects.

Electricity Transmission (Sections 401, 402, 209, 501)

This section is arguably the most important for meeting IRA emissions reduction targets and bringing clean energy projects onto the grid. The EPRA:

• Gives the Federal Energy Regulatory Commission (FERC) the power to permit transmission projects in the national interest. Currently, there must be a needs study conducted by the Department of Energy, who must then declare the land to be a “national interest transmission corridor” to permit the project. It is estimated that this could reduce approval process timelines by 2-5 years.

  • Notably, this means that projects would begin at the state level. If states balk at permitting for over 1 year (or deny permitting) for transmission projects, developers can then appeal to FERC.

• Reforms cost-allocation processes for transmission lines so that customers pay for the line in relation to how much benefit they receive.

• Establishes practices for interregional transmission planning.

• Makes FERC the primary agency for conducting environmental reviews of transmission projects that require them under the National Environmental Policy Act. The justification is that FERC, whose 5 commissioners are appointed on staggered 5-year terms by the President with Senate consent, is more politically insulated than the Department of Energy, which currently conducts environmental reviews.

• Directs agencies to create common exclusion definitions for transmission infrastructure in right-of-ways and for upgrades to pre-existing infrastructure. Effectively, these exclusion projects would then be streamlined and not require going through the federal permitting process with different agencies.

• Requires reliability assessments of agency proposals’ effects on the grid by the North American Electric Reliability Corporation.

Final thoughts.

All in all, the permitting reform bill is quite generous for fossil fuel companies and dressed up with a few bones for clean energy advocates. While reducing so-called “red tape” is always popular and speeding up the deployment of new, cleaner technology is important, it shouldn’t come at the expense of hamstringing environmental and regulatory oversight for the public interest.

For instance, The West Virginia Coal Association President called the EPRA’s new reliability assessments provision “desperately needed”. It’s easy to see a world where these reliability assessment requirements could be misused to overturn federal regulation on coal-fired power plant pollution, which has long been linked to health and environmental damages. By simply declaring that requiring coal plants to meet higher emissions standards might cause them to shut down, the EPRA could negate the agency proposal by ruling that it makes the grid less reliable. This allows companies to avoid the costs of investing in cleaner technology and would keep coal burning, diminishing the federal government’s ability to do anything about it.

Completely removing the federal government’s role in permitting oil and gas on nonfederal land is a large political victory for Republicans, long advocating for “drill baby, drill!” However, given that drilling and burning fossil fuel creates negative externalities that the public collectively pays the price for, the federal government having some oversight is not a bad thing, inherently. Leaving it up to the states (just like the social issue of abortion) will create dramatically different sets of regulatory practices in different states and will also make state governments more prone to regulatory capture or worse, bribery or pay-to-play schemes.

All in all, it’s unclear why some aspects of this reform are necessary. The transmission and grid infrastructure streamlining will certainly help since navigating construction across counties and state boundaries is complicated enough without layers of multi-agency federal permitting. However, when it comes to the boons for fossil fuels, it’s hard to see any reason they are included other than to win Republican votes in the Senate. The US is not suffering from a lack of oil and gas permitting. In fact, the Biden administration is outpacing the Trump administration, including approval of the massive ConocoPhillips Willow project on federal land in Alaska. Given that the oil and gas industry is currently sitting on unused leases, its unclear why it’s of great importance for a permitting reform bill to focus so heavily on increasing the number of leases sold.

The Energy Permitting Reform Act of 2024 now heads to the full Senate and remains to be negotiated with the House of Representatives, which has proposed its own versions of permitting reform in the past.