By William W. Beach, David Kreutzer, Ph.D., Karen Campbell, Ph.D. and Ben Lieberman
Representatives Henry Waxman (D-CA) and Ed Markey (D-MA) modified their global warming proposal from the draft version published on March 31. For the most part, the changes focused on the distribution of the allowance revenue--the equivalent of tax revenue.
There was also a slight easing of targeted emissions reductions for 2020, which resulted in a marginally lower economic impact. However, the new distribution of allowances created a less efficient pattern of government expenditures and more than offset the gain from the lower cap for 2020.
The economic impact of the new draft varies from that of the original draft in several major ways:
Compared to no cap and trade, real GDP losses increase an additional $2 trillion, from $7.4 trillion under the original draft to $9.6 trillion under the new draft; Compared to no cap and trade, average unemployment increases an additional 261,000 jobs, from 844,000 lost jobs under the original draft to 1,105,000 lost jobs under the new draft; and peak-year unemployment losses rise by 500,000 jobs, from 2 million under the original draft to 2.5 million under the new draft.
Though the proposed legislation would have little impact on world temperatures, it is a massive energy tax in disguise that promises job losses, income cuts, and a sharp left turn toward big government. Ultimately, this bill would result in government-set caps on energy use that damage the economy and hobble growth--the very growth that supports investment and innovation. Analysis of the economic impact of Waxman-Markey projects that by 2035 the bill would:
Reduce aggregate gross domestic product (GDP) by $9.6 trillion
Destroy 1,105,000 jobs on average, with peak years seeing unemployment rise by over 2,479,000 jobs
Raise electricity rates 90 percent after adjusting for inflation
Raise inflation-adjusted gasoline prices by 74 percent
Raise residential natural gas prices by 55 percent
Raise an average family’s annual energy bill by $1,500
Increase inflation-adjusted federal debt by 26 percent, or $29,150 additional federal debt per person, again after adjusting for inflation.
Read more here. See the effect on one state (Pennsylvania) as determined by three state utility commissioners here.
By Chris Horner
On Friday, House Energy and Commerce Committee Chairman Henry Waxman (D-Beverly Hills) released the closely-held details of his bill rationing energy use in the name of global warming, the American Clean Energy and Security Act of 2009 (ACES).
The details had been kept secret for two reasons. First, Waxman had been working desperately to buy off key Democrats on his own committee—such as Virginia’s Rick Boucher and Michigan’s John Dingell—whose states would suffer hugely under the “cap and tax” scheme, plus others with energy-intensive employers in their districts. He succeeded by, in short, giving energy use ration coupons to select employers for resale to some poor saps without Washington lobbyists.
And before those lawmakers were bought off with targeted limitations of the bill’s effects, it was impossible to assess the bill’s cost, leaving us only with the president’s guidance uttered when he let on to this agenda item: “Under my plan of a cap and trade system, electricity rates would necessarily skyrocket.”
That was an uncharacteristic expression of modesty because cap-and-trade actually will cause the cost of gasoline to skyrocket, too, and increase the cost of everything that uses energy in its production. Which is everything. And the only difference between Obama’s plan and Waxman’s is that Waxman bought votes by giving away many of the ration coupons; either way, Obama’s budget director Peter Orszag has serially admitted, it is you the consumer and ratepayer who will pay.
Second, Waxman kept quiet those details which were meant to pay off the “rent-seekers”—industry that would gain from the inherently corrupt mandates, subsidies, and the enormous carbon dioxide tax to pay for them under the bill’s quota and rationing schemes. This also delayed organization of broader opposition outside of those few stalwarts who recognize the peril in wresting control of the nation’s energy supply from private actors, both producers and consumers, in favor of government management.
So on Friday came the details of Waxman’s “allowance allocation,” which is what he calls the ration coupons. That’s right: we’re all seven again, and the state is our Mommy, meting out our yearly energy allowance. Waxman released a two-page memo to describe the now 1,000 page bill, which is apparently how many pages it takes to hide the biggest tax increase in U.S. history and hand out favors to the Al Gore crowd.
In the Democrats’ now-commonplace Orwellian mode, the two-page memo was full of “protections” the bill offers, laid out in boldface type: “Protection from electricity price increases,” “Protection from natural gas price increases,” “Protection from home heating oil price increases,” “Protection of low- and moderate-income households.” Then comes “Transition assistance for industry,” comprised of “Protection for energy-intensive, trade-exposed industries” and “Protection for domestic energy production.”
That’s an awful lot of protection Waxman’s selling, and it begs the question: from what? His bill, of course. For nearly every sector that it targets with its taxation and “investment” provisions, the bill claims as a marketing ploy to have offered protection. These temporary, select deals were in return for allowing certain provisions of the bill to be designed according to the specifications of particular members of each of those targeted groups—as brazenly admitted by Waxman in the first draft of the bill’s “Findings” section.
Allegations of such collusion between policymakers and the Bush administration by the same Henry Waxman led him to launch investigations. Don’t expect any here. Now this protection isn’t forever, mind you—just for a few years, in order to neuter opposition or provide cover for those whom he needed to vote for the scheme. Read the definitions in the bill, and you’ll notice that you were not represented at the table. What could you possibly offer him? Besides, don’t forget it was your gluttonous electricity use that made Waxman come down on you like this in the first place.
Waxman touts his bill with claims of offering protection, if from a menace found nowhere but in the very same bill. It’s the Democrats’ latest version of what the Mafia used to call the “protection racket.” You know, “window insurance.” Hey, me and my cousin, we’re watching this here block. Sure would be a shame if something happened to your place. Anyways, he and I think you might could use our protection. Capice?
And you thought the recent exposé of how the Sicilian mafia has seized control of the lucrative windmill franchises under Europe’s similar schemes was just an aberration. Commentators have increasingly noted the thuggish tactics that Team Obama and its ancillary cheerleading groups brought to town, such that even the early Clinton-Gore days are beginning to appear like schoolyard games. Back then, it was mostly the accumulation of individual power they were after. Now we have committed radicals attempting to seize control of the biggest engines of the economy, by using every sort of fear they can. Fear of economic collapse, fear of retribution if you oppose the agenda, fear of ecological bogeymen (who oddly continue to refuse to show up as promised).
To anyone who has studied political organizing tactics as perfected in Europe and Russia in the previous century (or America in the 1960s), it should come as no surprise that the president hired on a former board member of the Socialist International to run his “global warming” policy and a self-described communist to run his domestic operation, “green jobs.” Green really is the new red, and these people remain who we thought they were.
The question is whether an advanced if shaken America will fall for the fear mongering or, for others, whether they will simply acquiesce in having their liberties—and, frankly, their country—run over with these roughshod tactics. This week’s votes in the House should offer us a few indicators, for better or worse. Read more here.
Mr. Horner is author of ”Red Hot Lies: How Global Warming Alarmists Use Threats, Fraud, and Deception to Keep You Misinformed.”
By Governor Mitch Daniels in the Wall Street Journal Opinion Journal
This week Congress is set to release the details of the Waxman-Markey American Clean Energy and Security Act, a bill that purports to combat global warming by setting strict limits on carbon emissions. I’m not a candidate for any office—now or ever again—and I’ve approached the “climate change” debate with an open-mind. But it’s clear to me that the nation, and in particular Indiana, my home state, will be terribly disserved by this cap-and-trade policy on the verge of passage in the House.
The largest scientific and economic questions are being addressed by others, so I will confine myself to reporting about how all this looks from the receiving end of the taxes, restrictions and mandates Congress is now proposing.
Quite simply, it looks like imperialism. This bill would impose enormous taxes and restrictions on free commerce by wealthy but faltering powers—California, Massachusetts and New York—seeking to exploit politically weaker colonies in order to prop up their own decaying economies. Because proceeds from their new taxes, levied mostly on us, will be spent on their social programs while negatively impacting our economy, we Hoosiers decline to submit meekly.
The Waxman-Markey legislation would more than double electricity bills in Indiana. Years of reform in taxation, regulation and infrastructure-building would be largely erased at a stroke. In recent years, Indiana has led the nation in capturing international investment, repatriating dollars spent on foreign goods or oil and employing Americans with them. Waxman-Markey seems designed to reverse that flow. “Closed: Gone to China” signs would cover Indiana’s stores and factories.
Our state’s share of national income has been slipping for decades, but it is offset in part by living costs some 8% lower than the national average. Doubled utility bills for low-income Hoosiers would be an especially cruel consequence of the Waxman bill. Forgive us for not being impressed at danglings of welfare-like repayments to some of those still employed, with some fraction of the dollars extracted from our state.
And for what? No honest estimate pretends to suggest that a U.S. cap-and-trade regime will move the world’s thermometer by so much as a tenth of a degree a half century from now. My fellow citizens are being ordered to accept impoverishment for a policy that won’t save a single polar bear.
We are told that although China, India and others show no signs of joining in this dismal process, we will eventually induce their participation by “setting an example.” Watching the impending indigence of the Midwest, and the flow of jobs from our shores to theirs, our friends in Asia and the Third World are far more likely to choose any other path but ours.
Politicians in Washington speak of a reawakened appreciation for manufacturing and American competitiveness. But under their policy, those who make real products will suffer. Already we observe the piranha swarm of green lobbyists wangling special exemptions, subsidies and side deals. The ordinary Hoosier was not invited to this party, and can expect at most only table scraps at the service entrance.
No one in Indiana is arguing for the status quo: Hoosiers have been eager to pursue a new energy future. We rocketed from nowhere to national leadership in biofuels production in the last four years. We were the No. 1 state in the growth of wind power in 2008. And we have embarked on an aggressive energy-conservation program, indubitably the most cost-effective means of limiting CO2.
Most importantly, we are out to be the world leader in making clean coal—including the potential for carbon capture and sequestration. The world’s first commercial-scale clean coal power plant is under construction in our state, and the first modern coal-to-natural gas plant is coming right behind it. We eagerly accept the responsibility to develop alternatives to the punitive, inequitable taxation of cap and trade.
Our president has commendably committed himself to “government that works.” But his imperial climate-change policy is government that cannot work, and we humble colonials out here in the provinces have no choice but to petition for relief from the Crown’s impositions. See story here.