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Job Loss By Millions, Tax Hikes By Billions

April 23, 2009

By Diana Furchtgott-Roth

Only in Congress could legislators propose to raise energy prices, impose strict new efficiency standards on automobiles and appliances, require firms to use nonexistent technology, mandate greenhouse gas emissions back to 19th century levels—and then describe the bill as an economic rescue package.

Chairman Edward Markey of the House Energy and Environment Subcommittee said that his American Clean Energy and Security Act of 2009 would “create jobs by the millions, save money by the billions, and unleash energy investment by the trillions.” Perhaps if greenhouse gases were required to be completely eliminated, America would see an even faster economic recovery.

The 648-page bill, cosponsored by Mr. Markey and fellow Democrat Henry Waxman, Chairman of the House Energy and Commerce Committee, has been the subject committee hearings this week. It would set new limits for greenhouse gas emissions, potentially bringing in over $1 trillion in revenue, and prescribe radically new standards for energy production and use.

These requirements would come at substantial costs to producers that would be then be passed on to consumers. Homes, cars, household goods, and energy would become more expensive and people would buy less, leading to layoffs and a worsening recession.

Over 100 legislative pages are spent on measures to reduce greenhouse gases—deep, rapid reductions. The bill requires greenhouse gas emissions in 2012 to be no more than 97 percent of 2005 emissions; 58 percent in 2030; and 17 percent in 2050. This last target, four decades into the future, is incompatible with our present standard of living—and illustrates the arrogance of a legislature that thinks it can fine-tune the huge, variegated American economy far beyond anyone’s capacity to foresee events.

The mechanism for this is a "cap-and-trade" program, proposed by President Obama, under which allowances to emit greenhouse gases would be issued by the Environmental Protection Agency at a steadily declining rate through 2050. When a firm’s emissions exceeded its allowance, or cap, it would have to purchase more from the government or other firms, a tax under another name, driving up costs that would be passed on to consumers.

Shifting costs to consumers is the hidden theme of the Democratic bill. There’s no transparency because until the allowances are distributed and auction mechanisms are specified, the Congressional Budget Office cannot calculate the official cost.

Representative Joe Barton of Texas, ranking Republican on the Energy and Commerce Committee, offered his version of candor at yesterday’s hearing, with estimates based on previous cap-and-trade bills. “With a cap-and-trade scheme like that proposed by Chairmen Waxman and Markey," he said, "households can expect energy cost increases up to $3,128 per year. Your electricity bill will increase by 77 to 129 percent. Filling up your gas tank will cost anywhere from 60 to 144 percent more. The cost of home heating oil and natural gas will nearly double.”

The Obama March Budget acknowledged revenues of $646 billion over eight years from cap and trade. Yet National Economic Council deputy director Jason Furman told Senate Finance Committee staffers, according to news reports, that the figure could reach $1.3 trillion to $1.9 trillion over the same period.

In addition to higher costs to consumers, cap-and-trade would give government officials practically unlimited scope to play favorites in the allocation of permits, an invitation to political influence peddling, if not outright corruption.

At the discretion of government officials, firms could meet 30 percent of their 2012 greenhouse gas reduction obligations, increasing to 60 percent by 2050, by buying “offsets” to reduce greenhouse gas emissions elsewhere. Half of these offsets can take place abroad.

As drafted, the bill allows firms to shift economic activity abroad to countries with laxer emissions standards, further damaging U.S. job creation. A plant’s emissions might exceed its U.S. allowances, yet its technology might produce lower emissions than the norm in a developing country, thereby allowing the relocation to count as an offset.

Cap-and-trade is only one of many parts of the bill that would drive up prices. Consider energy production, among others. The bill would require doubling in three years of the share of electric utility output that comes from renewable sources—wind, solar, geothermal, biomass—from three percent now to six percent in 2012. In a further leap of central-planning hubris, the bill would raise that standard in stages to 25 percent in 2025.

Sounds good? Maybe, but the technology to do it doesn’t exist. Nor do transmission lines to deliver wind energy from where it is likely to be produced, in the central states, to the population centers on the coasts, where it would be consumed.

The most surprising word in the 648-page bill is the one that isn’t there, not even once. That word is “nuclear.” To discuss clean energy and security without mentioning increased development of nuclear energy, now powering 20 percent of America’s electricity with no greenhouse gas emissions, shows that Chairmen Waxman and Markey are not taking the issue seriously. They’re just trying to raise taxes on Americans and enhance the power of Congress and the agencies it oversees.

Original Source: http://www.realclearmarkets.com/articles/2009/04/job_loss_by_millions_tax_hikes.html

 

 
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