‘Cap-and-Tax’ Fiasco
by Doug CarlsonBasic economic principles teach that achieving sound economic policy requires careful consideration of two expected outcomes: costs and benefits. A majority in Congress has just opted to disregard both.
In a narrow 219-212 vote, the House of Representatives has approved what many call the largest tax increase in American history—all in what many experts view as a futile attempt to control the world’s thermostat. The Waxman-Markey cap-and-trade bill, which restricts industries to specified amounts of greenhouse gases and other carbon emissions they can discharge, garnered support from 211 Democrats and eight Republicans. The damage was done Friday night, just before the House broke for a week long July 4 recess.
At its core, the nearly 1,500-page bill is a monstrosity, threatening to make every American who turns on a light switch a loser. First, there is the exorbitant cost. Such a plan amounts to a national energy tax, something cap-and-tax proponent President Obama has admitted will cause electricity rates to “necessarily skyrocket.” According to the Heritage Foundation, a family of four can expect to see their inflation-adjusted energy prices soar an additional $1,870 per year by 2020 and $6,800 per year by 2035 under Waxman-Markey.
Put another way, by 2035 electricity rates are projected to rise 90 percent, with gasoline prices jumping 58 percent and residential natural gas prices similarly climbing 55 percent. That amounts to a loss of $9.4 trillion in GDP. Hit hardest would be the poor, who expend a larger percentage of their income for energy, and people who live in the Midwest, South, and Rocky Mountain regions, where coal is the main fuel for industry and electricity.
The bill is also projected by some to be a job-killer. During the House floor debate, Rep. Tom Price (R-GA) called for a moment of silence for the anticipated 2.3 to 2.7 million jobs lost each year. His request was denied. Meanwhile, rising nations like India and China, with no intention of scaling back greenhouse gas emissions, are prepared to absorb lost American jobs, possibly leaving the United States behind as an economic featherweight.
The bureaucratic web of Waxman-Markey, controlled by some 20 government agencies, is so complex and far-reaching that no industry will be able to avoid entanglement. [See chart (PDF, 28KB) displayed by Republican Leader John Boehner.] Even home ownership will be targeted. Existing homes for sale will face stringent energy audits, and homes under construction will be subject to a 30 percent increase in energy efficiency—that is until it is ratcheted up an additional 50 percent in 2014. And this is only a sampling of the indirect costs to be passed on to Americans.
Then there is the expected benefit—little if anything. Economics aside, the rationale for imposing this massive tax increase—man-made global warming—is itself being viewed with increasing skepticism among scientists. For this reason, global warming, long the catch phrase of the debate, is being replaced with the term climate change. The repackaging is a brilliant move on the part of the proponents. The climate is always in a state of flux, so whether the earth is warming or cooling—as it has done for the last decade—politicians can still pin the blame on humans and cast a doomsday imperative that we must enact sweeping legislative mandates to reduce our carbon footprint.
In spite of the unfortunate House passage of the cap-and-trade bill, the Ethics & Religious Liberty Commission appreciates the calls you made last week to Capitol Hill. Now the focus turns to the Senate, where the bill must be stopped.
If you share our concerns, please tell your senators to vote “no” on the Waxman-Markey bill (H.R. 2454) or any other bill that would place a straightjacket on American industry and saddle generations of Americans with unnecessary tax burdens. You might also want to see how your representative voted on the bill and express either your appreciation or displeasure to him or her.
This article is reprinted with permission from The Ethics & Religious Liberty Commission.