While the attention of the American public was focused on the circus surrounding the death of Michael Jackson, the House of Representatives was laying the groundwork for picking that same public’s pockets. The Waxman-Markey energy bill, set for debate later this year in the Senate, would hamstring the U.S. economy, raise unemployment and burden taxpayers.
The centerpiece of the legislation is a “cap and trade” provision designed to reduce carbon dioxide (CO2) emissions by raising the price of CO2-intensive goods and services such as gasoline, electricity and many industrial products. Legislation should be subjected to some basic cost-benefit analysis. This bill provides little in the way of benefits to Americans but imposes very high costs.
The goal of the bill is to reduce greenhouse gas emissions that allegedly cause “global warming,” or as it is now known, “climate change.” But global temperatures have been decreasing since 1998.
On the benefits side, there is another problem. Even if the United States were to significantly reduce CO2 emissions, it would have little global effect, given that the biggest producers of greenhouse gas emissions are rapidly developing countries such as China and India. And U.S. businesses have reduced such emissions in response to market forces.
On the other hand, the costs of something along the lines of Waxman-Markey are staggering. Carbon-based fuels (oil, coal, natural gas) provide about 85 percent of U.S. energy needs and generate most greenhouse gases. Companies would need annual allowances issued by the government in order to emit greenhouse gases.
Under the “cap” part of the bill, these allowances would gradually decline. Indeed, Waxman-Markey requires the CO2 level in 2050 to be 83 percent less than it was in 2005. The “trade” permits utilities and refineries that need extra allowances to buy them from other companies. As the annual allowances allowed by Washington are reduced, their price would rise.
The EPA estimates that the price of a permit would rise from $20 a ton in 2020 to $75 a ton by 2050. Companies would pass the extra cost to customers.
The Congressional Budget Office estimates that reducing the level of CO2 to 15 percent less than the total level of emissions in 2005 would increase a household’s annual cost of living by $1,600.
Meanwhile, American companies would suffer in export markets as American prices rose. Domestic producers would suffer because of competition from imports from countries that do not impose the CO2 tax.
The idea that we can shift effortlessly from carbon-based fuels to alternative “clean” forms of energy and conservation is a pipedream. Population increases in the United States alone will raise energy demand. If the supply of electricity doesn’t keep pace with demand, brownouts, blackouts or other disruptions would mount.
Western European countries have found that it is very difficult and expensive to reduce carbon emissions. Nearly every western European state has had higher unemployment and energy costs than America, and a weaker overall economy. And the promise of the new “green” economy is proving elusive as well.
Let’s hope the Senate does a better job of cost-benefit analysis than the House. It should not be Washington’s job to wreck the economy.