When running for president, then-Sen. Barack Obama promised that his election would be “the moment when the rise of the oceans began to slow and our planet began to heal.” That’s the sort of offer you can’t turn down, but translating it into law has proved difficult.
The result is the 1,000-plus-page American Clean Energy and Security Act (H.R. 2454) — more commonly known as Waxman-Markey after its sponsors, Democratic Reps. Henry A. Waxman of California and Edward J. Markey of Massachusetts. In an attempt to fulfill the president’s promise, the bill’s sponsors have come up with the largest tax increase in history. It is up for a vote Friday.
The bill’s supporters argue passionately that there is no tax increase anywhere in the bill, but that’s because they have ingeniously disguised it. They refer to renewable electricity standards, cap-and-trade programs and green job creation, but all these components of the bill amount to one thing: a massive increase in the cost of energy at the behest of government to meet government’s desired ends. That’s a tax in most people’s books.
The bill’s centerpiece is its cap-and-trade program for greenhouse gas emissions. The idea behind this provision is that greenhouse gases are bad for the planet because they cause the global warming (which appears to have stopped 10 years ago), and therefore, America should emit less of them. To achieve that, the bill sets a cap on the amount of emissions that companies such as electric power utilities can put out each year. They will receive permits for a certain amount. If they can emit less than their amount, they can sell them to companies that are having trouble meeting the targets.
This sounds good on paper, but it has not worked in practice. In Europe, where such a scheme has been in effect for several years, utilities simply have passed the extra costs on to consumers. This has resulted in significantly higher power bills. Companies have also gamed the system in order to avoid having to reduce emissions significantly, so the program’s promised emissions reductions have not materialized. It is a lose-lose proposition: all economic pain for no climate gain.
Under Waxman-Markey, the economic pain would be severe, indeed. President Obama’s own aides have admitted that it could cost hardworking Americans up to $2 trillion. The burden, moreover, would fall disproportionately on the poor, who spend a greater proportion of their income on energy - 26 percent compared to a median-income family that spends 4 percent of its earnings on energy. It would also affect the South and Midwest much more than the West Coast and Northeast. In fact, the effect would be a wealth transfer from the South and Midwest to the West Coast and Northeast. Overall, the bill would cost the average American family $1,500 in increased energy costs.
Those increased energy costs would hit businesses hard, resulting in an average loss of 1.1 million jobs a year. And that is after counting the effect of so-called “green jobs,” which would largely be temporary and, according to a recent study, pretty low-paying - most green jobs that have been created to date pay below the average wage.
At a time when America’s economy has taken a severe beating, this bill would deal yet another kick to the head. The lights would go out. Jobs would flee overseas to countries like China, which have consistently refused to accept any restrictions on emissions, because they know the harm that they can do to an economy. Meanwhile, studies using accepted climatological methodology have concluded that the bill, even if it works, will have no distinguishable effect on the climate.
This bill will do nothing to slow the rise of the oceans, but it will certainly slow the much-needed rise of the economy. Members of Congress must decide: Do they want to be remembered for raising household energy bills and putting millions out of work while achieving no environmental benefit? Their constituents will surely remember.
Iain Murray is director of projects and analysis and senior fellow in energy, science and technology at the Competitive Enterprise Institute.