The House of Representatives passed a bill on Friday to reduce carbon dioxide emissions to fight global warming. What Democratic leaders didn't say is that it would cost American families thousands of dollars a year.
The bill, sponsored by Rep. Henry A. Waxman, California Democrat, and Rep. Edward J. Markey, Massachusetts Democrat, would mandate huge reductions in carbon dioxide and five other greenhouse gases. Compared to 2005 levels, emissions would be reduced by 17 percent by 2020 and by an incredible 83 percent by 2050. If this bill becomes law, energy prices will soar.
The Congressional Budget Office estimates the average cost per household to be just $175 a year by 2020. That offensively low estimate wouldn't even cover the cost of higher gasoline prices for the family car.
Canadian estimates for similar legislation expose how absurd CBO's estimates are. Canada's target seeks a smaller reduction: a 20 percent cut in carbon dioxide emissions per dollar of gross domestic product (GDP) by 2020. Thus, if GDP rises by more than 20 percent in the 15 years until 2020 -- which is a safe bet -- Canada's carbon emissions will be allowed to rise. That's quite a contrast to the Democrats' proposed 17 percent cut from 2005 U.S. levels.
Canada has run the numbers on how much its smaller reduction in carbon dioxide will raise prices. The costs are startling. The Canadian government's National Round Table on the Environment and the Economy estimates that a tax of 73 U.S. cents per gallon of gas will be required to reach its 20 percent reduction relative to GDP. With U.S. gas prices at $2.61, a 73 cent tax would amount to a 28 percent tax. A much higher tax would be necessary to meet the Democrats' 2020 goal.
Even a moderate tax of $1 per gallon means that household costs would exceed $175 after just 175 gallons of gasoline are purchased. Readers can figure out their own gas use, but for the CBO estimates to be true, CBO would have to assume the average family uses fewer than 4 gallons of gas a week -- or 2 gallons a week per car if you have two cars.
Perhaps the bureaucrats at CBO only use their cars to go up and down their driveways, but most people have to drive to work and take their kids to baseball games, karate practice and other events.
It's important to note that these estimates don't include any of the other costs people would bear from higher utility bills to heat and cool their homes or the impact that higher energy prices would have on consumer products.
The Heritage Foundation did its own analysis of the Waxman-Markey bill and found it would cost the economy $161 billion in the year 2020 alone. That would cost $1,870 for a family of four. In 2035, that yearly cost rises to $6,800 per family.
Carbon legislation faces an uncertain future in the Senate. Because of its obvious negative impact on the economy, cap-and-trade is a hard sell even with large Democratic majorities.