There’s something the Democratic lawmakers who are pushing cap-and-trade legislation don’t want the public to know. The controversial climate-change legislation winding its way through Congress will impose a massive new national gas tax on the American people. We discovered this by analyzing what the Waxman-Markey cap-and-trade bill would do to gas prices and what Americans spend on gasoline, diesel and jet fuels. We found that cap-and-trade legislation will levy a $3.6 trillion gas-tax increase that will impact every American and important segments of our economy.
The goal of this climate-change legislation is actually to increase the price of traditional forms of carbon-based energy such as coal, gas and oil so that consumers will respond by using less of it. Some lawmakers call this “setting the price on carbon.” Economists refer to this kind of policy as a price signal. But the bottom line is that the price of energy will go up. Ultimately, all Americans will pay directly or indirectly for the higher fuel prices the cap-and-trade legislation will cause.
Americans travel more than 200 million vehicle miles each month, and annually we spend nearly $1.2 trillion on gasoline and oil. The average household spends 5 percent of its annual budget on fuel. For many, gasoline is a mandatory expense. And this legislation disproportionately hits middle and lower income households that tend to have longer commutes to work and must drive in order to work. These families will be hit especially hard by the projected $1 per gallon increase for the additional gas tax the cap-and-trade legislation will bring.
Further, Americans will be double-hit by the gas tax when it raises the costs of goods and services such as groceries and utilities they must continue to purchase. Energy costs are among businesses’ top operational expenses already. While companies face a variety of energy expenses, ranging from heating and cooling their work space to powering equipment and lighting, operating their vehicles is the most costly. Every company, from the small-town local florist to a package delivery service with nationwide operations, will be hard hit. In order for these businesses to withstand the heavier tax burden and to remain profitable, they will be forced to pass these energy cost increases along to consumers through higher prices.
Several industries will be penalized more severely by the gas tax than others. Our nation’s farmers and ranchers, who are tasked with producing high-quality goods for much of the world, will be harmed by Waxman-Markey’s $2 trillion tax on gasoline and $1.3 trillion tax on diesel fuel. Gas- and diesel-powered equipment, ranging from tractors to combines to fertilizing systems, are the operational foundation of American farms and ranches. Under the climate-change legislation, they will face $550 million in higher fuel costs in 2020 and $1.65 billion in 2050.
The American trucking industry will be another target of the cap-and-trade gas tax. In 2007, 1.7 million drivers of tractor-trailers logged 145 billion vehicle miles, consuming 28.5 billion gallons of fuel. That equates to $34,560 in annual fuel costs per driver. That number will skyrocket under Waxman-Markey. And when you consider that the average self-employed truck driver earns $43,545 in net revenue, the gas tax is essentially a new tax on the middle class. Of course, truckers will not suffer these higher gas taxes alone. Their costs are shared by all consumers. At some point, nearly everything bought or sold must be shipped from a manufacturer to a retailer. Thus, the sweeping effects of the gas tax will actually harm our entire economy.
Despite all this pain for families, farmers, truckers and businesses, there is no gain for our environment. Even U.S. Environmental Protection Agency Administrator Lisa P. Jackson admits that unless China and India impose similar draconian taxes and regulations, there will be no effect on world temperatures. So what is the purpose of the increase in costs to every American, and the consequent loss of jobs, if they will not have an effect on the global environment?
Under the majority congressional leadership, trillion-dollar figures have been discussed so nonchalantly in Washington recently that, unfortunately, they’re starting to lose their shock value. Americans must know that the $3.6 trillion gas tax is a very real number with consequences for all of us. That is why we will fight the Waxman-Markey and Kerry-Boxer bills. We can improve the environment and economy through American ingenuity and technological advancement, not with taxes and mandates that increase costs and burden American families and businesses.
Kay Bailey Hutchison is a Republican senator from Texas, and Christopher S. Bond is a Republican senator from Missouri.