Cap and Trade Reaches the Terrible Twos

June 26, 2011

House Democrats’ Cap and Trade Bill Would Have Destroyed Millions of Jobs and Raised Gas Prices

Today is the two year anniversary of when Nancy Pelosi led House Democrats in ramming the cap and trade bill through the U.S. House of Representatives, legislation that was called the “biggest tax in American history.”
Employer organizations projected that the bill would destroy more than 2 million jobs, reduce American workers’ wages, set back economic growth and raise gas prices. And House Democrats passed it anyway.
Worse yet, strong evidence shows that the cap and trade bill would not have even achieved the reduction in greenhouse gas emissions promised, as American companies simply would have moved their jobs overseas.

BACKGROUND:

Two years ago on this day, House Democrats voted en masse to pass a national energy tax on American workers and families—legislation that was called “the biggest tax in American history”:

HOUSE DEMOCRATS PASS CAP-AND-TRADE ON 219-212 VOTE. (Roll Call Vote #477, Clerk of the U.S. House, 6/26/2009)

WSJ: CAP AND TRADE TO BE “THE BIGGEST TAX IN AMERICAN HISTORY”:“Americans should know that those Members who vote for this climate bill are voting for what is likely to be the biggest tax in American history. Even Democrats can’t repeal that reality.” (Editorial, “The Cap and Tax Fiction,” The Wall Street Journal, 6/26/2009)

Fortunately for Americans, the bill failed to gain traction in the Senate despite the best efforts of President Obama and Nancy Pelosi. By the numbers, the economic impact of the cap and trade bill would have been an utter disaster, destroying millions of jobs and hurting economic growth by raising gas and energy prices:

NATIONAL ASSOCIATION OF MANUFACTURERS STUDY:

$3.1 TRILLION LOSS IN GDP: “Cumulative Loss in Gross Domestic Product (GDP) up to $3.1 trillion (2012-2030)” (“State-by-State Analysis of Waxman-Markey Cap and Trade Legislation Paints Dour Picture for Nation’s Economy,” National Association of Manufacturers, 8/12/2009)

2.4 MILLION JOBS DESTROYED: “Employment losses up to 2.4 million jobs in 2030” (“State-by-State Analysis of Waxman-Markey Cap and Trade Legislation Paints Dour Picture for Nation’s Economy,” National Association of Manufacturers, 8/12/2009)

50% INCREASE IN ELECTRICITY PRICES: “Residential electricity price increases up to 50 percent by 2030” (“State-by-State Analysis of Waxman-Markey Cap and Trade Legislation Paints Dour Picture for Nation’s Economy,” National Association of Manufacturers, 8/12/2009)

26% INCREASE IN GAS PRICES: “Gasoline price increases (per gallon) up 26 percent by 2030” (“State-by-State Analysis of Waxman-Markey Cap and Trade Legislation Paints Dour Picture for Nation’s Economy,” National Association of Manufacturers, 8/12/2009)

NATIONAL BLACK CHAMBER OF COMMERCE:

1.5 MILLION JOBS LOST BY 2015, 3.6 MILLION OVER LONG TERM: “A net reduction in U.S. employment of 1.5 million job-equivalents in 2015 increasing to 2.2 million in 2030 and 3.6 million in 2050. These reductions are net of … gains in ‘green jobs.’ While all regions of the country would be adversely impacted, Oklahoma/Texas, the Southeast and the Midwest regions would be disproportionately affected.” (CRA International, “Impact of the American Clean Energy and Security Act of 2009 (H.R. 2454),” National Black Chamber of Commerce, August 2009)

DECLINES IN WORKERS’ WAGES OVER TIME: “Declines in workers’ wages will become more severe with time. The earnings of an average worker who remains employed would be approximately $250 less by 2015, $510 less by 2030, and $1,250 less by 2050, relative to baseline levels.” (CRA International, “Impact of the American Clean Energy and Security Act of 2009 (H.R. 2454),” National Black Chamber of Commerce, August 2009)

MAJOR HIT TO NATIONAL GDP: “In 2015, gross domestic product (GDP), a commonlyused measure of total economic activity, is estimated to be 0.7% ($110 billion) below

the baseline level driven principally by declining consumption.” (CRA International, “Impact of the American Clean Energy and Security Act of 2009 (H.R. 2454),” National Black Chamber of Commerce, August 2009)
HIGHER GAS PRICES: “After an estimated 19 cents per gallon increase in 2015, costs of using motor fuels are estimated to increase by 7% (38 cents per gallon) in 2030 and increase by 16% (95 cents per gallon) in 2050, relative to baseline levels.” (CRA International, “Impact of the American Clean Energy and Security Act of 2009 (H.R. 2454),” National Black Chamber of Commerce, August 2009)

Despite these staggering economic costs, the bill wouldn’t have even accomplished its intended objective of lowering global greenhouse gas emissions, as companies would simply move their operations overseas. When will Democrats stop defending their job-destroying policies?:

EPA ADMINISTRATOR ADMITTED UNILATERAL U.S. ACTION ON GREENHOUSE GASES “WILL NOT IMPACT WORLD CO2 LEVELS”: “I believe the central parts of the [EPA] chart are that U.S. action alone will not impact world CO2 levels.”(Remarks from EPA Administrator Lisa Jackson, U.S. Senate Environment & Public Works Hearing, 7/07/2009)

“GLOBAL GREENHOUSE GAS EMISSIONS WOULD LIKELY INCREASE“: “U.S. refiners already face stiff foreign competition and would be severely disadvantaged with higher compliance costs under the Waxman-Markey scheme. Indian businesses, for example, are building refineries specifically geared toward U.S. markets. Such foreign refiners, whose facility emissions are not addressed in the bill and whose operating costs are much lower, will gain a distinct advantage over American businesses in the marketplace. By ceding our stake in the markets to foreign businesses in locations where environmental standards are not nearly as stringent as those that already exist in the United States, global greenhouse gas emissions would likely increase.” (Charles T. Drevna of National Petrochemical & Refiners Association, “The Waxman-Markey Bill: A Good Start or a Non-Starter?”, Yale Environment 360 Blog, 6/18/2009)

BENEFITS OF EMISSIONS REDUCTIONS “ARE LIMITED”: “And it needs to be recognized that the benefits of any action by the United States alone are limited because of the relatively small share that the United States will contribute to global emissions over the next century.” (CRA International, “Impact of the American Clean Energy and Security Act of 2009 (H.R. 2454),” National Black Chamber of Commerce, August 2009)

CAP AND TRADE WOULD SIMPLY SEND JOBS OVERSEAS: “Expensive energy is bad enough, but the real danger of a cap-and-trade policy is a global trade war. A cap-and-trade system would give a competitive advantage to industries in countries that aren’t subject to a de facto energy tax. Jobs would flow overseas, but so would emissions, a dynamic known as ‘carbon leakage.’ To prevent this, a broad coalition of industry, labor, and environmental groups have expressed interest in a tariff that would tax the emissions content of imports from countries without stringent climate policies. Naturally, these countries would retaliate if such a tariff were enacted. Protectionism deepened the Great Depression, just as climate protectionism would worsen the current recession. “(William Yeatman, “Cap and Trade’s Economic Impact,” Council on Foreign Relations, 3/19/2009)