Washington Examiner Editorial - Cap & Trade

Waxman-Markey cap-and-trade scheme will wreck U.S. economy
By: Examiner Editorial-05/18/09 6:05 AM EDT
House Energy and Commerce Committee Chairman Rep. Henry Waxman, D-CA, has teamed with Rep. Edward Markey, D-MA, chairman of the House Select Committee on Energy Independence and Global Warming, to produce the latest in a series of “cap-and-trade” bills designed to reduce carbon-dioxide (CO2) emissions. Such emissions are produced when carbon-based fuels like petroleum and coal are burned to create energy to run things like electric power plants, automobiles and air conditioning systems. These emissions must be reduced because they are allegedly causing the earth’s atmosphere to heat up, with all sorts of lethal consequences following, not excluding death, destruction and the Final Apocalypse of All Mankind. The problem for such advocates, however, is that earth’s average temperatures have been declining for a decade, and a fast-growing number of climate and other scientists now question the root idea of a global warming crisis. These critics are increasingly banding together with elected officials and other experts in the public policy arena who see cap-and-trade schemes like Waxman-Markey as fatally flawed on two counts.
First, under Waxman-Markey, the government would establish a schedule of emissions reductions – 70 percent by 2030 – and a program of “credits” for businesses that meet the schedule. Those that don’t meet it can buy credits from companies that do, thus satisfying the government’s emission reduction mandate. The problem is that even under the most optimistic scenario, achieving the Waxman-Markey reductions would have only a negligible effect on global temperatures. Europe’s similar cap-and-trade program has been in effect for five years, yet has had no measurable impact on global temperatures. The U.S. effort is likely to fail, too, for the simply reason developing countries, particularly China and India, aren’t going to hobble their expanding economies, which will be dependent upon carbon-based fuels for the foreseeable future. Thus, at best, Waxman-Markey will reduce average global temperatures by much less than one degree.

That reduction highlights the second flaw, which is the excessive cost of achieving virtually no reduction in global temperatures. The conservative Heritage Foundation’s Center for Data Analysis used an econometric model of the U.S. economy to measure the projected impact of Waxman-Markey and found that by 2035, it would:

§ Reduce aggregate gross domestic product (GDP) by $7.4 trillion,
§ Destroy 844,000 jobs on average, with peak years seeing unemployment rise by over 1,900,000 jobs,
§ Raise electricity rates 90 percent after adjusting for inflation,
§ Raise inflation-adjusted gasoline prices by 74 percent,
§ Raise residential natural gas prices by 55 percent,
§ Raise an average family's annual energy bill by $1,500, and
§ Increase inflation-adjusted federal debt by 29 percent, or $33,400 additional federal debt per person, again after adjusting for inflation.

That is a prescription for wrecking American prosperity for decades to come.