By Nick Loris
The idea behind cap and trade is to reduce carbon dioxide emissions by putting a price on the right to emit carbon and other greenhouse gases on businesses. Since 85 percent of America’s energy needs are met through carbon-emitting fossil fuels, cap and trade would be a massive tax on energy consumption if enacted.
The debate will move to the Senate this fall. Here’s what to expect if the Senate passes their own version of Waxman-Markey and President Obama signs cap and trade into law.
• Gasoline prices will rise 58 percent. Gas prices are expected to increase in the future even without cap and trade. Waxman-Markey would add an additional $1.38 to that increase.
• Natural gas prices will rise 55 percent;
• Heating oil prices will rise 56 percent;
• Electricity prices will rise 90 percent;
• A family of four can expect per-year energy costs to rise $1,241;
• Including taxes, a family of four will pay an additional $4,609 per year;
• A family of four will reduce its consumption of goods and services by up to $3,000 per year, as its income and savings fall;
• Aggregate GDP losses will be $9.4 trillion; in other words, we will be $9.4 trillion poorer with cap and trade than without.
• The government will collect $5.7 in energy tax revenue.
• Job losses will be nearly 2.5 million; and
• The national debt will rise an additional $5 trillion ($12,803 per person or $51,212 per family of four).
(All figures are in constant 2009 dollars.)
The full Center for Data Analysis report breaks down the legislation (pages 3-4), how the economic model works (pages 6-7), how the energy model works (pages 7-8), and details the reasons why Waxman-Markey is so costly (pages 8-12 ). Appendix two has key economic indicators (GDP loss, personal income loss, unemployment loss, etc) by year, while appendix three has the breakdown of GDP loss, income loss and unemployment loss by state.
The report also includes three breakout sections. The first, on pages 3 and 4, breaks down the effects on different industries. Since some sectors of the economy are more energy-intensive than others, these industries are hit harder by the higher prices. The second breakout, on pages 4-6, includes a description of the allowance giveaways – those industries lucky enough to win the lobbying battles that took place. On page 12, the third breakout debunks why EPA and CBO are reporting that Waxman-Markey will cost a postage stamp per day.
Proponents of Waxman-Markey argue that we need to save the planet to give our children and our grandchildren a better world to live in – but this is not a gift we’re leaving for the next generation – it’s a less prosperous country with fewer opportunities. The income losses, the job losses, the tax increases, and the mounting debt all get worse over the decades. Instead of selfless charity for those who follow, this bill forces a bad deal on a generation that doesn’t have the option to turn it down.
Read more informative articles at Heritage – The Foundry