The New York Times reported Saturday:
How did cap and trade, hatched as an academic theory in obscure economic journals half a century ago, become the policy of choice in the debate over how to slow the heating of the planet? … The answer is not to be found in the study of economics or environmental science, but in the realm where most policy debates are ultimately settled: politics.
Cap and trade, by contrast, is almost perfectly designed for the buying and selling of political support through the granting of valuable emissions permits to favor specific industries and even specific Congressional districts. That is precisely what is taking place now in the House Energy and Commerce Committee, which has used such concessions to patch together a Democratic majority to pass a far-reaching bill to regulate carbon emissions through a cap-and-trade plan.
The Heritage Foundation’s Center for Data Analysis has crunched the numbers on how the latest “buying and selling of political support” has changed the economic impacts of the Waxman-Markey energy tax legislation:
Representatives Henry Waxman (D-CA) and Ed Markey (D-MA) modified their global warming proposal from the draft version published on March 31. For the most part, the changes focused on the distribution of the allowance revenue–the equivalent of tax revenue.
There was also a slight easing of targeted emissions reductions for 2020, which resulted in a marginally lower economic impact. However, the new distribution of allowances created a less efficient pattern of government expenditures and more than offset the gain from the lower cap for 2020.
The economic impact of the new draft varies from that of the original draft in several major ways:
- Compared to no cap and trade, real GDP losses increase an additional $2 trillion, from $7.4 trillion under the original draft to $9.6 trillion under the new draft
- Compared to no cap and trade, average unemployment increases an additional 261,000 jobs, from 844,000 lost jobs under the original draft to 1,105,000 lost jobs under the new draft
- Peak-year unemployment losses rise by 500,000 jobs, from 2 million under the original draft to 2.5 million under the new draft.