The House of Representatives is prepared to pass the President’s energy tax, also known as the American Clean Energy and Security Act – or “ACES”. ACES is a fitting name for this particular bill, because it gambles with the future of the American people. In Blackjack, the dealer might have an ace showing, but one card in the dealer’s hand is always hidden. In this case, the hidden card is the real costs of this bill to the American taxpayer. What the taxpayer doesn’t know is that the odds for the game are that you lose.
No matter how many times the Majority deals in additional give-aways to special interests or another tax break to offset the monumental costs of this bill, the end will be just the same – the taxpayer goes bust. The House wins. ACES is a product of the supermajority the Democrats have in the House of Representatives. Given the rules and procedures of the House, reasonable amendments will be defeated or even blocked from consideration. The final product will not be a real starting point to begin this debate on climate change. ACES will have a devastating effect on our economy, and we will have no environmental benefit to show for it. I’m not alone in this assessment.
According to Harvard Economist Martin Feldstein in a recent Washington Post article, ACES will “have a trivially small effect on global warming while imposing substantial costs on all American households.” He cites the Congressional Budget Office, which estimated that the resulting increases in consumer prices needed to achieve a 15 percent CO2 reduction, slightly less than the ACES target, would raise the cost of living by $1,600 a year for every family in America. That’s a $1,600 tax on every American.
The Heritage Foundation predicts that the ACES approach could cost the economy $9.6 trillion and more than 1 million lost jobs by 2035. These are just the raw numbers. The real potential for economic pain goes much farther.
As David Sokol, Chairman of MidAmerican Energy, points out, ACES could be a bonanza for more Wall Street corruption and greed. ACES would “deal in” investment banks, hedge funds, and other speculators in the cap-and-trade market. Sokol points out, “If you liked what credit default swaps did to our economy, you’re going to love cap and trade.” Coincidentally, the bill allows for credit default swaps. Sokol is not alone in his assessment.
British Scientist James Lovelock, noted chemist and environmentalist, stated in January of this year that “[c]arbon trading, with its huge government subsidies, is just what finance and industry wanted.” He went on to say, “it’ll make a lot of money for a lot of people and postpone the moment of reckoning.” Carbon markets can also cause massive fluctuations. We can look to Europe as an example.
In February of this year, the Financial Times wrote an article entitled “Fall in CO2 Price a Risk to Green Investment.” It seems that the price of carbon in the European Union had fallen so low that it no longer provided an incentive to lower carbon development. According to the Norway-based consulting and analytics firm Point Carbon, the value of the global carbon market will drop from $118 billion in 2008 to about $79.7 billion in 2009. That is a severe economic contraction, similar to the ones we have seen in our markets.
According to the Times, “the recent falls have demonstrated the difficulty for the European Commission and member states to set carbon quotas at levels industry finds acceptable, while providing a reliable incentive to low-carbon investment.” The carbon price has also been affected by the recent recession. According to the Times, “as companies produce less, they will need fewer permits.” This just further highlights how risky a gamble creating a carbon market can be.
Another problem is the huge economic gamble ACES makes by bypassing cheaper, low-carbon fuels by heavily relying on unreliable expensive energy. ACES mandates by 2020 that electric utilities meet 20 percent of their electricity demand through renewable energy sources and energy efficiency.
This is the wrong approach. We need an “all of the above energy strategy” to address our nation’s needs. We need to make America’s energy as clean as we can, as fast as we can, without raising energy prices for American families. That’s how you create and sustain economic development. Let’s develop all of our energy resources – wind, solar, geo-thermal, hydro, clean coal, nuclear and natural gas. The United States is blessed with abundant energy resources. They are right here for us to use in a clean and environmentally-friendly way. Coal is cheap and abundant in America. It’s what’s keeping energy affordable. Uranium is abundant in America too. Let’s develop this proven, zero-carbon resource. And yes, let’s develop renewable energies like wind, solar, and hydro-power.
As Lisa Jackson, Director of the Environmental Protection Agency stated on a recent trip to my home State of Wyoming, “As a home of wind, coal, and natural gas, Wyoming is at the heart of America’s energy future.” That is because Wyoming has it all – coal, wind, natural gas, oil and uranium for nuclear power. We need it all. The bottom line is the Democrat’s cap and tax bill costs jobs, and raises energy prices. I don’t understand why we can’t make America’s energy as clean as we can, as fast as we can, without raising energy prices on American families.
Why are the American people being given this stacked deck, where all the options hurt the economy, raise energy prices, and cost jobs? The reality is, this partisan energy tax bill is a bad bet. We shouldn’t double down with any more taxpayer money to bail out the climate through an energy tax.
The views expressed by guest bloggers on the Foundry do not necessarily reflect the views of the Heritage Foundation.