Senate Finance Chairman Max Baucus made headlines this week for something other than healthcare. On October 27 Senator Baucus said he has “serious reservations” about the cap and trade bill, especially the increased near-term target of 20 percent carbon dioxide reduction below 2005 levels by 2020 – up from 17 percent in the passed House bill.
No changes can be made within the cap and trade approach can alleviate his concerns. Changing the targeted emissions reductions for 2020 from 20 percent to 17 percent might reduce the near-tem economic impact, but the reduction targets from there on out mirror the Waxman-Markey bill. The steeper the reduction targets in subsequent years, the higher energy prices will have to go to meet those targets.
The scariest numbers from The Heritage Foundation CDA analysis of Waxman-Markey were in 2035, when job losses reach 2.5 million, gasoline prices will rise by 58 percent ($1.38 more per gallon) and average household electric rates will increase by 90 percent. The Heritage model only goes out to the year 2035 but carbon dioxide reduction cuts are most stringent in 2050.
This is just one of many concerns the Senate has with the cap and trade. In June of last year 10 Democrats sent a letter to Senator Barbara Boxer and Senator Harry Reid stating their concerns over a cap and trade bill, the biggest being that it contain costs and prevent harm to the U.S. economy.
The Heritage Foundation analysis of Waxman-Markey found that implementing the bill would reduce aggregate gross domestic product (GDP) by $9.4 trillion from 2012-2035. Even the Congressional Budget Office acknowledged that “such legislation would also reduce economic activity through a number of different channels.”
Senators in coal producing states rightly have their own reservations. For instance, Senator Sherrod Brown (D-OH) said one of his top concerns was “a spike in energy prices” saying, “I don’t think we’re entirely there, for coal states.”
And we’ll never get there for coal states. President Obama’s infamous line when it comes to cap in trade is that electricity prices will “necessarily skyrocket”, but his message on coal was just as alarming. Although the President did talk about the possibility of clean coal, he also said, “So, if somebody wants to build a coal-fired plant, they can. It’s just that it will bankrupt them because they are going to be charged a huge sum for all that greenhouse gas that’s being emitted. That will also generate billions of dollars that we can invest in solar, wind, biodiesel and other alternative energy approaches.”
So we’re going to tax cheap, reliable energy (costs that will be passed on to the consumers) to invest in expensive, inefficient energy sources that cannot survive without government support.
Despite Boxer’s repeated attempts to promote cap and trade as a jobs bill, Senator Debbie Stabenow (D-MI) still has concerns: “My message over all is that for us to support what needs to be done in addressing global warming we need to demonstrate that, in fact, jobs are created.”
They won’t be; they will be destroyed. It’s important to stress that of the organizations that modeled cap and trade, not one scenario, including the EPA’s after generous assumptions, projected a net increase in income or employment from cap and trade. The entire debate was over the magnitude of income, consumption and job losses.
The Senate has a lot of problems with cap and trade. But there aren’t any solutions.