It’s Time to Discuss Cap and Trade
Nicolas Loris /
This week, beginning today, Waxman and Markey are holding Congressional hearings to discuss the draft of a massive energy bill that includes clean energy investment, energy efficiency mandates, a cap-and-trade program, and protectionist policies that will supposedly help the consumer cope with higher energy prices.
The logic behind the hearing process is to gather experts to help inform legislators about the impact of their efforts. This is a worthwhile and laudable goal, to be sure, but the reality is often very different. Unfortunately, the hearing process is often hijacked by agenda driven politicians more interested in advancing their special interests and self-promotion than actually shedding light on complex and important issues.
The value of a hearing (or in this case, a series of hearings) can often be extrapolated from who will be providing testimony.
The witnesses scheduled to provide testimony on the Waxman-Markey legislation largely fall into two groups. There are those in the energy business that have a financial stake in the legislation and there are those in the advocacy business that support capping carbon dioxide.
While the energy business has a critical perspective on the issue, it is important to put that perspective into context. At first blush, it would seem that these are precisely who should be testifying before such a committee on such a piece of legislation. But first blushes don’t always tell the full story. They have an interest in ensuring that their bottom lines are protected. Many of them have calculated that some sort of carbon capping is inevitable and that their interests will therefore be best served by trying to influence how such a cap is implemented. And the best way to do that will be to position themselves as supporters of the legislation and then to provide some helpful suggestions on how to improve it.
And by “improve it”, read protect their bottom lines, which is what they’re expected to do given the position government put them in the first place.
By having selected energy business leaders provide generally positive testimony on the legislation, Waxman and Markey will be able to claim they have industry-wide support, from big oil to small wind. If they’re all receiving a piece of the pie, why wouldn’t they jump on board?
While there are few testifiers representing the consumer and willing to analyze the cost and benefits of the bill, the deck is still heavily stacked in Waxman and Markey’s favor.
Special interest politics, also known as rent-seeking, has always been a part of politics and it’s unlikely to cease any time soon. Milton Friedman’s son, David, explains it well:
Special interest politics is a simple game. A hundred people sit in a circle, each with his pocket full of pennies. A politician walks around the outside of the circle, taking a penny from each person. No one minds; who cares about a penny? When he has gotten all the way around the circle, the politician throws fifty cents down in front of one person, who is overjoyed at the unexpected windfall. The process is repeated, ending with a different person. After a hundred rounds everyone is a hundred cents poorer, fifty cents richer, and happy.”
In this case, the ‘pennies’ are taken from the American taxpayer. Consumers lose doubly, paying to fund these projects then paying for pricier electricity.
Furthermore, all the political celebrities will be there, including former Vice President Al Gore, EPA Administrator Lisa Jackson and Secretary of Energy Steve Chu. It isn’t difficult to surmise how these three feel about investing taxpayer dollars in unproven sources of energy while heavily taxing the reliable ones.
Presented as a comprehensive energy bill, the American Clean Energy and Security Act of 2009 (ACES) offers nothing more than subsidies and mandates for unsuccessful, unproven energy sources coupled with taxes on reliable energy sources. The bill falsely claims to stimulate the economy by investing in clean technology and creating green jobs, but this government-centric approach will only destroy jobs and drive up energy prices for years to come. A more thorough analysis of the provisions can be found here.
The tentative schedule and list of panels can be found here.