Generous Assumptions on Cap and Trade Do Not Mask the Costs
Nicolas Loris /
The Heritage Foundation recently released its economic analysis of the Waxman-Markey cap and trade bill, and unsurprisingly, found devastating results. The goal of cap and trade is to force energy prices to rise so high that people use less of it. And boy do they. Even under the most generous assumptions the Heritage analysis found: Gas 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. Electricity prices will rise 90 percent. In total, a family of four can expect per-year energy costs to rise $1,241 by 2035.
A family of four will also reduce its consumption of goods and services by up to $3,000 per year, as its income and savings fall; Over the 2012-2035 time frame, the years in which we modeled the bill, 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 trillion in energy tax revenue. By 2035, job losses will be nearly 2.5 million.
All of these costs come after very generous assumptions about renewable energy and does not include the full economic impact of the legislation.