So I ask this Congress to send me legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy in America.
It was a fairly innocuous sounding request in President Barack Obama’s speech, but it would cost more than anything else he mentioned. That’s saying a lot, since the speech contained a number of expensive promises, including a big budget coming on the heels of the colossal stimulus package.
But, beyond the impacts of a bloated annual budget, a global warming cap and trade bill to would fundamentally weaken the economy for decades by placing limits on fossil fuel use- the coal, oil, and natural gas that currently provides 85 percent of America’s energy. And despite President Obama’s lofty talk about wind turbines and solar panels (which after decades of federal handouts provide less than 2 percent of our electricity), there is no way to quickly move away from these energy sources without serious economic disruption. In effect, a carbon cap and trade bill acts like an energy tax, raising the cost of energy so individuals and businesses are forced to use less.
The administration admits as much, assuming up to $300 billion in annual revenues raised from cap and trade in the upcoming budget. But this is not money that drops out of the sky. It is revenues raised by businesses having to pay the government for the right to use energy, making it more expensive. A Heritage Foundation analysis of the 2008 Lieberman-Warner cap and trade bill estimated that it would reduce cumulative GDP by up to 5 trillion dollars, cost many hundreds of thousands of jobs, and raise gasoline and other energy prices by 30 percent.