October 1, 2009
Climate Change: The Senate has finally rolled out its long-awaited cap-and-trade bill to slash carbon dioxide. Looking at its draconian restrictions on the U.S. economy, it's hard to believe its supporters are serious.
The Boxer-Kerry bill isn't a whole lot different from the Waxman-Markey bill that was passed by the House of Representatives in June. And that's the problem.
Both bills provide for a "cap-and-trade" system to slash the use of fossil fuels and replace them with solar, wind and other "alternative" energy sources. The idea is to impose strict limits on the output of CO2, a supposed cause of global warming.
If this sounds like a good idea, it isn't. It'll lead to massive new taxes, the demise of entire industries, the elimination of millions of jobs and lost income for all. As the Heritage Foundation found when it ran the numbers on Waxman-Markey, the economic losses entailed in imposing cap-and-trade are enormous.
Over 23 years, a cap-and-trade plan would slash $9.4 trillion from GDP and kill 2.5 million jobs. It would hike gasoline prices by 58%, or $1.40 a gallon. Home electricity rates would soar 90%.
All told, cap-and-trade could cost families an added $1,761 a year in taxes. And no, that's not an estimate cooked up by anti-cap-and-trade activists. That's the White House's own estimate for the costs, which it tried to hush up. Taxpayers will have to pony up as much as $200 billion a year in new taxes, the equivalent of raising everyone's taxes by roughly 15%.
"Economic costs will likely be on the order of 1% of GDP, making them equal in scale to all existing environmental regulation," said a confidential White House memo, written late last year and obtained recently by the Competitive Enterprise Institute.
Worst of all, neither the House's bill nor the Senate's will work.
The Senate version would slash CO2 output by 20% by 2020 and 83% by 2050, from 2005 levels. Waxman-Markey, by comparison, would cut 17% by 2020.
Supporters point out that we've already sliced our CO2 output in the last two years. We could do more, they say. Sure, but we haven't cut CO2 output because of any green initiative. We've cut it by suffering the worst recession in at least two decades.
Some advocates seem not to mind that they would hobble the economy permanently due to totally arbitrary CO2 output "targets."
Unfortunately, as of today, the technology to radically reduce fossil fuel use without crashing the economy simply doesn't exist. So to reach the goal means, inevitably, massive economic contraction.