Climate bill seems pretty dim

Commentary by H. Sterling Burnett

Source: Washington Examiner

It's been called a highly regressive tax, imposing relatively higher costs on the poor. Another agrees that it would impose a larger burden, relative to income, on low-income households than on high-income households. And these are just its advocates.

On May 21, on a near-party line vote, Rep. Henry Waxman (D-CA) and the Democratic leadership of the House Energy and Commerce Committee passed its version of President Obama's global warming/energy tax bill. Sadly, the bill contradicts the spirit of the President's pledge to never raise taxes on the poor and middle class.

Obama's original bill would have capped CO2 emissions and auctioned the right to emit shares of that cap. Companies that were able to cut emissions below their share, could sell their excess emissions to companies that were unable to cut their emissions by the required amount. Over time, as the allowed emissions shrink, companies unable to cut their emissions or afford the emissions permits, would be forced out of business.

The administration estimated that the auction would raise nearly $700 billion. Director of the Office of Management and Budget Peter Orszag candidly testified that "under a cap-and-trade program, firms would not ultimately bear most of the costs of the allowances but instead would pass them along to their customers in the form of higher prices for products such as electricity and gasoline." Government forcing industry to create higher prices for consumers? Sounds like a tax.

The government likes cap-and-trade because it is an indirect tax for which industry, rather than Congress or the President, will get the blame when energy prices rise. However, imposing a very visible $700 billon tax on industry during a recession might not be a good idea, so Waxman and company retreated. Instead, Democratic leadership decided that rather than auction the permits, they should give most of them away to select affected industries.

Unfortunately, this change will not prevent massive job losses. Indeed, in anticipation of job losses, which could top 3.2 million unemployed, Congress added a provision that provides three years of unemployment insurance, health care, and relocation expenses to anyone who loses their jobs due to the legislation. The public gets smacked twice: Once by higher food and fuel prices and a second time by having to pay for those unemployed by the bill. Paying for this will either require higher taxes or bigger deficits.

Chairman Waxman and other Democrats were not truly concerned about the effects of high energy prices and job losses - just look at the amendments they rejected. Rep. Mike Rogers (R-MI) offered an amendment that would have suspended the emission caps if China (the world's biggest greenhouse gas emitter) and India did not adopt similarly stringent emissions. Rep. Fred Upton (R-MI) proposed suspending the act if unemployment reaches 15 percent. Rep. Roy Blunt (R-MO) proposed suspending the emission limits if electricity prices rose in any region by more than 10 percent after inflation. Rep. Lee Terry (R-NE) suggested suspending the act if gasoline prices rose above $5.00 per gallon. Democrats rejected every one of these amendments.

Finally, Rep. Marsha Blackburn (R-TN) put the Democratic party's and the Obama Administration's commitment to "transparent" government to the test by offering an amendment that would require full disclosure of any cost increases due to the cap-and-trade bill. Apparently, Democrats feared that the electoral price of honesty might be too high -- they voted it down.

The climate change bill under debate in Congress fails to help the environment and prevent harm to workers. Unfortunately, this isn't enough to make Congress think a second time before turning off our lights.

H. Sterling Burnett is a senior fellow at the National Center for Policy Analysis.