SON OF WAXMAN-MARKEY: MORE POLITICS MAKES FOR A MORE COSTLY BILL
May 26, 2009
It's no surprise that the economy responds to cap and trade as it would to an energy crisis. Energy prices rise; income and employment drop. In response, Reps. Henry Waxman (D-Calif.) and Ed Markey (D-Mass.) modified their global warming proposal from the draft version published in March 2009. For the most part, the changes focused on the distribution of the allowance revenue -- the equivalent of tax revenue, says the Heritage Foundation.
Though there was also a slight easing of targeted emissions reductions for 2020, which resulted in a marginally lower economic impact, the new distribution of allowances created a less efficient pattern of government expenditures and more than offset the gain from the lower cap for 2020.
According to researchers, by 2035, the Waxman-Markey bill would:
- Destroy 1,105,000 jobs on average, with peak years seeing unemployment rise by over 2,479,000 jobs.
- Raise electricity rates 90 percent after adjusting for inflation;
- Raise inflation-adjusted gasoline prices by 74 percent.
- Raise residential natural gas prices by 55 percent.
- Raise an average family's annual energy bill by $1,500.
- Increase inflation-adjusted federal debt by 26 percent, or $29,150 additional federal debt per person, again after adjusting for inflation.
Ultimately, this bill would result in government-set caps on energy use that damage the economy and hobble growth--the very growth that supports investment and innovation, says Heritage.
But is all of this economic pain justified by gains against global warming, asks Heritage?
- Waxman-Markey raises energy prices by 55-90 percent.
- These higher energy prices push unemployment up by 1,105,000 jobs. In aggregate, gross domestic product (GDP) drops by over $9.6 trillion.
- The next generation will inherit a federal debt pumped up by $29,150 per person, say researchers.
Source: William W. Beach, et al., "Son of Waxman-Markey: More Politics Makes for a More Costly Bill," Heritage Foundation, WebMemo, No. 2450, May 18, 2009.
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