Commentary: Energy proposal forgets economics
Published: July 10, 2009
Tags: American Clean Energy and Security Act, cap-and-trade, economy, global warming, Obama
Raymond Keating
Dolan Media Newswires
Long Island, NY — Too many elected officials either ignore economic reality when pursuing political desires or never had a clue about economics in the first place.
Of course, politicians are not alone. It’s not unusual to find an economist who succumbs to the dark side of politics, letting political preferences override sound economic reasoning.
A glaring example of politics overriding economics came June 26 when the U.S. House of Representatives passed the American Clean Energy and Security Act. The legislation’s intent is to completely overhaul the nation’s energy consumption and production in the name of fighting so-called manmade global warming.
In effect, politicians are willing to wreak havoc on the U.S. economy for the sake of green politics, even as deep divisions exist within the scientific community over the theory that carbon-dioxide emissions are driving temperatures to catastrophic levels.
The bill features a massive regulatory scheme known as cap-and-trade. The government caps emissions, hands out permits for certain levels of emissions to various industries and then those permits can be traded.
Over time, the restrictions grow tighter. The mandate would cut emissions to 17 percent below 2005 levels by 2020 and 83 percent by 2050.
Study after study has shown this cap-and-trade agenda would devastate U.S. competitiveness and economic growth. In May, a study conducted by CRA International for the National Black Chamber of Commerce estimated that by 2030, natural gas prices would rise by 16 percent, electricity rates by 22 percent and motor fuel prices by 23 cents per gallon. Meanwhile, the average American household’s purchasing power would fall by $830 and net employment loss would range between 2.3 million and 2.7 million annually through 2030.
President Obama, of course, supports the entire effort. However, as the New York Times reported regarding a June 28 interview with the president, “Mr. Obama said American industries like steel, aluminum, paper and glass had legitimate concerns about competition from developing nations.”
The House would answer those concerns by making matters even worse through trade protectionism. While Obama’s energy secretary, Steven Chu, also endorsed trade retaliation earlier this year, the president, who has been all over the map on trade, currently does not favor risking a trade war.
But Obama certainly likes international efforts to cap emissions. He reportedly wants legislation from Congress to sign before heading off to United Nations talks on climate issues in Copenhagen in December.
As we look now to the U.S. Senate, let’s hope that the world’s most deliberative body soberly deliberates on the economics of cap-and-trade and wisely rejects this dangerous legislation.
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.
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The older I grow the more I understand that legislators are not elected to represent their constituents (voters). They are in office for power and greed. They don’t care about the inflation they enact or the lives or bank accounts of their district residents. The energy act is a scam and foolishness as is the wind and solar energy policy of these same fools. I am holding back on my adjectives for state and federal legislators and administration