Contentious, Costly, and Irrational Cap and Trade: A Policy Slated to Crush the U.S. Economy
Policy experts, lawmakers, businesses, and constituents from across the country have continued to express their well justified opposition to the idea of a government-run cap and trade system in the U.S. Currently, a new version of a cap and trade based bill is being considered. This new bill, in large part, unfortunately resembles the original Waxman-Markey cap and trade bill.
The underlying criticism is that cap and trade, simply put, is far too expensive; particularly during a time when our national debt, fiscal deficit, and unemployment levels are still climbing. In addition to the vast scientific uncertainty that characterizes cap and trade backed science, the widely disseminated consensus has been that cap and trade’s subsequent effects on our domestic economy would unequivocally cripple industry in the United States.
Referring to proposed cap and trade legislation, Politico writes:
With millions of Americans out of work, the economy struggling and recovery in doubt, the last thing we should be doing is further burdening American families and businesses.
Politico then proceeds to say:
Legislation laden with job-killing regulations that does not produce cleaner, more efficient, American-made energy is not what Americans need or want.
Finally, Politico says:
Unfortunately, if the Senate legislation resembles the Waxman-Markey bill, that’s what they’ll get.
Although there are many advocates of alternative (perhaps renewable) energy resources and a green jobs market, many of these same advocates fail to realize that cap and trade is one of the least prudent ways of going about achieving the former and/or the latter. After all, economic models and data analyses have proven that cap and trade would be detrimental to both the producer and the consumer in both the short run, and the long run. You may be wondering: to what degree would cap and trade be detrimental to the producer and the consumer? The Heritage Foundation conducted a thorough study of the economic impact of Waxman-Markey sponsored cap and trade. Adjusted for inflation to 2009 dollars, these were their calculated findings:
Cumulative gross domestic product (GDP) losses are $9.4 trillion between 2012 and 2035;
Single-year GDP losses reach $400 billion by 2025 and will ultimately exceed $700 billion;
Net job losses approach 1.9 million in 2012 and could approach 2.5 million by 2035. Manufacturing loses 1.4 million jobs in 2035;
The annual cost of emissions permits to energy users will be at least $100 billion by 2012 and could exceed $390 billion by 2035;
A typical family of four will pay, on average, an additional $829 each year for energy-based utility costs; and
Gasoline prices will rise by 58 percent ($1.38 more per gallon) and average household electric rates will increase by 90 percent.
This CDA analysis extends only to 2035, as this is the forecasting horizon for the macroeconomic model used to prepare these estimates. But it should be noted that the emissions reductions continue to tighten through 2050 and that model-based analysis by other groups whose models extend beyond 2035 shows increasing harm to the U.S. economy.
Further validating the severity of cap and trade’s grim economic projections, Politico reports:
A study of Waxman-Markey by the American Council for Capital Formation and the National Association of Manufacturers found that it could translate into 2.4 million lost jobs and a cumulative gross domestic product loss as great as $3.1 trillion by 2030.
In an effort to put a finishing touch on their defense against cap and trade, Politico writes:
Waxman-Markey, or anything like it, is unnecessary, unwise and ill-advised.
Given what economists, policy experts, and energy scholars have emphatically revealed regarding the negative economic unintended consequences of cap and trade legislation, it baffles me to hear that there are still those out there who believe that cap and trade is necessary. Even more so, it baffles me to hear that there are still those who are not disenchanted by the widely proclaimed negative economic consequences of a cap and trade system in the U.S. Why should U.S. lawmakers rush to pass a multi-trillion dollar bill that will single handedly change the course of production in the U.S. for the worse? Also, given what we know about the recent IPCC global warming data scandal, why would such a drastic economic measure still be considered necessary? Ultimately, cap and trade is an awful legislative proposal. It threatens not only our prospects for economic growth and productivity, but also our economic liberties as energy consuming households. These are just some things to consider when considering the idea of a cap and trade system in the United States.