Elections have consequences. One of the most significant yet little talked about consequences of recent elections appears to be a Democratic effort to pass a major energy bill aimed at reducing greenhouse gasses and increasing alternative forms of energy. Now, in theory, this is a concept that I and most Americans could probably support. Protecting our environment and seeking to reduce our reliance on foreign oil are important goals. However, the Democratic leadership in Washington is wandering way off track in its pursuit of these goals. The Waxman-Markey bill, named after authors Henry Waxman (D-CA) and Ed Markey (D-MA), limped out of the House some weeks ago and is now in the Senate. This legislation is in reality a massive pork bill that will further our economic difficulties and mean even more job losses for South Carolina.
Waxman-Markey would establish a “cap and trade” system for carbon dioxide and other greenhouse gas emissions. Companies would be limited to a set allowance of carbon emissions; if they exceeded the allowance, the companies would have to buy “carbon credits” from businesses not using their full allotment. Over time, these allowances would be reduced; if companies did not reduce their carbon emissions, they would be forced to spend more money on additional “credits.”
Anticipating opposition from business, Reps. Waxman and Markey relied on a traditional Washington approach to gain support – they bought it. The Wall Street Journal estimates that Waxman-Markey would give away about $55 billion in permits to “favored” industries in the first year alone. Even more troubling is the provision that would allow investment banks, hedge funds, and other speculators to participate in the cap-and-trade market. This crowd is largely responsible for the collapse of our banking and housing markets. Why would we allow them to play an active role in our energy policy?
The real problem with Waxman-Markey, though, would be the devastating economic impact. The cap-and-trade policy would encourage less energy use by making energy more expensive. In January 2008, then-Senator Obama gave us the details: “under my plan of a cap and trade system, electricity prices would necessarily skyrocket. . . . Because I’m capping greenhouse gases, coal power plants, natural gas—you name it—whatever the plants were, whatever the industry was, they would have to retrofit their operations. That will cost money. They will pass that money on to consumers.” Those price increases are certain to have a ripple effect from large manufacturing companies to the family of four living right here in South Carolina. As the cost of doing business in America increases, we can expect companies and jobs to move to countries with fewer restrictions, such as India, Mexico, and China.
The Institute for Energy Research estimates that a cap-and-trade program could cost South Carolina 18,000-28,000 jobs by 2020. For a state that is already facing one of the highest unemployment rates in the country, that is a pretty sobering statistic. We have the opportunity and resources to use energy as a job creator; yet Waxman-Markey would use energy as a job killer. Encouraging research in alternative fuels, opening new areas for oil exploration, and advancing nuclear power are all energy policies that would create jobs right here at home. These are the policies Congress should promote. Instead, the Democratic leadership in Congress is pushing a flawed cap-and-trade scheme that would satisfy liberal activists at the expense of our national economy. If ever we needed some small-town common sense in Washington, this is surely the time.