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Changing the Nation, One State at a Time
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Changing the Nation, One State at a Time
As it appeared in the Cincinnati Enquirer:
By Jack Boyle and Phil Kerpen
Washington wants to hand Ohio a huge new tax bill. The "cap-and-trade" scheme at the core of the energy tax bill recently passed by the U.S. House of Representatives would have an enormous negative impact on the state. An analysis by the Heritage Foundation showed that the House-passed Waxman-Markey bill would cost Ohio's 1st district 74,832 jobs and decrease household incomes by $5,909 by 2030. Rep. Steve Driehaus voted for this bill, but for the sake of their state, Sens. George Voinovich and Sherrod Brown need to vote against it.
The cap-and-trade scheme is a huge new tax in disguise - a tax on energy that will drive up the price of nearly everything in the country. Take President Obama's own word for it. He told the San Francisco Chronicle last year: "Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket."
His plan to auction off allowances for the use of fossil fuels is essentially an energy tax where nobody knows the tax rate in advance. Companies bid against each other at a government-run auction, and the company that loses the auction gets shut down by the EPA - so it's high-stakes.
Unfortunately, this idea went from bad to worse in the House. Instead of auctioning the permits, most of them will be given away based on political considerations - that's how they got enough votes to squeak the bill through on a 219-212 vote.
Senator Barbara Boxer (D-Calif.) candidly explained how this works a couple of weeks ago:
"There's so much revenue that comes in from a cap-and-trade system that you can really go to a person in a congressional district and get enough votes there by saying, 'What do you need? What do you want?' You can really help them."
All those permits - worth billions - being given away for free are good news for the corporations that will get the windfall, but they do nothing to soften the blow of steeply higher energy prices for consumers. As environmental economists Kristen Sheeran and James Barrett have explained, it's like buying World Series tickets from a scalper, who doesn't charge you any less if he found them on the ground. They explained:
"Of course, the scalper would much rather get his tickets for free - and that's precisely the point. Polluters are financially much better off if permits are given away instead of auctioned, but the cost of cutting emissions and the resulting effect on energy prices will be the same no matter how the permits are delivered."
It's no wonder that electric utilities have begun to line up for their free piece of the pie. American Electric Power, the Columbus-based provider with operations in 38 states, endorses an approach to cap-and-trade that gives away a large number of emission allowances. It's no surprise that AEP wants to avoid the costly auction, but either way the costs will be borne by the consumer.
While AEP, Obama and central planners in Washington don't want you to know what this bill will ultimately look like, either way you pay more. A lot more. Not just for electricity, but also for gasoline, diesel, and lots of other things.
Don't take our word for it. In March, President Obama's budget director, Peter Orszag, got right to the point:
"If you didn't auction the permits it would represent the largest corporate welfare program that has even been enacted in the history of the United States. All of the evidence suggests that what would occur is that corporate profits would increase by approximately the value of the permits."
So will the United States Senate follow the House's lead and grease a massive cap-and-trade energy tax through with the biggest corporate welfare program in history?
And what do we gain environmentally? Basically, nothing. Cap-and-trade failed to reduce emissions in Europe. And even if emissions targets were met, climate models show the reductions would have no detectable impact on global average temperatures.
In fact, it could very well increase emissions. Even the Environmental Protection Agency has warned that cap-and-trade "can cause domestic production, which embodies the greenhouse gas allowance price, to shift abroad, which would thus result in an increase in greenhouse gas emissions."
Let's hope that as the bill moves to the Senate, Voinovich and Brown will stand up to politically correct special interests and vote against this tax-hiking, jobs-killing scheme.
Jack Boyle is state director for the Ohio chapter and Phil Kerpen is director of policy for Americans for Prosperity, a national organization dedicated to educating and training citizens to be advocates for limited government and lower taxes.