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The summer driving season is underway and Floridians will have to grapple with higher gas and energy prices in the months to come. Unfortunately for them, the Leadership in Congress is poised to make matters even worse by establishing a new national energy tax to be paid by all Americans who drive a car, buy anything made in America, or turn on a light.
The central focus of their climate change bill, titled the American Clean Energy and Security Act, is a cap-and-trade system under which the government imposes an economy-wide limit on carbon emissions, which would decline over time.
The government would print permits for each ton of carbon allowed under the cap, and companies in a wide range of targeted industries would buy and trade those permits to match their emissions.
The intellectual architects of the cap-and-trade tax plan acknowledge higher energy prices would result from an emissions cap; in fact they rely on it. According to Dr. Peter Orszag, the Director of the Congressional Budget Office (CBO), “under a cap-and-trade program, firms would not ultimately bear most of the costs of the allowances but instead would pass them along to their customers in the form of higher prices. Indeed, the price increase would be essential to the success of a cap-and-trade program.”
And that is precisely why some in Congress worked feverishly in secret back room deals to hand out hundred of billions of dollars in free allocations, essentially bribing companies and other members to support the bill.
Masked as a legislative solution to clean up the environment, the Heritage Foundation Center for Data Analysis found that this cap-and-trade tax scheme could cost families up to $4,300 more per year in direct and indirect costs, and result in real GDP losses of $9.4 trillion over the life of the bill.
Further analysis of the economic impact of the cap-and-trade tax scheme by the Heritage Foundation projects that by 2035 the bill would, after adjusting for inflation, raise electricity rates 90 percent; raise gasoline prices by 74 percent; raise residential natural gas prices by 55 percent; and increase the federal debt by 26 percent or an additional $29,150 per person.
The resulting higher energy rates would be especially hard on elderly and low-income individuals. Putting a price on carbon is regressive by definition because poor and middle-income households spend more of their paychecks on things like gas to drive to work or to get groceries, or on cooling and heating their homes.
The CBO estimates that the price hikes from a 15 percent cut in emissions would cost the average household in the bottom income quintile about 3.3 percent of their after tax income every year, not including the cost of reduced employment and economic output.
During the House Energy & Commerce Committee’s consideration of the legislation, I along with others offered a series of amendments to protect Americans from paying the national energy tax if gasoline and electricity costs soared, or if unemployment reached historic levels.
But, one by one, the majority rejected these common sense amendments, barreling ahead with their plans to saddle Americans with a massive new tax when they can least afford it.
At a time when the United States faces a projected 25 percent increase in electricity demand by 2030, failure to develop a holistic policy that meets the nation’s energy demand, energy security needs, and reduce greenhouse gas could threaten our nation’s future success, especially if we do it alone.
China adds more carbon dioxide to the atmosphere each year than any other nation in the world. However they have consistently rejected any binding international cap on such emissions and claim the right to continue to increase greenhouse gas emissions.
Without equivalent efforts by China, India and other nations to limit greenhouse gas emissions, our nation stands to lose many hundreds of thousands of jobs to these countries profiting from this unilateral action.
Any meaningful effort to achieve long-term, sustainable reductions in global greenhouse gas emissions will depend on the development and deployment of new energy technologies, including advanced clean coal technologies, carbon capture and sequestration, and advanced nuclear power generators.
The rapid development, demonstration, and widespread deployment of such technologies are of paramount importance in any reasoned and effective effort to address carbon dioxide reductions.
The massive new regulatory burdens imposed by this cap-and-trade tax scheme would inevitably undercut the growth and innovation we desperately need to build lasting and effective solutions.
Fostering new technology and scientific research across all sectors of the economy, not capping our economy and trading American jobs, will guard our nations security and increase our energy independence.
Cliff Stearns is the U.S. Representative for Florida’s Six Congressional District.