Cap and Trade: a job killer

You don’t have to be an economist to understand the economic situation.  Unemployment has hit double digits in many states and is growing (in Ohio: 340,000 jobs lost since Ted Strickland and Lee Fisher took office) and everyone is paying the price.    The stimulus has accomplished nothing (Again, in Ohio, in the neighborhood of 100,000 jobs lost since its passage) and yet the Democrats in Congress are intent on making a bad situation worse by passing legislation that would cripple American businesses and devastate families.

The focus lately has been on health care, and for good reason, but energy is an issue that should not be lost in the debate about the economy.  Because Cap and Trade (H.R. 2454, the Waxman- Markey bill) is a dagger aimed at the heart of our economy.

More below.

I attended the Energy Summit here in Columbus sponsored by the American Energy Solutions Group in the House Republican Conference.  The field hearing was led by Congressman Pence and joined by House Minority Leader John Boehner and Ohio Reps. Austria, Latta, Tiberi, and Schmidt.  It was an interesting experience.

Pulling up to THE (all the OSU grads made sure to emphasize that word) Ohio State University campus I saw protesters with signs: “Paid for by Big Oil”, “Clean Energy Now”, etc.  I made a note to inquire about my check from Big Oil, because I have yet to receive it!

Joking aside, the summit was really free from ideology or partisan debates about global warming, etc.  The focus was on jobs.  The simple message was that an “All of the Above” strategy is needed to address American energy needs, that the Waxman-Markey Cap and Trade bill ignores this fact and as a result will have a devastating effect on the American economy.

The particular focus was on how damaging this bill, as passed by the House, would be for Ohio businesses and families.  There were a wide variety of witnesses and sectors like agriculture, manufacturing, small business, municipal energy, minority business, etc. were all touched on.

And in all of these areas Ohio’s economy would be devastated by Cap and Trade.  Example: it is estimated that there are roughly 35,000 coal related jobs in Ohio.  With Cap and Trade 80% of those jobs would be destroyed by 2030.  And these are high paying jobs in areas of the state that are struggling economically.  This is a serious human impact.

A small businessman put this in perspective.  He said this was about not having to lay off friends and neighbors; about trying to find a way to give your employees 40 hours a week in a struggling economy.  Cap and Trade would mean less business as his customers pay higher prices, it would mean higher costs for his own company, and it would force him to go overseas to get raw materials and supplies.  This means fewer jobs and those tough conversations with his employees. Not to mention the economic reverberations in the community.

And as Christopher Horner, Senior Fellow at the Competitive Enterprise Institute,  explained, all of this for a policy that will not actually reduce carbon emissions.  He noted that Europe has tried a similar strategy (in the aftermath of Kyoto) and it has failed.  They have not reduced emissions but instead have paid the price economically (they have been desperately trying to hide this fact ever since).

Horner bluntly explained that what is being proposed is really the largest tax increase in history, albeit a hidden one, and a strategy of government rationing where the federal government decides what is available and at what cost.  He also noted that as a result of Europe’s policy America has once again begun to be competitive in the steel industry with companies building plants here.  This bill threatens that and the resulting jobs that those companies produce.

Having followed the energy issue myself very little of what was discussed was news to me, but it was helpful to see the issue presented in such a straightforward and factual way.

What became clear, however, is that there is a fundamental disconnect between what voters think about energy and what is going on in Washington.  Voters care about the environment and would like to see growth in “green jobs” and renewable energy.  But they obviously don’t want to do so at the expense of their own jobs and communities.

What they don’t fully understand is that under the guise of these popular sentiments the Democrats in Congress are trying to pass a bill that will cripple the Midwestern economy – with Ohio being at the center of hat bulls-eye.

Rep. Latta explained that his district is the heaviest agricultural and manufacturing district in Ohio and 3rd in terms of districts that would be hardest hit by Cap and Trade.  The irony is that this district is involved in, and manufactures, many of the technologies that will lead to clean energy: wind, solar, bio-diesel, etc.  But higher costs make those businesses uncompetitive as well.

A Heritage Foundation study outlines the devastation this bill would cause:

Analysis of the economic impact of Waxman-Markey projects that by 2035 the bill would:

  • Reduce aggregate gross domestic product (GDP) by $9.4 trillion;
  • Destroy 1,145,000 jobs on average, with peak years seeing unemployment rise by over 2,479,000 jobs;
  • Raise electricity rates 90 percent after adjusting for inflation;
  • Raise inflation-adjusted gasoline prices by 58 percent;
  • Raise residential natural gas prices by 55 percent;
  • Raise an average family’s annual energy bill by $1,241; and
  • Result in an increase of $28,728 in additional federal debt per person, again after adjusting for inflation

After all of this, the question is what can we do about it?  I spoke with Rep. Latta afterwords and he suggested that what is needed is to make Americans aware of what the bill actually does and its impact on them.

He felt that when Congress convened their was a sense of urgency and a traditional honeymoon period for President Obama.  So many issues were being pushed through by the majority that it was hard to focus citizen’s attention on Cap and Trade (though the House GOP tried).  It was really only in the aftermath of the bill’s passage that businesses and voters began to understand the damage that could be done.

The bill is now in the hands of the Senate.  So it falls to knowledgeable and politically active people to get the message out.  The members of the Energy Solutions group are doing there part.  They are holding meetings (Latta has held hundreds of meetings across his district) and reaching out to people online.

Whether it is through new media or just old fashioned communicating with your friends, family, and neighbors if you care about economic growth and jobs you need to spread the word about this bill.  Politicians from dog catcher to president need to feel the heat, and understand the political ramifications of a vote to support the policies that will kill jobs and cripple our economy.

Voters need to understand that this bill won’t help the environment and won’t magically lead to a Utopian world of green jobs and renewable powered energy.  This is big government, bad science, and terrible economics.

It is not an easy time.  Jobs are scarce and there are battles on multiple fronts.  But the only way to dig ourselves out of this hole is to stop digging and start making policies that help not hurt.

Cap and Trade is a dagger aimed at the economy of the  heartland and must be stopped.

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