Summary of Yesterday's Conference Call With Rep. McCarthy (R-CA) and Rep. Scalise (R-LA)

Yesterday, several of us were in on a roughly bi-weekly conference call organized by Rep. Kevin McCarthy (R-CA).

The main focus of the call yesterday was the recent “center of gravity” in the Energy and Commerce Committee regarding all the “climate change” debris and the various proposals spinning around the tornado of “Cap-and-Trade” (perhaps better described as “Cap-and-Tax”).

Rep. McCarthy brings “guests” to these conference calls – and since the focus of this call was energy, the special guest was Rep. Steven Scalise (R-LA). Rep. Scalise serves on the House Energy and Commerce Committee – and, of course, he represents Louisiana…. where energy is a major issue.

Highlights below the fold….

The hearings in Energy and Commerce have been quite a circus, with some 60 witnesses testifying with regard to Cap-and-Trade. The main point of Cap-and-Trade is that it is – pure and simple – an energy tax. When it’s packaged as something nice and fluffy and cost-free, it can look palatable – but when the rough truth that it all amounts to stiff energy taxes (that become more onerous over time) is made clear, support for it collapses with startling rapidity.

(Apparently, the Democratic Congressional Campaign Committee (DCCC) is starting to hit the panic button over this one for obvious reasons – and is actually trying to prevent Cap-and-Trade from coming up for a vote. This has also led to Democrats being assailed over at the Puffington Host – all I can say to that is, “Please pass the popcorn.”)

Rep. Scalise went through the list of the negative impacts that this sort of severe energy tax will have – a list which is pretty well-known by now but which always bears repeating. It’s no secret that these plans will cause large rises in the cost of electricity; while much of the focus of these cost-increases has been on household energy bills, the impact on large-scale industrial users (particularly among those heavy-manufacturing facilities that many are so fond of) will be disastrous. The National Association of Manufacturers has estimated job losses in the 3 – 4 million range, and some estimates run even higher.

Rep. Scalise also mentioned the now-somewhat-famous study that came out of Spain that examined the overall results-and-impacts of the big Spanish “green energy” drive – one that President Obama himself has continually cited as a model that he wants us to follow. You can find an English-language version of that study here (direct link to the pdf file for downloading – 51 pages, 677 kB). The core highlights are that for each “green” job created, 2.2 other jobs were destroyed; in addition, of those green jobs, only 1 in 10 were permanent.

A final point about Cap-and-Trade is that as the “Cap” is lowered over time, it becomes more and more difficult to meet. This really shouldn’t be a surprise; anyone with experience in engineering, economics, or many other things is well-aware of what is known as the problem of “diminishing returns.” Basically, the first parts of this sort of thing are simple, as you pluck the low-hanging fruit; but as time passes, it becomes more and more difficult to make progress. (If anyone needs a thought-experiment at this point, just try to imagine an effort to cut your household energy consumption by 5% a year, year after year; in the first year or two it wouldn’t be that difficult, but later – after all the easy things have been done – it becomes more and more difficult until it becomes impossible.)

The bottom line on Cap-and-Trade is that it amounts to an enormous and crippling COST – and that the more that is realized the less popular it becomes. (Even the DCCC has apparently figured that out.)

During the Q&A, three issues came up.

First, there is a certain frustration among Congressional Republicans with Al Gore continually being swanked around on this issue – particularly given his financial interests in this space. He has greatly enriched himself just by babbling about this issue, was even working as Vice President with a prototype of a Cap-and-Trade plan with Enron (!!), and has enormous financial interests via his “green” investment firm Generation Capital Management and as a partner in the blue-chip Silicon Valley venture firm Kleiner-Perkins. (I pointed out that Moe had this on the front page earlier this week.) This is clearly a conflict-of-interest situation – a charge Mr. Gore regularly (and often falsely) metes out at others but which is absolutely applicable to him.

Second, I had to ask a question (see more below) about the larger impacts of the whole Cap-and-Trade and “climate change” (sic) bandwagon – particularly citing Germany’s foolish Green-Party-induced drive to shut down all of Germany’s nuclear energy capacity and insist that solar energy can simply replace it (which has led to disastrous German dependence on Russian natural gas, which has turned Germany into almost a client state of Russia, caused Germany to become a de facto Russian interests section inside NATO and the EU, and which is all coming together now to politically destabilize central and eastern Europe).

In response, Rep. Scalise cited a salient issue that’s on the table right now in Louisiana. Nucor is the largest of the “new-steel” companies that have emerged over the last 20 or so years – “new-steel” being largely based on scrap as input and the use of electric arc furnaces, as compared to the start-with-raw-iron-ore-and-use-blast-furnaces of traditional “big steel.”

Last year, Nucor announced that it was planning to build a new steel plant. Now, of course, that project would be in considerable doubt anyway – the global economic situation (and the situation with steel demand) has changed drastically since the announcement. However, as of February, the site selection has boiled down to either Louisiana or Brazil. While the economic situation makes waiting a sensible strategy regardless, Nucor has stated quite clearly that they are also waiting on that final decision – pending the outcome of the Cap-and-Trade possibilities coming out of Washington. At stake is a direct investment of $2 billion and the creation of some 700 direct jobs.

The irony (pun intended) here of course is that when the demand for steel is there, the plant will be built – somewhere. The chief effect of Cap-and-Trade would be to drive such capacity elsewhere – taking the jobs and investments along; plus, any emissions of satanic gases would be put into the atmosphere anyway. Anyone who believes that countries like China, India, Brazil, etc. would simply go along with Cap-and-Trade-suicide needs to get a grip on reality.

Third, someone asked about the impact of the “tea parties” in Congress. Both Congressman Scalise and Congressman McCarthy said that they had had a surprisingly large impact on the Congress – because spendthrift members went home and caught h*ll for their spending votes. As a memorable summary phrase, “Congress paid more attention to the tea parties than did the media.” Translation: “Keep up the good work.” 🙂

As hinted at above, I did want to add something here. Whenever I hear about all the time and energy being spent on things revolving around “climate change,” I can’t but help to note how completely surreal these discussions are – since they carry an echo of the Greek city-states arguing furiously about things like the proper placement of statues at the temple of the Oracle of Delphi while ignoring Philip of Macedon moving his troops into Thessaly. Right now, it’s strange to see so much time and effort being forced to be devoted to purely imaginary crises (and AGW is a purely-imaginary “crisis”) while real crises are being largely ignored.

When I look at my own rundown about various worrisome situations in the world (and perhaps I should write about that sometime – vote in the comments section), the whole AGW scare and all the “alternative energy” huffing-and-puffing just doesn’t register – with the exception noted above of the increasingly-disastrous collateral consequences that are flowing (in a pigheaded chain of causality) from Germany’s disastrous decision to pretend that “green energy” actually can be made to work just by clapping your hands and believing real hard.

This is a reckless and irresponsible diversion of concentration – one that is (sadly) unlikely to go unpunished by events….