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Factsheet #27 on Climate Change and Energy Policy

May 1, 2009

'Cap and Trade Is A Tax and It's a Great Big One'

Cap and Trade Top Ten List

  • Cap and Trade Is a Massive Energy Tax.
  • It Will Not Make A Substantive Impact on the Environment.
  • It Will Kill Jobs.
  • It Will Cause Electricity Bills and Gas Prices to Sharply Increase
  • It Will Outsource Manufacturing Jobs and Hurt Free Trade
  • It Will Make You Choose Between Energy, Groceries, Clothing, and Haircuts
  • It Will Be Highly Susceptible to Fraud and Corruption
  • It Will Hurt Senior Citizens, the Poor, and the Unemployed the Worst.
  • Adding $1,960 in 'Cap and Trade' to the family budgetIt Will Cost American Families Over $3,000 a Year.
  • President Obama Admitted "Electricity Rates Would Necessarily Skyrocket" under a cap-and-trade program (January 2008)

What Would Global Warming Regulations Do?

  • Lieberman-Warner: Last year, the Senate rejected cap-and-tax legislation that would have capped CO2 emissions 70% below 2005 levels by 2050. A Heritage analysis of that bill found startling economic impacts.
  • Markey-Waxman: The cap-and-trade tax proposed by Rep. Henry Waxman (D-CA) and Rep. Edward Markey (D-MA) would double down on last year's failed scheme, bringing in trillions of dollars in taxes, making it one of the largest sources of revenue for the federal government.
  • Six Hundred Hurricanes Couldn't Cause This Much Economic Damage: In the first 20 years, Lieberman-Warner would have destroyed nearly 3 million jobs, caused some manufacturing sectors to cut jobs by 50% and generated up to $300 billion per year in government revenue while reducing income by nearly $5 trillion. For comparison, this is equal to the economic damage done by over 600 hurricanes...and the Markey-Waxman bill is worse.
  • Green Jobs Are a Myth; Real Job Losses Are Not: For every "green job" created, others are wiped out. Job losses resulting from the Lieberman-Warner cap and trade would have surpassed 900,000 in some years. Keep in mind that this is net of any "green jobs" created.
  • New Version, More Expensive: Markey-Waxman will be much more costly than the bill rejected by the U.S. Senate last year. Such an expensive tax on all Americans is bad under normal circumstances and worse during a recession.

A "Carbon Constrained Future"

  • The Ultimate Outsourcing: India and China have repeatedly said they would not match U.S. environmental goals in order to protect their economies. Cap and trade will merely move manufacturing jobs to China and India.
  • By 2100: By EPA calculations, the Lieberman-Warner bill could at best result in a global drop in temperature of only 0.1 to 0.2 degrees Celsius by the year 2100.
  • A Carbon Tax Would Be No Different: Alternative carbon taxes share the central flaw of any other carbon reduction scheme. Similar to cap and trade, a carbon tax would cause significant economic damage and would do very little to reduce global temperatures.
  • An Alternative That Supports American Taxpayers: Instead of appeasing a radical environmental agenda, President Obama should give us access to all energy sources, including domestic oil production, nuclear energy, coal, and new renewable fuels. Instead of new taxes, the President should aim to lower gas and electricity prices. When government impediments are lifted, America's energy entrepreneurs can develop innovative and market-driven solutions to our energy needs.

For more information, please visit: http://blog.heritage.org/2009/05/01/cap-and-trade-is-a-tax-and-its-a-great-big-one.

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