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Adding $1,960 in 'cap and trade' to the family budget

Created on April 9, 2009

Adding $1,960 in 'cap and trade' to the family budget

Make lots of room for 'Cap and Tax' in your family budget

By Ken McIntyre

If Congress passes the "comprehensive energy bill" as proposed, it will be a serious shock to American taxpayers.

For starters, the Markey-Waxman measure is packed with more subsidies and mandates for unsuccessful, unproven energy sources. It also would raise taxes on reliable energy sources and sock consumers with a new global-warming tax amounting to $2,000 a year for a typical household. That's some hit to the family budget.

Rather than stimulate the economy by investing in clean technology and creating green jobs, as proponents claim, this government-centric approach would kill jobs and drive up energy prices for years to come, Heritage analysts Nicolas Loris and Ben Lieberman conclude in a new paper.

The legislation introduced by Reps. Henry Waxman (D-Calif.) and Edward Markey (D-Mass.) -- chairmen, respectively, of the House Energy and Commerce Committee and Energy and Environment subcommittee -- combines protectionist policies with a wildly expensive "cap and trade" program to slow global warming. By 2020, "cap and trade" is supposed to reduce carbon dioxide emissions by 20 percent below 2005 levels -- and, come 2050, by a whopping 83 percent.

Markey-Waxman is being promoted as a way to help consumers cope with higher energy prices. But most alarmingly, Loris and Lieberman note, the bill would impose $1,960 a year in new costs on the average household. And that's not even considering a provision, buried in the bill, allowing "victims" of global warming to sue the U.S. government.

"The reality is that any carbon-capping plan is a costly energy tax in disguise -- raising energy prices and unemployment with little, if any, environmental benefit," the Heritage analysts say.

"Cap and tax" is more like it.

Fossil fuels meet about 85 percent of U.S. energy demand. Further taxing this lifeblood of the U.S. economy would have disastrous consequences. A study by Heritage's Center for Data Analysis of last year's global warming bill concluded it would sap nearly $5 trillion from the nation's economic output and cost 400,000 to 800,000 jobs a year.

Because targets and timetables in Markey-Waxman are considerably more stringent, Heritage analysts warn, the economic consequences of "cap and tax" would be greater still.

As Lieberman and Loris write: "Using taxpayer dollars to invest in inefficient energy sources while artificially driving up the costs of reliable energy with a cap-and-trade program will only cause more economic pain for the consumer -- with no environmental benefit to show for it."