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May 19, 2008

McCain's Global Warming Plan Threatens Economy

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Exactly one year after angering conservatives with an amnesty bill for illegal aliens, Sen. John McCain managed to fire up the right again last week-only this time he's proposing a massive plan to combat global warming that would have severe consequences for the U.S. economy.

During a West Coast trip to Oregon and Washington state, McCain outlined his global warming strategy, which in many ways resembles legislation offered by Senators Joe Lieberman (I-Conn.) and John Warner (R-Va.). Their plan will be debated on Capitol Hill next month.

Although he's spent the past several months trying to mend his rocky relationship with conservatives by putting forward a market-based health care plan and vowing to appoint conservative judges to the Supreme Court, critics wasted little time going after McCain's global warming proposal.

It's not that conservatives don't care about the environment-they do. But in the case of McCain's proposal, the benefits-lowering Earth's temperature by no more than the Kyoto projection of 0.07 degrees Celsius-would come at a great cost to America's economy.

What's in McCain's Plan?

McCain, who previously teamed with Lieberman to draft global warming legislation, supports a cap-and-trade proposal designed to reduce U.S. carbon emissions by 60% from 1990 levels by 2050. He argued that such a system "harnesses human ingenuity in the pursuit of alternatives to carbon-based fuels."

McCain's two Democratic rivals, Senators Hillary Clinton and Barack Obama, support an 80% reduction by mid-century, a recommendation in line with the U.N. Intergovernmental Panel on Climate Change. The Lieberman-Warner bill supposedly would cut emissions by 70% by 2050.

A closer examination of cap and trade reveals the pitfalls of such a system. Even if it works perfectly, which is unlikely, it essentially amounts to a new tax on energy. In its analysis of the Lieberman-Warner bill, the Congressional Budget Office said the legislation would increase federal revenue by $1.21 trillion from 2009 to 2018-money that can best be described as a tax increase.

Several studies of the cap-and-trade proposal reveal its high costs. The Heritage Foundation last week released its analysis of Lieberman-Warner, showing skyrocketing energy costs, millions of jobs lost and falling middle-class income.

"The burden would be shouldered by the average American," the study's authors conclude. "The bill would have the same effect as a major new energy tax-only worse. Increases are set by forces beyond legislative control."

The resulting higher prices for electricity, natural gas and home heating oil would send a typical consumer's total annual energy bill through the roof-$938.63 more in 2030 than 2012 after adjusting for inflation, according to the Heritage study. Based on Department of Labor data, that equals about six weeks' worth of groceries for a family of four.

The impact on the overall the economy is even more alarming. The current U.S. economic output of $14 trillion would sharply decline by 2018 because of higher energy prices. Even under the most generous assumptions, the Heritage study estimates cumulative losses to gross domestic product (GDP) would be $1.7 trillion by 2030 after adjusting for inflation. The total could be as high as $4.8 trillion.

Europe's experience with cap and trade offers the clearest example that it can have a harmful impact on the economy while offering little benefit to the environment. Emissions are growing at a faster rate on the continent since the European Union implemented its program in 2005 to comply with the Kyoto Protocol.

Technology Doesn't Exist

McCain cites the success of the 1990 sulfur dioxide cap-and-trade system as evidence that his plan would work. "The key feature of this mechanism is that it allows the market to decide and encourage the lowest-cost compliance options," McCain said. However, there are important distinctions between combating acid rain though cap and trade vs. carbon dioxide.

When the acid rain cap-and-trade system was added to the Clean Air Act, the technology to reduce sulfur dioxide was already in commercial use.

There's nothing comparable for carbon dioxide. The method, known as carbon capture and sequestration, is still in development. Carbon storage, as it's also called, "requires capturing carbon dioxide from power plants and other industrial facilities, transporting it to suitable locations, injecting it into deep underground geological formations, and monitoring its behavior," according to the World Resources Institute.

There's no clear evidence that carbon capture and sequestration will be ready for full-scale commercial use 10 years from now. Without this technology, the goals outlined by McCain and those included in the Lieberman-Warner bill cannot be accomplished.

The so-called "green jobs" that would be created from the legislation are also largely a myth manufactured by activists. While it's true that a proposal such as Lieberman-Warner would have a short-term benefit over the next five years, annual job losses after 2013 would exceed 500,000-even approaching 1 million in 2016 and 2017.

Manufacturing would be among the hardest hit with 2.3 million lost jobs in 2029 as a result of government-imposed changes to the economy. Wisconsin, New Hampshire, Illinois and Maryland are forecast for the biggest losses in the short term, according to the Heritage analysis.

Criticism on the Right

McCain's embrace of government solutions for the environment represents a major shift from the Bush administration's approach. It also means the country's next president-Republican or Democrat-will craft a far different global warming strategy at a time when Americans are already feeling the added costs of energy.

"For the market to do more, government must do more by opening new paths of invention and ingenuity," McCain said in Portland, Ore., drawing a sharp distinction from the conservative philosophy of former President Ronald Reagan, who famously said, "Government is not the solution to our problem; government is the problem."

Bob Williams, president of the Evergreen Freedom Foundation in Washington state, said he was disappointed with McCain's reliance on government. Voters in the Pacific Northwest, Williams said, would be leery of government's attempts to "do more."

"In order to implement McCain's proposal," Williams said, "government would do more by telling the taxpayer what size car they are going to drive; when they are going to drive it; what size house you will live in; and how much electricity you will use."

He cited government policies that destroyed thousands of jobs for the Spotted Owl, ruined the Pacific Northwest's fishing industry, shut down America's nuclear industry and increased the price of food through ethanol mandates in fuel.

Similar criticism is reverberating with many conservatives, who remain skeptical of global warming. These conservatives care about the environment, but want to ensure that the tradeoffs made with legislation do not pose economic problems in the future.

"I have not faced a situation where a major Republican presidential candidate sounds just like a liberal Democrat," radio talk-show host Rush Limbaugh said. "This is embarrassing, and it is frightening." During his Fox News show, Sean Hannity quipped, "He sounds like Hillary Clinton and Barack Obama. Conservatives are angry."

Robert B. Bluey is director of the Center for Media & Public Policy at The Heritage Foundation

First Appeared in TownHall.com

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