It has become quite clear over the past several months that
placing a cap on carbon emission--via rationing, taxing, and
eliminating consumer choice--will have major implications for
American families and the economy.
An analysis of the Waxman-Markey bill (as reported out of the
House Committee on Energy and Commerce) by The Heritage Foundation
found that unemployment will increase by nearly 2 million in 2012,
the first year of the program, and reach nearly 2.5 million in
2035, the last year of the analysis. Total GDP loss by 2035 would
be $9.4 trillion. The national debt would balloon as the economy
slowed, saddling a family of four with $114,915 of additional
national debt. Families would also suffer, as the bill would slap
the equivalent of a $4,609 tax on a family of four by 2035.
Heritage is not alone in its assessment. The National Black
Chamber of Commerce and the Brookings Institution also
project huge job losses. Proponents of a national energy tax will
quickly point to a recent Congressional Budget Office memo and
Environmental Protection Agency analysis suggesting low per
family costs. Those estimates are grossly inaccurate, as both the
CBO memo and the EPA's analysis contain flaws too serious for use
as measures of the economic impact of the Waxman-Markey bill.
While national numbers are startling, many Members of Congress
may be tempted to assume that their congressional districts will
not be affected because they "cut a deal" or they have an
incomplete view of how the American economy functions. Thus, it is
crucially important that the Members making decisions, and the
people affected by those decisions, understand how their
congressional districts will be impacted by Waxman-Markey, or any
type of national energy tax.
The table below lays out six congressional district specific
- Gross State Product Loss in 2012: This number is the
amount of economic destruction that will occur in that district in
the first year of the cap-and-trade regime.
- Average Gross State Product Loss, 2012-2035: Same as
above, only it is the average economic destruction in the district
for the bill's first 24 years.
- Personal Income Loss in 2012: This number represents the
reduction in consumer spending power in a district in the first
year of the cap-and-trade regime.
- Average Personal Income Loss, 2012-2035: Same as above,
only it is the reduction in consumer spending power in the district
for the bill's first 24 years.
- Non-Farm Job Loss in 2012: Jobs are jobs, and in the
first year of the cap-and-trade regime, each district will have
significantly less than they otherwise could.
- Average Non-Farm Job Loss, 2012-2035: This number is
crucially important because it demonstrates that no district gains
jobs, even in the long run; the increase in "green jobs" does not
outweigh the decrease in jobs elsewhere.
A Final Note on Jobs
During the "stimulus" debate, White House Press Secretary Robert
Gibbs lamented that "more companies [have] announced mass
layoffs." The Bureau of Labor Statistics defines mass
layoffs as "where private sector nonfarm employers indicate that 50
or more workers were separated from their jobs for at least 31
days." Under Waxman-Markey, on average each congressional district
would experience the equivalent of more than 52 mass layoffs.
Although losing several thousand jobs may not seem like a lot to
some politicians who are stuck inside the beltway, the mass layoffs
resulting from Waxman-Markey should make any politician--and hard
Appendix: Table 1
Campbell, Ph.D., is Policy Analyst in Macroeconomics and David W.
Kreutzer, Ph.D., is Senior Policy Analyst for Energy Economics
and Climate Change in the Center for Data Analysis at The Heritage