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  • It's Time to Discuss Cap and Trade

    This week, beginning today, Waxman and Markey are holding Congressional hearings to discuss the draft of a massive energy bill that includes clean energy investment, energy efficiency mandates, a cap-and-trade program, and protectionist policies that will supposedly help the consumer cope with higher energy prices.

    The logic behind the hearing process is to gather experts to help inform legislators about the impact of their efforts. This is a worthwhile and laudable goal, to be sure, but the reality is often very different. Unfortunately, the hearing process is often hijacked by agenda driven politicians more interested in advancing their special interests and self-promotion than actually shedding light on complex and important issues.

    The value of a hearing (or in this case, a series of hearings) can often be extrapolated from who will be providing testimony.

    The witnesses scheduled to provide testimony on the Waxman-Markey legislation largely fall into two groups. There are those in the energy business that have a financial stake in the legislation and there are those in the advocacy business that support capping carbon dioxide.

    While the energy business has a critical perspective on the issue, it is important to put that perspective into context. At first blush, it would seem that these are precisely who should be testifying before such a committee on such a piece of legislation. But first blushes don’t always tell the full story. They have an interest in ensuring that their bottom lines are protected. Many of them have calculated that some sort of carbon capping is inevitable and that their interests will therefore be best served by trying to influence how such a cap is implemented. And the best way to do that will be to position themselves as supporters of the legislation and then to provide some helpful suggestions on how to improve it.

    And by “improve it”, read protect their bottom lines, which is what they’re expected to do given the position government put them in the first place.

    By having selected energy business leaders provide generally positive testimony on the legislation, Waxman and Markey will be able to claim they have industry-wide support, from big oil to small wind. If they’re all receiving a piece of the pie, why wouldn’t they jump on board?

    While there are few testifiers representing the consumer and willing to analyze the cost and benefits of the bill, the deck is still heavily stacked in Waxman and Markey’s favor.

    Special interest politics, also known as rent-seeking, has always been a part of politics and it’s unlikely to cease any time soon. Milton Friedman’s son, David, explains it well:

    Special interest politics is a simple game. A hundred people sit in a circle, each with his pocket full of pennies. A politician walks around the outside of the circle, taking a penny from each person. No one minds; who cares about a penny? When he has gotten all the way around the circle, the politician throws fifty cents down in front of one person, who is overjoyed at the unexpected windfall. The process is repeated, ending with a different person. After a hundred rounds everyone is a hundred cents poorer, fifty cents richer, and happy.”

    In this case, the ‘pennies’ are taken from the American taxpayer. Consumers lose doubly, paying to fund these projects then paying for pricier electricity.

    Furthermore, all the political celebrities will be there, including former Vice President Al Gore, EPA Administrator Lisa Jackson and Secretary of Energy Steve Chu. It isn’t difficult to surmise how these three feel about investing taxpayer dollars in unproven sources of energy while heavily taxing the reliable ones.

    Presented as a comprehensive energy bill, the American Clean Energy and Security Act of 2009 (ACES) offers nothing more than subsidies and mandates for unsuccessful, unproven energy sources coupled with taxes on reliable energy sources. The bill falsely claims to stimulate the economy by investing in clean technology and creating green jobs, but this government-centric approach will only destroy jobs and drive up energy prices for years to come. A more thorough analysis of the provisions can be found here.

    The tentative schedule and list of panels can be found here.

    Posted in Energy [slideshow_deploy]

    10 Responses to It's Time to Discuss Cap and Trade

    1. ARJIS, Duluth GA says:

      If we have to live with the TAX CODE the way it is, then I would advocate that it provide a TAX CREDIT based on each taxpayer's energy expenses throughout the year. If our taxes will be funding these companies in some way or another, then we should benefit from a Tax Credit which would be a decent percentage of what was spent throughout the year on Gasoline, Heating Oil, Natural Gas, and Electricity.

      I am not talking welfare here. I am talking about giving back to the taxpayer some of the sweat and blood which had to be paid to the government for all the other Pork it funds.

    2. Patrick Bell says:

      Nick, I think what you mean to say is this will largely be a dog and pony show. The media will cover it, however, as you say: a serious show of support for the bill. The only hope at this point might be for Democrats who disagree with key provisions to drive a wedge in the process. Blue Dogs and those from coal or petroleum producing states.

    3. Danny , AL says:

      cap and trade sounds really good doesn't it. we are going to lower carbon out put and save the enviroment. That's the problem, congress will be full speed ahead without giving any serious thought to this and the American people will be left to pay it just like many other programs that were passed all with good intentions.Give the free market an incentative to solve this problem and they will do it better than a govt mandate

    4. Mary says:

      This is just another way to further erode our economy. It's amazing to see all of this happening and to have NO voice and no control. Cap and trade is only one of many things this admisnistration has in store for us. Of course we will pay for this. Imagine our heating bills next year and gas prices, not to mention everything we buy. Really feel we are watching the deliberate, rapid destruction of our country. Does anyone care????

    5. Alberto, WV says:

      The object of cap-and-trade (as well as a carbon tax)is to reduce the consumption of carbon-based energy – mainly electricity – by boosting its price, and thereby reduce CO2 emissions. A tax credit to offset the burden of a higher price defeats the purpose. I'm not going to buy less electricity if the government helps me pay my electric bill. Neither will you. And coal-burning power plants aren't going to reduce output if consumers buy just as much electricity at a higher price. The long and the short of it is: If we want a reduction in CO2 emissions, we will have to pay for it.

    6. DANA (New Mexico) says:


    7. Barb -mn says:

      Let's "discuss" being rid of it!

    8. ARJIS, Duluth GA says:

      "The object of cap-and-trade (as well as a carbon tax)is to reduce the consumption of carbon-based energy – mainly electricity – by boosting its price, and thereby reduce CO2 emissions. A tax credit to offset the burden of a higher price defeats the purpose"

      The Object of the TAX CREDIT is to get back at least a portion of the money that we are shelling out daily while this country figures out what it wants to be when it grows up!

      Why do we have double, triple or more taxation?

      It is bad enough on the income taxes, but the energy excise, connection, consumption,etc etc,etc… How much should we have to put up with?

    9. Pingback: The Hill’s Blog Briefing Room » DAY’S END ROUNDUP

    10. Pingback: The Hill’s Blog Briefing Room » MORNING READ

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