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  • Doomed to Repeat Energy Tax History? (Part 8 in a 10-Part Series)

    A national energy tax, which masks as a cap-and-trade program, could produce a substantial public backlash. According to a recent CNN poll, a majority of Americans already believe that such a job-killing energy tax that produces little or no environmental gain is not a good idea. This is not the first time our nation’s policymakers have toyed with an unpopular energy tax, though.

    Rewind to 1993. With a large majority and emboldened by the election of President Bill Clinton, House Democrats advocated and passed (barely) a national energy tax known as the BTU tax. The goal was to tax certain energy sources based on the unit of energy production known as the British Thermal Unit. The thin margin of victory accurately reflected the reluctance of many policymakers to proceed with such a misguided policy. The Senate’s refusal to even consider the bill only served to highlight the unpopular nature of the tax.

    Bring it back to 2009. House Energy and Commerce Chairman Henry Waxman (D-CA) is pushing for an aggressive national energy tax that has many of his Democratic colleagues quite anxious. These concerns are not new but Chairman Waxman is adamant about pushing his bill forward to meet his self-imposed Memorial Day deadline, House Democrats have sincere concerns over the current structure of the Waxman-Markey cap and trade bill. Congressman Jim Matheson, “sees several ways this bill could result in a huge ‘income transfer’ from his state to those less fossil-fuel dependent.”

    In fact, after weeks of behind-closed-doors negotiations, it’s evident the cap and trade debate has evolved into exactly that. From the New York Times:

    “Cap and trade, by contrast, is almost perfectly designed for the buying and selling of political support through the granting of valuable emissions permits to favor specific industries and even specific Congressional districts. That is precisely what is taking place now in the House Energy and Commerce Committee, which has used such concessions to patch together a Democratic majority to pass a far-reaching bill to regulate carbon emissions through a cap-and-trade plan.”

    Much more on this here.

    Even though policymakers tried to mitigate the near-term economic damage inflicted by a cap and trade system, special interest politics and redistributive negotiations have made a bad bill worse. Although Congress set a lower emissions cap for 2020, “the new distribution of allowances created a less efficient pattern of government expenditures and more than offset the gain from the lower cap for 2020.”

    Household costs for a new energy tax will be close to $4300. Whether they fall on businesses or consumer, higher taxes reduce economic growth. Higher taxes force companies to cut costs elsewhere, typically by reducing production and therefore cutting jobs. According to The Heritage Foundation’s Center for Data Analysis’ estimate of the Waxman-Markey climate change bill, job losses resulting from cap and trade will average 1,105,000 over a 2012 to 2035 timeline. Keep in mind; these are net losses – after any “green jobs” created.

    When considering the Waxman-Markey bill policymakers should remember the backlash that the 1993 BTU vote created. Any massive energy tax, especially in a recessionary environment, will be met with widespread public disapproval.

    Posted in Energy [slideshow_deploy]

    4 Responses to Doomed to Repeat Energy Tax History? (Part 8 in a 10-Part Series)

    1. Rmoen says:

      For the past 20 years I believed global warming was caused by CO2. Now, after many months of research, I'm not so sure. It's looking more and more to be a natural phenomenon to me. My interest in energy policy is so great I launched http://www.energyplanusa.com where I take a common sense look at global warming and energy policy. I've waded through the wellspring of global warming theory, the United Nation's IPCC reports, and conclude they lack the 'smoking gun' that proves global warming is man-made. Moreover, I've come to realize that man-made global warming theory cherry picks facts and ignores contradictory evidence from reliable studies.

      I'm dismayed that my own party, the Democrats, the thinkers, have turned a scientific issue into religious zealotry where faith trumps facts. I'm also dismayed that the American press seems content with publishing hearsay, without backing up conclusions and presumptions with facts and evidence.

      Before we increase the cost of energy with cap-and-trade, I believe it's imperative that the United States establishes a non-political, scientific commission to review all facts and evidence surrounding global warming. The UN, a political organization, should not be determining our energy policy. The stakes are huge. If we respond to global warming incorrectly, our children and grandchildren will likely lead lives of increasing hardship and desperation.

    2. Pingback: » Financial News Update - 05/18/09 NoisyRoom.net: “Extremism in the defense of liberty is no vice. Moderation in the face of tyranny is no virtue.” Barry Goldwater

    3. Ben Franklin, Kendal says:


      I am surprised to hear you say that "your party" (the Democrats) are "the thinkers"! From my perspective, most Liberals (and most democrats are liberals) wouldn't want to be characterized as thinkers. They would more likely be proud to be known as "the feelers"… More concerned for appearing to be sensitive, and open-minded. Whereas conservatives (most Republicans are conservative) are caricatured as being "cold hearted and hard headed" … making decisions based more on logic, and less concerned about the impact on others, and certainly not thought of as sensitive. Perhaps your study of this issue has opened your mind a little to a better understanding of why conservatives think the way they do. Our founders distrusted Government to act in a way that benefited the people. (Politicians tend to use the public's money to get a return not on the people's investment, but at the ballot box). I am a whole-hearted, 100% died in the wool, thinking conservative, and a republican (small 'r')… Generally, I support the Republican Party (big 'R')… And, as a Conservative, I believe that we need no "Energy Policy" from the politicians in Washington, except than to turn loose the brilliant scientists and engineers working in the Energy Industry to find and create for us the most cost effective sources of energy they can dream up. I once heard someone say that when Standard Oil created and marketed Kerosene, it saved more whales from destruction than Greenpeace could ever hope to do.

    4. Corey Lockridge, All says:

      I would like to know WHERE we can write to protest against this legislation (cap and trade) The public needs to get involved with this! We cannot afford our energy bills top go any higher. I cannot pay mine NOW!!

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