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  • Boxer-Kerry Unveil Their Energy Tax Bill: Incomplete But Still Very Harmful

    Senators Barbara Boxer (D-Calif.) and John Kerry (D-Mass.) introduced the Senate companion to the Waxman-Markey climate change legislation today and while many pieces are missing, the framework in place spells bad news for every American energy consumer, especially low income ones.

    Like Waxman-Markey, the focus is a cap and trade system, but takes the House bill’s 17 percent reduction of 2005 emissions by 2020 to a more stringent 20 percent cut. Unlike the House version, which gives away emission allowances to special interests groups that lobbied hard to protect their bottom line, the Senate draft does not include how the emission allowances – hundreds of billions of dollars – will be given away.

    Co-sponsor Senator Kerry tells us, “This is not a cap-and-trade bill, it’s a pollution reduction bill.” But the simple reality is it’s an energy tax bill. As OMB director Peter Orszag says, “Under a cap-and-trade program, firms would not ultimately bear most of the costs of the allowances but instead would pass them along to their customers in the form of higher prices.” And the bill’s incompleteness goes to show how impatiently Kerry and Boxer are trying to move a historic energy tax into law.

    Since the Senate bill is structured similar to the Waxman-Markey cap and trade bill, our economic analysis of the first two decades (2012-2035) provides an alarming forecast. Our cost estimates of Waxman-Markey project higher energy and other costs for a household of four are nearly $3,000 per year between 2012 and 2035. Gasoline prices will rise by 58 percent ($1.38 more per gallon) and average household electric rates will increase by 90 percent.

    And because the low-income families spend a larger portion of their income on energy, cap and tax is extremely regressive. According to a new study commissioned by the Institute for Energy Research (IER), “Households in the lowest-earning quintile—those earning less than $18,370 per year—would pay $451 per year or a substantial 4.5 percent of their income. This additional tax upon these households would be larger than every other tax they currently pay, except the federal payroll tax, which costs an average of $656 per year, and would be roughly equivalent to a 69 percent increase in the federal payroll tax on these households”

    IER’s full study is available here.

    The mind-blowing estimated costs do not even tell the whole story as both bills include new, costly energy efficiency standards, renewable energy mandates, as well as taxpayer-funded subsidies for clean energy development. And since the bill is far from completion, more costly provisions are sure to come.

    Similar to its House counterpart, the Boxer-Kerry draft provides funding for green energy worker training plans and for those who lose their jobs, a “Climate Change Worker Adjustment Assistance” program to protect employees who “have become totally or partially separated, or are threatened to become totally or partially separated from employment.” So we now have confirmation from both the House and the Senate that cap and trade is a jobs destroyer. Our analysis of Waxman-Markey predicts net job losses (after accounting for green job creation) approach 1.9 million in 2012 and could approach 2.5 million by 2035. Manufacturing loses 1.4 million jobs in 2035.

    One addition worth mentioning in the Senate version that isn’t included in the House bill is its inclusion of nuclear. It attempts to fix something that doesn’t need fixing. Instead of addressing problems such as the onerous regulatory environment or putting forth a plan to dispose of nuclear waste, the bill proposes subsidies to grow the nuclear industrial base and work force.

    Adequate infrastructure is certainly a prerequisite to any substantial expansion of nuclear energy and that is why the private sector is making those investment right now, absent any federal handouts. It is something the nuclear industry, not the American taxpayer, can take care of, and the industry is. According to the Nuclear Energy Institute, “private investment in new nuclear power plants has created an estimated 14,000-15,000 jobs.”

    Large universities and local community colleges are expanding to meet industry’s demands for more engineers and skilled laborers. Texas A&M has one of the fastest-growing nuclear engineering departments in the country, the University of Florida has continued increased enrollment as well as an increase in its research grant awards, and a total of 31 schools continue to offer a degree in nuclear engineering.

    And the New Jersey-based Public Service Enterprise Group (PSEG) piloted an entry-level technical-trade program at Mercer County Community College that provides training and education for specific nuclear jobs. Given all of this activity, it’s odd Boxer and Kerry focus specifically on handouts to bolster the nuclear workforce.

    Senator Sherrod Brown (D-Ohio), says the Boxer-Kerry bill is “going to need a lot of work.” But the shell is there. Move over, health care, it’s time to share some of the spotlight.

    Posted in Energy [slideshow_deploy]

    19 Responses to Boxer-Kerry Unveil Their Energy Tax Bill: Incomplete But Still Very Harmful

    1. matthew queens, ny says:

      2010 can't come fast enough!

    2. Pat Collins, Grant M says:

      These people have no idea what they are doing, or do they? They must be filling their pockets as they take from us without cause or good science.

    3. Larry Smith, AL says:

      People in congress have no idea what it takes just to get by. The longer they stay in office the more insulated from reality they become. They are idiots and the people that vote for them are stupid. Ignorance is a correctable condition but there is no hope for stupidy.

    4. Larry Smith, AL says:

      I meant stupidity.

    5. Chicago, IL says:

      This article is unduly harsh. The Waxman-Markey bill propsed huge appropriations (millions) for low-income families – not only to subsidize upgrading the efficiency of their homes, but also to fund non-profit groups to support them, and to create jobs. See e.g. Title II, Subtitle F ss. 264, 298; Title IV subtitle s 2201. I haven't read the companion bill yet, but I'm certain it won't remove many, if any, of those provisions.

      Also, this article criticizes both a focus on increasing energy efficiency AND support for nuclear energy. If we're going to go with less power, fine, let's put a moratorium on new power plants. But look at the facts before you condemn nuclear: not only is it the cleanest, most efficient way to make power in the quantities Americans are requiring, but other fuels (ex. thorium) are also viable alternatives, and create much safer byproducts. Bills like this provide incentive for innovation, which is the main thing we need right now.

    6. Sarah P, Maryland says:

      You endlessly repeat the line that "cap and trade is an extremely regressive tax" without once stopping to mention the many provisions in both the House and Senate bills that give cash rebates to low-income households; fund energy efficiency and home weatherization for both low-income and middle-income households; and fund public transit which benefits the poor and elderly most.

      Note – it is not an energy tax, but a greenhouse gas tax. Energy that does not produce greenhouse gases incurs no additional charge. A simple point…

      It is the poor who will suffer most from more extreme weather and increased numbers of Katrinas, as they are least able to escape or recover from natural disasters. What's really regressive is climate change.

    7. Pingback: On the Senate Side | TALON

    8. Pingback: robert reed daly (rrdenigma47) 's status on Thursday, 01-Oct-09 01:23:34 UTC - Identi.ca

    9. Ralph Hansen says:

      To the commenters who defend this legislation, do you understand that 85% of the energy we use in America comes from fossil fuels? Do you understand that cap-and-trade will not only raise the price of most of the energy we use, it will also raise the cost of EVERYTHING we buy because it takes energy to produce and transport goods? Do you understand there is no chance that we can expand our use of nuclear power and expensive renewables to come anywhere close to supplanting these existing sources of energy? And do you understand that there is no existing, affordable technology to capture carbon dioxide emissions?

      The harsh reality is that America and the developed world represent only about 20% of the global population. The other 80% in China, India and elsewhere collectively emit about 20 percent more greenhouse gas than we do. And their rates of emissions growth are accelerating. These numbers guarantee that humanity isn’t going to reduce global emissions at any point in the foreseeable future.

      The only way we can achieve meaningful emission reductions in the next couple decades is by becoming poorer.

    10. iblain michigan says:

      There is no global warming. The warmest year in Michigan history was 1988. We had more days that year with temps over 100 degrees than days over 90 degrees this year. The North pole ice is getting larger again. The South pole ice never stopped getting larger. Where are the rising oceans, the hurricanes? Senator Inhofe is right, global warming/climate change is the biggest fraud the world has ever seen.

    11. Bobbie Jay says:

      Mankind does not effect global climate. Nature does. The life span of mankind has increased. Mankind is able to reduce pollution emissions which reduces allergies and respiratory ailments of people who are susceptible.

      Continue the use of what we have in the name of America's energy independence!

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    13. Nicolas Loris Nick Loris says:

      Ralph is right. The higher costs brought on not only through our electric bills and gas prices but also the goods that take energy to produce will likely outweigh any promises made to rebate money back to low-income families. And as we saw with Waxman-Markey, more and more allowance revenue was allocated to industries to pass this bill meaning less comes back to the people.

      As far as nuclear, I would love to see nuclear, along with wind and solar succeed just as much as anyone – so long as they are able to succeed in the market and provide consumers with affordable electricity. But subsidies and tax credits aren't the way to do it. They distort the market and cause industry to be reliant on the government to do some of the lifting for them.

      Energy efficiency is also a good thing but it often has unintended consequences when mandated by the government. It can become costlier than originally intended and reduce consumer choice. If something saves consumers money, they will buy it – we do not need politicians to tell us what to buy.

    14. Linus, K.C., Ks says:

      Let's see. The Democrates want us to make our bricks without straw ( no carbon energy allowed), Cass Sunstien is going to force us to be vegetarians, the EPA, has closed down the central valley of Calf. to farming so we pay higher prices for produce and fruit and thousands of farmers are unemployed, they want to control our health and want access to our bank accounts. I think we are living in a Fascist/Communist dictatorship. I only know of one way to stop it.

    15. Pingback: Grassroots in Nebraska: In the News: Week of September 23-30, 2009 | Grassroots in Nebraska

    16. Pingback: EPA Takes Another Shot at the Economy, Proposes More Micromanagement | Conservative Principles Now

    17. Vern W Bean, Hanniba says:

      It appears that congress is not listing to what the people say; just take a look at the political polls, what do they tell you? And what do you think their chances are in the next election? If you follow the party line. Why do they think that they know what is better for me than I do??

    18. Pingback: John Kerry Doesn't Know What "Cap and Trade" Means - AIP Blog - American Issues Project

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