The Waxman-Markey Climate Bill passed the house this week. The stated goal of this bill is to limit pollution by capping emissions and putting a price on carbon output. It calls for a decrease in American carbon emissions of 17% by 2020 and 83% by 2050.
The way this works is that any company which hits a certain threshold for carbon emissions must buy a permit to do. The initial round of permits will be "sold" and some given out by the government. From there companies that go beyond the set threshold are allowed to buy credits from other companies who are more energy efficient.
This bill has many flaws and will have many costly repercussions.
1.) This legislation will kill jobs. Congress must really think very low of our intellectual capacity if they think we believe that we will end up with jobs in the net positive category. It is self evident that this is a lie. Afterall, I think it is pretty widely accepted (even among liberals) that, relative to government run micro-economies, privatized industries are more efficient. The more efficient a particular company/industry is the greater relative production it creates. The greater production the greater employment.
We could also take this route in analyzing whether this is capable of creating jobs. Ask yourself, is value being added to the economy through this? Without discernible value being added it is inevitable and self evident that this system will be inefficient and thus counterproductive (that is a technical way of saying that we will waste money). All you would need is simple logic and reason to debunk this claim that it will "create" jobs. But if reason is not your strong suit and you need studies and facts to make you believe then so be it.
Spain has a somewhat similar program to what congress is attempting to push through. An independent study was done on the effects of this program with regards to job loss/creation. The results were that it is estimated that 2.2 jobs were killed for every one job created. Admittedly it is not the same system verbatim as our program but do you really trust a government that has a track record of running the following programs: Medicaid, Medicare, Social Security, and Amtrak? All of which are incredibly adept at losing money.
2.) There will be increased cost to consumers. We know it could be bad when even the authors of this bill admit that costs will go up. Effectively speaking, this would be the largest tax increase ever imposed on America. The following estimates were put forth regarding the cost to consumers. The CBO estimated that by 2015 the average increase in energy costs per household would be $175/yr., the EPA estimated an increase of $110/yr. While those numbers don't seem particularly staggering keep in mind who it is that is making those estimates. Do you think either of those parties have an incentive to over shoot the estimate or under shoot the estimate? We also have independent estimates done by the George C. Marshall Institute and the Heritage Foundation. Both of which predict average increases of approximately $1,500/yr. per household. So essentially, for the average person, approximately one entire paycheck would be spent with nothing in return.
Those aren't the only estimates we have. The George C. Marshall Institute also predicts that this legislation would push average electric costs up 5-15% by 2015, natural gas prices up 12-50%, and gasoline prices up 9-14.5% by 2015.
And if all of that weren't enough we can also look at it like this. If any of those estimates are even remotely acurate (and I would guess it's probably somewhere in the middle of the low and the high estimates) then we can honestly say that the demographic that will be hurt the most are the poor. I touched on this with my last note but I'll say it again. For the most part poor families spend a greater percentage of their income on fixed expenses (food, housing, utilities). Knowing that energy costs are going up, and by default food prices will increase, we can say that, relatively speaking, the poor will be affected to a greater degree. Essentially guaranteeing a greater gap in standard of living between the rich and the poor.
I could continue on with how the increased cost would hurt by going over the opportunity cost of lost investment and thus lost growth but I think I'll save that for another day. Just rest assured that an astronimical amount of potential wealth creation will never be realized due to this bill. There would quite literally be a decrease in the quality of life.
3.) Now some might say that all of the negative results are worth it due to lower carbon emissions. But even the stated goal is laughable. Sure, America might decrease it's carbon emissions but what do you think happens to all the manufacturing that will be pushed overseas to places like China, India, and other third world countries. These countries which have even less efficient means of production will be increasing their production as a direct result of this. There will be a net increase in greenhouse gases while at the same time cutting American jobs and giving them to other countries. So even those who believe in the man-made global warming theory should be against this.
In conclusion: Every one of us, regardless of political affiliation should be very wary of this bill.
Oh, and mark my words, when gas prices go up in a few years because of this we will hear all about how the gas companies are "price gouging" and taking advantage of the consumer by driving up prices. When that happens, remember this piece of legislation.
The way this works is that any company which hits a certain threshold for carbon emissions must buy a permit to do. The initial round of permits will be "sold" and some given out by the government. From there companies that go beyond the set threshold are allowed to buy credits from other companies who are more energy efficient.
This bill has many flaws and will have many costly repercussions.
1.) This legislation will kill jobs. Congress must really think very low of our intellectual capacity if they think we believe that we will end up with jobs in the net positive category. It is self evident that this is a lie. Afterall, I think it is pretty widely accepted (even among liberals) that, relative to government run micro-economies, privatized industries are more efficient. The more efficient a particular company/industry is the greater relative production it creates. The greater production the greater employment.
We could also take this route in analyzing whether this is capable of creating jobs. Ask yourself, is value being added to the economy through this? Without discernible value being added it is inevitable and self evident that this system will be inefficient and thus counterproductive (that is a technical way of saying that we will waste money). All you would need is simple logic and reason to debunk this claim that it will "create" jobs. But if reason is not your strong suit and you need studies and facts to make you believe then so be it.
Spain has a somewhat similar program to what congress is attempting to push through. An independent study was done on the effects of this program with regards to job loss/creation. The results were that it is estimated that 2.2 jobs were killed for every one job created. Admittedly it is not the same system verbatim as our program but do you really trust a government that has a track record of running the following programs: Medicaid, Medicare, Social Security, and Amtrak? All of which are incredibly adept at losing money.
2.) There will be increased cost to consumers. We know it could be bad when even the authors of this bill admit that costs will go up. Effectively speaking, this would be the largest tax increase ever imposed on America. The following estimates were put forth regarding the cost to consumers. The CBO estimated that by 2015 the average increase in energy costs per household would be $175/yr., the EPA estimated an increase of $110/yr. While those numbers don't seem particularly staggering keep in mind who it is that is making those estimates. Do you think either of those parties have an incentive to over shoot the estimate or under shoot the estimate? We also have independent estimates done by the George C. Marshall Institute and the Heritage Foundation. Both of which predict average increases of approximately $1,500/yr. per household. So essentially, for the average person, approximately one entire paycheck would be spent with nothing in return.
Those aren't the only estimates we have. The George C. Marshall Institute also predicts that this legislation would push average electric costs up 5-15% by 2015, natural gas prices up 12-50%, and gasoline prices up 9-14.5% by 2015.
And if all of that weren't enough we can also look at it like this. If any of those estimates are even remotely acurate (and I would guess it's probably somewhere in the middle of the low and the high estimates) then we can honestly say that the demographic that will be hurt the most are the poor. I touched on this with my last note but I'll say it again. For the most part poor families spend a greater percentage of their income on fixed expenses (food, housing, utilities). Knowing that energy costs are going up, and by default food prices will increase, we can say that, relatively speaking, the poor will be affected to a greater degree. Essentially guaranteeing a greater gap in standard of living between the rich and the poor.
I could continue on with how the increased cost would hurt by going over the opportunity cost of lost investment and thus lost growth but I think I'll save that for another day. Just rest assured that an astronimical amount of potential wealth creation will never be realized due to this bill. There would quite literally be a decrease in the quality of life.
3.) Now some might say that all of the negative results are worth it due to lower carbon emissions. But even the stated goal is laughable. Sure, America might decrease it's carbon emissions but what do you think happens to all the manufacturing that will be pushed overseas to places like China, India, and other third world countries. These countries which have even less efficient means of production will be increasing their production as a direct result of this. There will be a net increase in greenhouse gases while at the same time cutting American jobs and giving them to other countries. So even those who believe in the man-made global warming theory should be against this.
In conclusion: Every one of us, regardless of political affiliation should be very wary of this bill.
Oh, and mark my words, when gas prices go up in a few years because of this we will hear all about how the gas companies are "price gouging" and taking advantage of the consumer by driving up prices. When that happens, remember this piece of legislation.
Matthew N Jaimie DeBoer I should have been more on top of this and harassed our congressmen/women about this.
It's not too late too contact our senators though.June 28, 2009 at 9:01am · ·
Mark DeBoer You didn't mention that the last 3 winners of the tour de france have come from Spain so they must be doing something right... Seriously though, Luke do you have a phone # or link of our Senator/Rep we can ctc to voice our concerns?June 28, 2009 at 9:02am · ·- Matthew N Jaimie DeBoer Klobuchar http://klobuchar.senate.go
v/emailamy.cfm June 28, 2009 at 9:03am · · 
Luke De Boer For more on this....http://www.realclearpolitics.com/articles/2009/06/26 /cbo_grossly_underestimate s_cost_of_cap_and_trade.ht ml June 28, 2009 at 10:03am · ·
Dan Hiebert Awesome write-up!! How did you congressman vote?
http://www.glennbeck.com/content/articles/article/19 8/27312/ June 29, 2009 at 10:15am · ·
Danielle BerningLuke- I'm gonna show this to my mom- I think you would be great friends, although you're more facts when it comes to politics and she's more conspiracy theory... haha... but you'd still be friends. she thinks the gov't is trying to make ame...ricans poorer to be more dependent on them... and their goal is to essentially make us a third world country- but I'm not gonna get into all that....
this is a very well put together note you wrote. i'm impressed by you for once luke! just kidding.
and now i'm gonna go stalk amy klobuchar... :)See MoreJune 29, 2009 at 5:54pm · ·
Mike Neiber Obama is pulling the biggest heist in American history.June 30, 2009 at 3:22pm · ·
Jeff Stone Wait.... I thought Obama said that 95% of America wouldn't see a tax increase!! And... What if you like waiting in lines at the post office and at the DOT to get your license tabs... Health care will be like that! I wonder if they'll have free coffee available while you wait??July 2, 2009 at 7:46am · ·
Danny Kreps Keep it up Luke.
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