Lieberman-Warner: Intended Consequences

By March 28, 2008Economy, Global Warming, Taxation

We’re always on guard against new laws and regulations creating unintended consequences that take a whack at manufacturers and the economy, but when Phil Kerpen of Americans for Prosperity considers the Lieberman-Warner cap-and-trade scheme, he sees a lot of intended consequences. Kerpen cites the NAM-ACCF commissioned study on S. 2191, America’s Climate Security Act, which projects inflation-adjusted costs including 3 to 4 million fewer jobs, $4,022 to $6,752 in lost household income, an annual hit to GDP of between $631 billion and $669 billion, and higher energy prices — 60 percent to 144 percent higher for gasoline and 77 percent to 129 percent higher for electricity. From “Bad Times for Green Schemes“:

But these costs are not unfortunate side effects of the bill; they are intended effects. The bill’s key regulatory scheme is called “cap and trade,” which is a complicated, indirect way of levying an energy tax. Instead of charging a set amount for carbon-dioxide emissions, the government would sell a fixed number of permits, with prices set at auction and then determined by trading on Wall Street. This has all the costs of a tax, with price uncertainty and administrative costs thrown in.

Al Gore acknowledged that the House-sponsored energy tax of 1993, which he championed as vice president, contributed to Democratic congressional defeats. Yet while the cap-and-trade scheme helps hide the tax from voters, its purpose remains the same: Make energy much more expensive so that people use less of it.

Meanwhile, cap-and-trade has failed in Europe to achieve its goals, and even if successful, does anyone seriously believe such a program would do anything to curb supposed global warming?

Better to encourage the prosperity that allows the developed world to afford to address the environment, Kerpen argues.

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