Detroit Fears: Climate Bill Would Strangle Economic Recovery

  • Date: 20/05/10

The betting in Washington is that the cap-and-trade carbon bill introduced in the Senate by Democrat John Kerry of Massachusetts and Independent Joe Lieberman of Connecticut hasn’t got a chance of passing this year. That may explain why public outcry against yet another economy-choking piece of legislation has been fairly muted.

But we’re not taking anything for granted, remembering that in January, after Scott Brown scored his stunning victory in the Massachusetts race for the U.S. Senate, the smart money said that health care reform was dead, too. And look what happened.

This bill ought to be labeled “The Kill Any Hope for Economic Recovery Act.” Its negative impact on jobs and economic development in this country will be enormous, as will be its contribution to job creation and economic growth in China, Brazil and India. What’s left of America’s manufacturing base will pack up and head for places where energy is still cheap and environmental regulations are less onerous. You think making cars in Detroit is tough now, watch what happens if the Kerry-Lieberman bill passes.

The bill would cap carbon emissions at 20 percent of 2005 levels by 2020, and at 83 percent of 2005 levels by 2050.

There are two ways the country can meet the stringent targets: With phenomenal technological breakthroughs, or by putting severe limits on economic growth. We’ll put our chips on the latter.

Hitting the target, according to a Heritage Foundation analysis, will take nearly $10 trillion out of gross domestic product. It will lead to $4.6 trillion in higher energy taxes, and job losses of 2.5 million.

Households will pay $1,000 more per year in energy costs, including $1.20 more per gallon of gasoline. Net worth for a family of four will decline by $40,000, while its share of the national debt will increase by $27,000 per family member.

Supporters of the bill argue that it will force the development of a new green economy with millions of new jobs. But they can’t point to a jobs explosion anywhere in the world after the adoption of similar mandates.

What the bill will create is a complex carbon trading marketplace where companies will be able to buy and trade carbon credits. If this bill progresses the way the health care bill did, expect that to result in exemptions and special deals for favored industries and interest groups.

Meanwhile, the air will be just as dirty, unless we can figure out how to build carbon walls high into the atmosphere to keep out the emissions that will still be churning from smokestacks in China and India.

Allowing this bill to remain alive in the Senate will add to the uncertainty of investors and job creators. The Senate should kill it, and quickly.

The Detroit News, 20 May 2010

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