(CNSNews.com) - The congressional Democrats’ cap-and-trade plan to tax carbon emissions could cost every American family as much as $3,100 a year and is equivalent to a “declaration of war on the Midwest,” Republican lawmakers told CNSNews.com this week.
But Democrats disputed the Republicans’ cost figure and said the plan can be accomplished without imposing a net cost on the American people.
In general, under cap and trade, the amount of carbon that energy producers emit is capped. They can exceed that cap through the purchase, i.e., “trade,” of carbon permits. The money for those permits would be collected by the government and presumably redistributed under a system still being crafted.
“The reality is the cap-and-trade legislation offered by the Democrats amounts to an economic declaration of war on the Midwest by liberals on Capitol Hill,” Chairman of the House Republican Conference Mike Pence (R-Ind.) told CNSNews.com.
“We are going to increase costs on every American with this plan -- and the other thing we need to keep in mind is the millions of American jobs we are going to put at risk if we impose this new tax on American industry when our competitors around the world will not,” House Minority Leader John Boehner (R-Ohio) told CNSNews.com in a press conference on Thursday. “It’s pretty clear.”
Both Pence and Boehner have said they estimate that, in total, the Democrats’ cap-and-trade legislation could cost each American family up to $3,100 a year. While lawmakers are still finalizing a cap-and-trade bill, Rep. Henry Waxman (D-Calif.) and Rep. Edward Markey (D-Mass.) recently introduced the draft of the American Clean Energy and Security Act of 2009.
According to Boehner's office, the $3,100 number is based on a Massachusetts Institute of Technology (MIT) study released earlier this year that examined cap-and-trade legislation from 2007. Republicans believe the new legislation for 2009, in its final form, will be similar to the 2007 bill.
“We took MIT’s own estimate of a key cap-and-trade bill from the 110th Congress (S. 309), cosponsored by then-Senator Obama, that said S. 309 would generate $366 billion in revenues in 2015,” Boehner's office told CNSNews.com. “We took MIT’s own number – $366 billion – and divided that by the number of U.S. households. … Using this formula, you get roughly $3,000 per household.”
But Democrats deny their legislation will cost the taxpayers anywhere near that much money, and some said the legislation’s goals it can be achieved with no net cost to the taxpayer. Further, one of the MIT study’s author’s disagreed with the Republicans’ interpretation of the costs.
“That is nearly 10 times the correct estimate, which is approximately $340,” wrote MIT Prof. John Reilly, one of the authors of the disputed report, in an Apr. 1 letter to Boehner.
In reference to the $3,100 figure, Rep. Henry Waxman (D-Calif.), chairman of the House Committee on Energy and Commerce, said, “That’s not true at all.”
“In fact, the Environmental Projection Agency estimate says that it will be about $40 or $50 per family per year,” Waxman told CNSNews.com.
Waxman was referencing an EPA study of a “discussion draft” of the American Clean Energy and Security Act of 2009, the Waxman-Markey plan.
“They [Republicans] are taking research and wildly misrepresenting it,” Rep. Earl Blumenauer (D-Ore.), chairman of the House Select Committee on Energy Independence and Global Warming, told CNSNews.com. “It is not true remotely.”
Blumenauer and Reilly also said that Republicans are not taking into account the point that the federal government plans to return to the American people part of the money paid by corporations for the right to release carbon into the atmosphere -- and that the government also plans to provide Americans with goods and services funded by the cap-and-trade program.
“They are misrepresenting research and it assumes that this money is not going back to communities,” Blumenauer told CNSNews.com. “Part of it will come right back to individual families, part of it will be used to strengthen the environment. … We want some of it to be spent to help communities with issues of transportation, the natural environment, energy conservation. There are lots of things here that are going to come right back to individuals and their communities.”
“It is very likely that the net cost when we are done with this is going to be a net positive cost because we already waste more energy than any country in the world,” he said.
“I have the idea that they [the American public] should lose nothing,” Rep. Charles Rangel (D-N.Y.), chairman of the House Committee on Ways and Means, told CNSNews.com. “If you are in the tax system, you should be reimbursed. If you are not in the tax system, it could be a check every month.”
In his letter to Boehner, Prof. Reilly wrote, “We assumed in the analysis we did that the revenue is returned to households.” Reilly also noted that the cap-and-trade plan would reduce the number of jobs in fossil fuel industries, such as the coal, natural gas, and oil industries.
“The higher energy prices encourage reductions in energy use by increasing the payback on improvements in energy efficiency, and through such investments households can avoid paying more for energy,” wrote Reilly. “Jobs and wages in fossil fuel industries are likely to decline but job opportunities will increase in industries that produce alternative energy sources or that provide ways to save energy.”
Republicans who spoke with CNSNews.com defended their $3,100 estimate and argued that it is unlikely that money going through the hands of the federal government will make it back intact to the taxpayers.
“Anyone who thinks you can pay $3,100 to the federal government and thinks you can get that money back completely in services -- like I said -- he may go to M-I-T but he is an N-U-T.,” Rep. Louie Gohmert (R-Tex.) told CNSNews.com.
“No, there is no chance this will not add to the net cost for taxpayers,” he said.
“This MIT study was pretty clear in terms of what this professor thought on the costs,” Boehner told CNSNews.com.
Republicans were also quick to note that, while on the campaign trail last year, President Obama himself predicted energy prices would skyrocket under a cap-and-trade program.
On Jan. 17, 2008, Obama was interviewed by the San Francisco Chronicle and he said: “You know, when I was asked earlier about the issue of coal, uh, you know, under my plan of a cap and trade system, electricity rates would necessarily skyrocket. Even regardless of what I say about whether coal is good or bad. Because I'm capping greenhouse gases, coal power plants, you know, natural gas, you name it -- whatever the plants were, whatever the industry was, uh, they would have to retrofit their operations. That will cost money. They will pass that money on to consumers.”