Cap & Trade – Bad Economics, Bad Science, Unbiblical Worldview

Climate and Cost: Clearing the Airwaves

By Dean Nelson

[Click here to see the Cornwall Alliance’s talking points on Cap & Trade.]

You may have heard the recent radio spot by the American Values Network regarding the Waxman Markey climate change bill in the House of Representatives. They wanted you to call your congressman in support of the bill.  They said this bill would help “working families and the poor.” They insisted that “a great assembly of church leaders” backed the bill.  And they claimed that power companies were against it because of greed and a disregard for the poor.

I have my doubts about all three claims.

First, how would this bill help working families and the poor?  The Waxman-Markey bill would create a “cap-and-trade” bureaucracy to regulate the amount of carbon dioxide that a factory, office building, fleet of trucks, or any other entity would be allowed to put into the atmosphere.  If a factory emitted less than its allowance, it could sell what remained to a company that emitted more than its allowance. The cap is the allowance; the trade is the ability to buy and sell.

The problem is that cap and trade would raise the cost of energy.  And when energy is more expensive, everything harvested, manufactured, or transported becomes more expensive.  And since almost everything we buy is harvested, manufactured, or transported, higher energy costs make everything more expensive.  This will especially hurt the poor, for whom the higher cost of goods and services (like groceries, gas, and home-energy use) consume a much higher percentage of their disposable income.

But don’t take my word for it.  Candidate Barack Obama was very candid when he said, “Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket.” [i]

Dr. Peter Orszag, who the President put in charge of the Office of Management and Budget, told Congress that, “under a cap-and-trade program, firms would not ultimately bear most of the cost of the allowances, but instead would pass them along to their customers in the form of higher prices…. Indeed, the price increases would be essential to the success of a cap-and-trade program….”[ii]

Cap and trade only works if it’s expensive, because it’s designed to change consumer behavior. Conservative estimates are that higher energy prices due to cap-and-trade would cost the average American household $1,241 every year, more than $100 a month. And that’s before things start getting really expensive in twenty-five years, when children born today are just graduating college and beginning their careers.[iii]

Far from helping working families and the poor, the bill threatens to harm them, greatly limiting their hopes and dreams of a better future.

What about the “great assembly of church leaders”?  There is none.  For ten years the general public has grown increasingly suspicious of claims of catastrophic, manmade global warming,[iv] and evangelical Christians and their pastors are even more skeptical than the general public.[v] Last fall, a reputable Baptist polling firm found that only 32 percent of pastors in evangelical denominations “believe global warming is real and manmade.”[vi] The rest–more than two thirds–doubt it.

If there’s a “great assembly” of church leaders, it is represented by the thousands of pastors, evangelical leaders, scientists, and laypeople who have joined the WeGetIt.org Campaign. The WeGetIt.org Declaration says that we want to care for the environment and the poor, but we don’t buy the media hype about global warming.

So, what about those greedy companies? It turns out that energy companies support the Waxman-Markey Climate bill. The official summary of the bill states: “The global-warming provisions in the discussion draft are modeled closely on the recommendations of the U.S. Climate Action Partnership (USCAP), a coalition of electrical utilities, oil companies, chemical companies, automobile manufacturers, other manufacturers and energy companies, and environmental organizations.”[vii] Contrary to what the American Values Network says, many big businesses support the legislation.

Why would energy companies and manufacturers lobby in favor of a cap-and-trade bill if, as the radio ad claims, it would hurt their profits?  They wouldn’t. They are betting that this bill will substantially increase their profits–at our expense.

Myron Ebell, director of the Energy and Global Warming Policy at the Competitive Enterprise Institute in Washington, D.C. told Congress, “The primary attraction of cap and trade appears not to be reducing emissions, but rather that promise of colossal transfers of wealth from consumers to big-business special interests and to government.”

The American Values Network radio ad claims the Waxman-Markey Climate bill is an example of “law makers working to provide resources to American families.”

Not so. The Waxman-Markey Climate bill is an example of lawmakers working with corporations to levy the biggest tax hike in American history. And unlike the auto industry bailout, Americans will own zero stock in the energy companies that are betting big on our tax dollars.

House Speaker Nancy Pelosi (D-Calif.) told the San Francisco Chronicle that she wanted to pass a cap-and-trade bill “because we see that as a source of revenue.”[viii] The non-partisan Congressional Budget Office estimates the bill’s cost at $973 billion over ten years.[ix] Senator Benjamin Cardin (D-Md.) called cap and trade “the most significant revenue-generating proposal of our time.”[x] And Representative John Dingle (D-Mich.) said at a recent House Energy and Commerce Committee hearing, “Nobody in this country realizes that cap and trade is a tax, and it’s a great big one.”[xi]

Cap and trade should be called what it is: a tax. It’s a huge tax, and a regressive tax that will hit the poor the hardest by raising the price of basic necessities, in order to fill the bank accounts of big business and finance our growing federal debt. Big business, big government, and big bureaucracy win; the poor lose.

Dean Nelson is public policy liaison for Wellington Boone Ministries and writes and speaks frequently about how federal legislation impacts families, poverty, and pro-life efforts.


[i] Interview in SF Gate (the San Francisco Chronicle’s website), January 17, 2008. http://www.ibdeditorials.com/IBDArticles.aspx?id=321149974392278
[ii] Dr. Peter Orszag, at the time Director of the Congressional Budget Office, Congressional Testimony, April 24, 2008.
iii Heritage Foundation study: “Son of Waxman-Markey: More Politics Makes for a More Costly Bill,” May 18, 2009, http://www.heritage.org/Research/EnergyandEnvironment/wm2450.cfm
[iv] Gallup Poll, March 2009, http://www.gallup.com/poll/116590/Increased-Number-Think-Global-Warming-Exaggerated.aspx
[v] Barna Group, September 2008, http://www.barna.org/barna-update/article/13-culture/23-evangelicals-go-qgreenq-with-caution
[vi] LifeWay Research, October 2008, http://www.lifeway.com/lwc/article_main_page/0%2C1703%2CA%25253D169052%252526M%25253D200906%2C00.html
[vii] Discussion Draft Summary: The American Clean Energy and Security Act of 2009, http://energycommerce.house.gov/Press_111/20090331/acesa_summary.pdf
[viii] San Francisco Chronicle, January 22, 2009.
[ix] Washington Times, June 8, 2009, http://washingtontimes.com/news/2009/jun/08/cbo-house-climate-bill-raise-973b/
[x] Washington Post, April 2, 2009, http://www.washingtonpost.com/wp-dyn/content/article/2009/04/02/AR2009040203473.html
[xi] House Energy and Commerce Committee hearing, April 24, 2009. Quoted by Myron Ebell.