Corporate America is giving Democrats cover to impose the Obama-Waxman-Markey national energy tax.
Communist Godfather Vladimir Lenin is alleged to have famously said, “The capitalists will sell us the rope with which we will hang them.”
Nowhere is that observation more relevant than in the sorry spectacle taking place in Congress as corporations, in exchange for short-term government handouts, fall over themselves to endorse a carbon dioxide regulation bill that will impose a crushing energy tax on the American people.
Sponsored by Rep. Henry Waxman (D-CA), chairman of the House Energy and Commerce Committee, and Rep. Edward Markey (D-MA), the “cap-and-trade” legislation, called the American Clean Energy and Security Act, would put a cost on carbon dioxide by imposing a cap on greenhouse gas emissions. On May 22, the committee approved the legislation, which will be referred to the House Ways and Means Committee and other committees for consideration. The bill would establish a market in which regulated industries, such as the electric power and petrochemical sectors, would buy and sell allowances in an auction market. As the cap is reduced each year, companies that emit too much carbon dioxide would have to buy an ever-decreasing number of permits from “clean” companies with extra emissions credits.
Besides being complex, the Waxman-Markey bill would be enormously expensive for both companies and workers. A recent Heritage Foundation study estimated it would destroy over 1.1 million jobs, hike electricity rates 90 percent, and reduce the U.S. gross domestic product by nearly $10 trillion over the next 25 years.
That is why it is inexplicable that corporations, some of which used to be against such onerous environmental measures, are jumping on the “Green” bandwagon.
As is too often the case, the reason is that companies are selling out their long-term interests for short-term financial gain — or at least what they perceive to be short-term gain. Instead of the companies having to buy all of their emissions permits, the government will give most of them away provided the recipient companies spend billions of dollars on supposedly cleaner technologies. In other words, it is a multi-billion dollar Green Bailout.
The list of corporate sellouts reads like a Who’s-Who of the Fortune 500: General Motors, Ford Motor Company, General Electric, PepsiCo, Johnson & Johnson, Alcoa, and Caterpillar. Wal-Mart has not officially endorsed the Waxman-Markey bill but is on record as supporting cap-and-trade in principle.
This corporate support was pivotal in reviving a bill that appeared to be fatally stalled in the House Energy and Commerce Committee.
In trying to get his bill reported out of the committee, Waxman ran into stiff opposition from about a dozen Democrats representing districts dependent on coal or petrochemical industries. With near-unanimous Republican opposition, Waxman was forced to make major changes in the bill to lessen the impact on energy-sensitive industries and woo back wayward Democrats.
The original bill, reflecting President Obama’s goals, called for the government to sell off all 100 percent of the emissions credits. The idea was to raise $646 billion over ten years to help pay for Obama’s massive expansion of government-run health care. The bill set a goal to cut carbon emissions 20 percent by 2020. However, several Democrats balked at a measure they feared would cost their districts jobs. These included Rick Boucher (D-VA), Gene Green (D-TX), and Charlie Gonzalez (D-TX).
The revised plan would cut greenhouse gas emissions 17 percent by 2020. The most dramatic change, though, is in the allocation of credits. It would give away 85 percent of the emissions credits for free. That includes 35 percent for the electricity sector, 9 percent for natural gas companies, 3 percent for the auto industry, and 2 percent for oil refiners. All of the free credits will be phased out by 2025. The 15 percent of permits that will be auctioned off is expected to generate $12 billion in 2012, the first year the program could start working.
Free credits for the refiners was the price for winning the support of Texas Democrats Gonzalez and Green. John Dingell was won over because the auto industry’s share of the permits is supposed to total $12 billion to $15 billion over the first six years of the trading program. The Alliance of Automobile Manufacturers praised the allocation of credits as an “encouraging” development.
However, the most dramatic reversal of position came from the utility industry. Given that half the nation’s electricity is generated by coal, utility companies stand to get hit especially hard by a punitive program to reduce fossil fuel use. Thus, the industry has always been strongly opposed to any such measure. Not anymore. The utilities are estimated to get $21 billion in free credits in 2012. While not yet giving a full endorsement, the Edison Electric Institute (EEI), the utility trade association, says it is committed to seeing the bill passed. Said Jim Owen, EEI’s media-relations director, “There are probably some things that different people want to see tweaked in the legislation, but…we would like to see it get into the end zone.”
Individual power companies are publicly endorsing the Waxman bill. On May 19, David Crane, CEO of NRG Energy, wrote a letter to Waxman praising his “admirable” leadership on the issue and said NRG “will do what we can to support you and your colleagues in advancing your critically important bill.”
This was all the cover needed for coal-state Democrats to end their opposition to the bill. Rep. Boucher, who led the push for the allocation of credits to the utility companies, said that while he still has “remaining concerns,” he is now “committed in the full committee to be supportive of this bill, to encourage others to be supportive.”
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