Corporate America is giving Democrats cover to impose the Obama-Waxman-Markey national energy tax.
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In one of the more surreal developments, some corporations have been pressuring the U.S. Chamber of Commerce, the lobby charged with defending their interests in Washington, to reverse its opposition to a cap-and-trade plan. In a letter to the chamber, Nike Inc. and Johnson & Johnson called for the group to support emissions cuts consistent with Waxman-Markey.
So far, the Chamber of Commerce is maintaining its opposition to a bill which it estimates will raise energy prices, shrink the economy, and reduce household spending.
Rep. Markey is citing the corporate defections to the cap-and-trade side as evidence to rebut accusations by congressional Republicans and free-market advocates that the legislation will harm the economy. “When Edison Electric Institute’s CEO endorsed the bill, when three of the largest oil companies support the bill, when the second-largest coal company supports the bill, when [General Electric] and dozens of Fortune 100 companies endorse the bill, that will be the answer to the critics who say it will hurt the economy,” said Markey.
Markey says that “CEOs are not about to preside over the destruction of their business” because they believe they can still make money in the “new clean-energy future.”
On the contrary, CEOs jumping on the cap-and-trade bandwagon are risking the existence of not only their companies, but the livelihoods of ordinary Americans and indeed the very future of the U.S. economy. That is the conclusion, not of some supposedly biased industry lobby, but of the Congressional Budget Office (CBO).
On May 7, the CBO released its analysis of the impact of a cap-and-trade plan on the U.S. economy. Its conclusions are stark. Since cap-and-trade would raise prices of fossil fuels for the express purpose of discouraging their use, the resulting lower energy consumption “would render capital and labor less productive, which would lower output directly and would also tend to discourage investment and work.” The higher prices created by cap-and-trade “would create losses for some current investors and workers in the sectors of the economy that produce energy and energy-intensive goods and services. Investors would see the value of their stocks decline, and workers would face higher risk of unemployment as jobs in those sectors were cut.” That is a prediction that should make any CEO and shareholder shudder with trepidation.
But it is the average consumer that should be most fearful of cap-and-trade. The study points out that energy-intensive industries naturally would face the most serious increases in business costs such as electricity producers, the steel industry, petroleum refiners, coal miners, and the air, truck and passenger transportation industries.
Under cap-and-trade, CBO says that “obtaining allowances — or taking steps to cut emissions to avoid the need for such allowances — would become a cost of doing business for firms that were subject to the [carbon] cap.”
Or more precisely, it is the consumers who will have to get used to paying for the products and services of the affected industries. “Those firms would not ultimately bear most of the costs of the allowances. Instead, they would pass those costs along to their customers (and their customers’ customers) in the form of higher prices.”
CBO estimates that a 15 percent cut in carbon dioxide emissions would cost the average household roughly $1,600 per year. The lowest one-fifth (quintile) of household earners would pay an additional $700 while the top one-fifth would pay $2,200. However, the price increases “would impose a larger burden, relative to income, on low-income households than on high-income households.” That is because the lowest-income households spend 21 percent of their income on utility and gasoline expenditures whereas the highest income households spend only 4 percent.
In addition, some regions of the country will pay a higher price under cap-and-trade because they may rely more on coal-fired plants for their electricity. As a result, CBO found that low-income households in the Ohio Valley and the Mid-Atlantic states will pay significantly more for energy than those in California and New York.
For example, power costs in Kentucky would sharply increase. According to the National Rural Electric Cooperative Association, the average monthly bill could go up $27 to $68. Likewise in Indiana, estimates indicate that electricity bills would more than double.
President Obama cannot be accused of lying when he said that electricity bills “would skyrocket” under cap-and-trade.
The end result of the litany of corporate sellouts on the Waxman-Markey bill could be the imposition of an unprecedented and massive energy tax on the American people. Despite the short-term gains these companies believe they may reap, the long-term result will most certainly be dire for their own futures. Success, whether measured in corporate or individual terms, will be hard to come by in an economy hobbled by energy inflation, mandated use of untested and inefficient “clean” technologies, and a suffocating bureaucracy.
Fortunately, it is not at all clear that the Waxman-Markey bill will be enacted even if it manages to clear the House Energy and Commerce Committee. Major environmental groups such as Greenpeace and Friends of the Earth are opposing the bill for making too many compromises with industry. There could quite likely be many other changes both in the House and Senate that could make the legislation, intrinsically unacceptable to free market advocates, unpalatable for the environmental purists.
Whatever the outcome, it is profoundly disappointing to see a steady parade of corporations lend their support to a bill that is inimical to their existence. A lot has changed since Lenin made his dark prediction that capitalists will sell themselves out. One thing that hasn’t changed is the myopic stupidity of some members of that class.
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H/T to National Review Online