Exposed: Impacts of Waxman-Markey

Back to Cap and Tax Opposition Resource Center; Impacts of Costly Climate Bill Exposed

Inhofe Kicks Off Series of Floor Speeches Exposing Waxman-Markey Climate Bill: "In the coming weeks, I intend to go through every single page of this climate bill, revealing the massive amount of spending, the labyrinth of new regulations, and expansion of government agencies and programs," Senator Inhofe said on the Senate Floor today. "I think the time is right to peel back the green veil and expose this 1,400-page monument to big government.  There's a lot in there, and at times the bill gets very complicated.  But over the next several weeks, I plan to focus on some of the bill's most damaging provisions, as well as those that reinforce the criticisms I've been making. Before the United States Senate moves to vote on the largest tax increase in history, the American public deserves to know exactly what is in this bill."

Economic Impact of Waxman-Markey

Inhofe, Voinovich Request Updated Analysis on Waxman-Markey: (July 24, 2009) WASHINGTON, D.C. -U.S. Senator James Inhofe (R-Okla.), Ranking Member of the Senate Environment and Public Works Committee, along with Republican Committee member Senator George Voinovich (R-Oh.) today sent a letter to EPA Administrator Jackson requesting a more thorough and comprehensive economic analysis of the Waxman-Markey American Clean Energy and Security (ACES) Act of 2009. "An updated and more complete analysis of Waxman-Markey is critical to the legislative process," Inhofe said. "Congress needs this information in order to act in the best interest of constituents, the economy, and the nation's energy security."

EPW Republicans Call on EPA to Provide Realistic Analysis to Waxman-Markey Bill:  (June 9, 2009) WASHINGTON, D.C. - U.S. Senator James Inhofe (R-Okla.), Ranking Member of the Senate Environment and Public Works Committee, during today's EPW Committee hearing announced that he and several of his Republican colleagues on the committee sent a letter to EPA Administrator Lisa Jackson requesting new analysis be conducted on Waxman-Markey, H.R. 2454, "The American Clean Energy and Security Act" (ACESA), that reflects more realistic assumptions. Senator Inhofe asked Administrator Jackson to complete the analysis by June 26, 2009. 

CBO Report on Cap-and-Tax Bill: Higher Taxes, Lost Jobs, Lower Wages: WASHINGTON, DC - Sen. James Inhofe (R-Okla.), Ranking Member of the Environment and Public Works Committee, today commented on the Congressional Budget Office (CBO) cost estimate for the Waxman-Markey global warming cap-and-trade bill.   "This bill undermines President Obama's campaign pledge to cut taxes for middle class taxpayers," Sen. Inhofe said.  "The CBO analysis reveals that cap-and-tax legislation would destroy American jobs, lower wages, and impose a massive tax increase on middle class families over the next 10 years.  As we look to jump start the economy, the last thing Washington should do is impose the largest tax increase in history on consumers. As is always the case with cap-and-tax, the more that is exposed, the more likely the American people will reject it."  

Impact on Agriculture Community

WHEAT GROWERS CHANGE COURSE: AFTER SUPPORTING WAXMAN-MARKEY, NOW OPPOSES CAP-AND-TRADE BILL THAT ‘HARMS PRODUCTION AGRICULTURE' - Senator Inhofe applauded the board of the National Wheat Growers Association, which, on September 4, by a vote of 26 to 2, approved a new resolution on climate legislation and regulation.  The new resolution puts the group on record as "opposed to greenhouse gas legislation or regulation that has a negative impact on production agriculture." 

EPW POLICY BEAT: DOWN ON THE FARM:  In March, the House Agriculture Committee sent a lengthy questionnaire on various aspects of climate change policy to members of the agricultural community.  The committee cast a wide net, having sent questions to "a diverse group, including commodity, conservation, forestry, research, energy, business, and nonprofit interests."  The questions covered everything from allowance allocation, offsets, commodities trading, and regional economic impacts. That last topic piqued our curiosity, as it is incontestably clear that cap-and-trade harms consumers in the Midwest, Southeast, and Great Plains-regions that are heavily rural and coal-dependent-much more so than denizens of the East and West coasts.

EPW POLICY BEAT: FARM FIASCO: Over the last week, agriculture took center stage in the climate debate, as some in Congress threatened to derail the Waxman-Markey bill over, among other things, the Obama Administration's biofuels policy.  This ag-fueled drama heightened concern within the agricultural community about cap-and-trade and greenhouse gas regulation-and the devastating impacts both would have on farms.   The negative consequences of carbon regulation for American farmers are undeniable.  But don't take our word for it: EPW Policy Beat sorted through the regulatory docket on EPA's Advanced Notice of Proposed Rulemaking (ANPR) to regulate greenhouse gases under the Clean Air Act (CAA).  There we found numerous comments filed by farm groups staunchly opposed to CAA regulation.  A few themes predominate: CAA regulation will mean new, burdensome taxes and fees on farms; CAA regulation will be a futile attempt to address a global problem through controls on American farms; and CAA regulation will destroy farming jobs and force many farms out of business. 

Rep. Frank Lucas Op-Ed: Waxman-Markey Measure Portends Devastating Results: These groups realize that agriculture is a prime target for a national energy tax because it is an energy-intensive industry. Whether it's the fuel in the tractor, the fertilizer for the crops or the delivery of food to the grocery store, agriculture uses a great deal of energy throughout production. On average, 65 percent of farmers' variable input costs are fuel, electricity, fertilizer, and chemicals. Even a small increase in the operating costs for our producers will hurt American agriculture. Estimates vary, but experts predict that under this national energy tax, energy prices will increase anywhere between 15 percent and 125 percent. Additionally, as these higher energy prices ripple throughout the economy, producers will pay more for seed, equipment, machinery, steel and other supplies needed for their agriculture operations.  Ultimately, higher costs will be passed onto consumers with higher food prices. People will pay more for food, or be forced to buy less to meet household budgets.

Impacts on States

CLIMATE AND THE KEYSTONE STATE: EPW Policy Beat came across an interesting perspective on climate change legislation-this time from three Pennsylvania utility commissioners.  In a May 7 letter to the Pennsylvania Congressional delegation, Tyrone Christy, Kim Pizzingrilli, and Robert Powelson, all of whom, incidentally, were nominated by Gov. Ed Rendell (D), wrote that climate legislation, "[l]eft unexamined and unchecked," will have "a profound adverse impact on the Commonwealth of Pennsylvania."  How so?  For one thing, as the commissioners note, Pennsylvania gets 58 percent of its electricity from coal, and is the nation's 4th largest coal producer, distributing over "75 million tons of coal" each year.  "However," the commissioners warn, "if the Waxman-Markey bill were to pass, Pennsylvania is looking at a bleak scenario by 2020: a net loss of as many as 66,000 jobs, a sizeable hike in the electric bills of residential customers, an increase in natural gas prices, and significant downward pressure on our gross state product." 

MITCH DANIELS: Indiana Says 'No Thanks' to Cap and Trade: The Waxman-Markey legislation would more than double electricity bills in Indiana. Years of reform in taxation, regulation and infrastructure-building would be largely erased at a stroke. In recent years, Indiana has led the nation in capturing international investment, repatriating dollars spent on foreign goods or oil and employing Americans with them. Waxman-Markey seems designed to reverse that flow. "Closed: Gone to China" signs would cover Indiana's stores and factories.  Our state's share of national income has been slipping for decades, but it is offset in part by living costs some 8% lower than the national average. Doubled utility bills for low-income Hoosiers would be an especially cruel consequence of the Waxman bill. Forgive us for not being impressed at danglings of welfare-like repayments to some of those still employed, with some fraction of the dollars extracted from our state. 

Colorado: "Cap and Trade is Wrong Solution"- Denver Post Round-up of Recent Headlines on Waxman-Markey from Colorado DENVER POST EDITORIAL: Cap and trade is wrong solution - The U.S. needs to cut its greenhouse emissions, but legislation expected to be taken up today isn't the way to go about it: But Waxman-Markey isn't the solution. Fashioned to avoid appearing like a new tax, the measure nevertheless would work like one, as the higher costs of meeting the caps get passed on to consumers. The measure risks hurting our competitiveness globally without effectively lowering global greenhouse gases. Congress should instead consider a simpler carbon tax, creating a "nuclear-arms race" to harness atomic power to replace fossil fuels and provide incentives to speed new-energy innovation.

GOLDEN STATE GAFFE: The only problem with CARB's conclusions is that they have no basis in fact.  In a peer review of CARB's analysis, Harvard University's Robert Stavins reached the "inescapable conclusion that the economic analysis is terribly deficient in critical ways and should not be used by the State government or the public for the purpose of assessing the likely costs of CARB's plans."  "I say this with some sadness," he continued, "because I was hopeful that CARB would produce sensible policy proposals analyzed with sound scientific and economic analysis."  The analysis is "severely flawed," Stavins said, and "hence not useful for the purpose for which it was intended."

Impacts on the Coal Industry

EPW POLICY BEAT: GIVE AND TAKE: One of the more ironical provisions concerns merchant coal generators. More specifically, it's aimed at the potential for merchants in a cap-and-trade scheme to reap windfall profits.  Under the bill's allocation distribution, merchants receive about 5 percent of allowances.  That such allowances were freely given was considered to be a legislative "win" for the sector.   Yet, as stated on page 582, that "win" quickly turns into a loss.

THE ‘DE FACTO' BAN ON NEW COAL PLANTS:  Should coal be part of the energy mix in a carbon-constrained world?  It's not surprising that we think it should.  And we suppose it's not earth shattering that the Waxman-Markey climate bill answers this all-important question with nuance.   True, the bill supports carbon capture and sequestration technology for new coal plants.  But Congress can't legislate this technology into existence.  So this "bridge to a low carbon future" is a bridge to nowhere: the bill effectively sends the prospect of new coal plants into oblivion. Why?  In section 116 (beginning on page 60), the bill establishes a New Source Performance Standard (NSPS) for new coal plants that will be, from an economic standpoint, just about impossible to meet.  According to an analysis by ClearView Energy Partners, this amounts to a "de facto ban on new PC [pulverized coal] plants." 

Economic Analysis of Waxman-Markey

Boxer Says Goal is to "Soften the Blow" from Cap-and-Trade - Admits That Cap-and-Trade Will Hurt Jobs, Families, Consumers - During a hearing on July 16, 2009, in the Senate Environment and Public Works Committee, Sen. Barbara Boxer (D-CA.), chairman of the committee, said that her goal is to "soften the blow" of cap-and-trade legislation, implicitly acknowledging that cap-and-trade will harm the economy. "The biggest priority is softening the blow on our trade sensitive industries and our consumers. I just want you to know that, that's the goal," Sen. Boxer said.  In response, Harry Alford, president of the National Black Chamber of Commerce, dismissed claims that the government could redistribute revenues from cap-and-trade to "soften the blow" on the poor, the elderly, those on fixed incomes, and consumers.  "Madam Chair, I will do that, I have been around the block a few times.  People are not going to get that refund, it's not going to hit them, people are going to be unemployed, and they are not gonna have any recourse whatsoever, the government will have failed them again."

 Inhofe, Voinovich Request Updated Analysis on Waxman-Markey: (July 24, 2009) WASHINGTON, D.C. -U.S. Senator James Inhofe (R-Okla.), Ranking Member of the Senate Environment and Public Works Committee, along with Republican Committee member Senator George Voinovich (R-Oh.) today sent a letter to EPA Administrator Jackson requesting a more thorough and comprehensive economic analysis of the Waxman-Markey American Clean Energy and Security (ACES) Act of 2009. "An updated and more complete analysis of Waxman-Markey is critical to the legislative process," Inhofe said. "Congress needs this information in order to act in the best interest of constituents, the economy, and the nation's energy security."

EPW Republicans Call on EPA to Provide Realistic Analysis to Waxman-Markey Bill:  (June 9, 2009) WASHINGTON, D.C. - U.S. Senator James Inhofe (R-Okla.), Ranking Member of the Senate Environment and Public Works Committee, during today's EPW Committee hearing announced that he and several of his Republican colleagues on the committee sent a letter to EPA Administrator Lisa Jackson requesting new analysis be conducted on Waxman-Markey, H.R. 2454, "The American Clean Energy and Security Act" (ACESA), that reflects more realistic assumptions. Senator Inhofe asked Administrator Jackson to complete the analysis by June 26, 2009. 

CBO Report on Cap-and-Tax Bill: Higher Taxes, Lost Jobs, Lower Wages: WASHINGTON, DC - Sen. James Inhofe (R-Okla.), Ranking Member of the Environment and Public Works Committee, today commented on the Congressional Budget Office (CBO) cost estimate for the Waxman-Markey global warming cap-and-trade bill.   "This bill undermines President Obama's campaign pledge to cut taxes for middle class taxpayers," Sen. Inhofe said.  "The CBO analysis reveals that cap-and-tax legislation would destroy American jobs, lower wages, and impose a massive tax increase on middle class families over the next 10 years.  As we look to jump start the economy, the last thing Washington should do is impose the largest tax increase in history on consumers. As is always the case with cap-and-tax, the more that is exposed, the more likely the American people will reject it."