Milwaukee Journal Sentinel: 'Cap-and-tax' means costs will go up for everyone

April 20, 2009

Milwaukee Journal Sentinel: 'Cap-and-tax' means costs will go up for everyone

By: Rep. F. James Sensenbrenner, Jr./ April 20, 2009

http://www.jsonline.com/news/opinion/43201302.html

Milwaukee Mayor Tom Barrett recently called on us to observe "Earth Hour" by turning off our lights for an hour. I hope Barrett wasn't following the lead of Democrats in Washington who are trying to keep us in the dark about their global warming plans.

Democrats in Washington have a plan to "fight" global warming, but the result will be a new energy tax that affects nearly everyone in our state. And just like "Earth Hour," Democrats are keeping us in the dark.

House Democratic leaders recently unveiled long-anticipated climate change legislation backed by President Barack Obama. This bill would levy a hidden fee on the use of all fossil fuels, which is why I call it "cap-and-tax."

How much will this bill cost? The bill's authors aren't saying at this time. By leaving out key numbers, House Energy and Commerce Committee Chairman Henry Waxman (D-Calif.) and House Select Committee on Global Warming Chairman Ed Markey (D-Mass.) are hiding the true costs of the legislation.

But some studies already have shown that, while cap-and-tax will have negative economic effects nationwide, it will hit Wisconsin particularly hard.

Readers of the Journal Sentinel may have seen the April 2 article by Rick Romell, which showed how much this flawed approach would raise electric bills. Citing a new study by Midwest Consumer Utilities, the article reported that electricity rates could jump by up to 63%.

The National Association of Manufacturers reported that, under similar legislation introduced last year, the price of gasoline in Wisconsin could rise by as much as 141%, and electricity rates could jump by 171%.

Why will Wisconsin be hit harder than many other states?

Cap-and-tax would place limits on carbon dioxide emissions. Wisconsin generates more than half its electricity from coal. Coal is cheap, reliable and abundant, but it emits more carbon dioxide than other sources of energy. Utilities that use coal to generate electricity will therefore have to find other ways to generate power or pay a fine.

Those other options - solar and wind, for example - are more expensive. But whether utilities adopt expensive new technologies or pay fines, their costs will increase, and they will pass these costs to us, their customers.

These costs will raise the price of fuel, electricity and all carbon-intensive products, including cement, metal and food. Shipping costs also will increase.

Simply put, nearly everything will be more expensive under cap-and-tax. Despite Obama's pledge to only tax the rich, cap-and-tax is a regressive tax that will hit low-income earners harder than the wealthy. Everybody buys gas and electricity, but it's the poor and middle class who are affected most when these prices go up.

Proponents of this approach will say that restricting the use of coal will improve the economy by creating "green jobs." Europe has embraced cap-and-tax for several years, but there is still little evidence of these new jobs.

King Juan Carlos University in Madrid, Spain, recently issued a study that showed that, for every job created in Spain that depends on energy price supports (those ostensibly created by cap-and-tax), 2.2 jobs in other industries disappear. Today, Spain's unemployment rate is more than 15%.

We also can look to Denmark to evaluate the benefits of subsidizing costly alternative energy programs. Denmark has provided huge subsidies for wind power during the past two decades. But a study by the Danish Economic Council showed that the net effect of its wind subsidies was not a benefit, but a small cost. This study looked at the issue from all angles, taking into account the massive public subsidies as well as the "green jobs" the subsidies helped create.

Environmentalists promise millions of jobs through green subsidies. The San Francisco-based Apollo Alliance said a $500 billion "investment" by the government would create 5 million jobs. But asked by The Wall Street Journal to elaborate on those numbers, the alliance's co-director, Kate Gordon, said: "Honestly, it's just to inspire people."

I'm not inspired by cap-and-tax's promise to raise the gasoline and electric costs of Wisconsin's residents. Nor am I inspired by Congress' rush to push these policies onto American consumers.

Recently, Energy Secretary Steven Chu said that a "technological breakthrough" in energy was needed to confront climate change. By pushing cap-and-tax policies, proponents are trying to force changes before we develop these breakthroughs. Consumers in Wisconsin and around the country will pay.

American companies and entrepreneurs already are working to make these breakthroughs. Johnson Controls, for example, is working on improving battery power and other technologies that will improve energy efficiency. The incentive to develop these new technologies comes from the market incentives to sell them, not from the threat of an unprecedented new tax.

Rep. Jim Sensenbrenner, a Republican, represents Wisconsin's Fifth District.

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