On May 12, 2010, Sens. Kerry (D-MA) and Lieberman (I-CT) introduced the Senate Democrats' cap-and-tax legislation. According to a summary provided by the sponsors, the bill broadly follows the outline of the Waxman-Markey bill which barely passed the House in 2009. Like the House bill, the Kerry-Lieberman plan amounts to a national energy tax that will raise energy costs and kill jobs while unemployment stands at almost 10 percent.
National Energy Tax: The bill imposes a national cap-and-tax regime that ultimately every consumer in the U.S. would pay for. Independent researchers, the nonpartisan Congressional Budget Office (CBO), and President Obama have all agreed that this cost will be passed to consumers. Under any cap-and-tax system, facilities that emit greenhouse gases such as power plants and manufacturers would purchase credits for their emissions from the Environmental Protection Agency. The cost of these credits for businesses would be passed on to consumers in the form of higher electric bills and more expensive products.
New Gas Tax: The Kerry-Lieberman bill would force producers and importers of refined petroleum products (gasoline) to purchase fixed-price emissions allowances from the government. Of course, the cost of these credits would be passed directly through to the consumers-commuters, truckers, farmers and vacationers-in the form of higher fuel prices at the pump. The national average for a gallon of gasoline is already almost $3 and trending higher as the summer travel season approaches.
Kills Jobs: The bill would result in an enormous loss of jobs that would ensue when U.S. industries are unable to absorb the cost of the national energy tax and the bill's other provisions, likely sending jobs overseas. There is little debate that a national energy tax would outsource millions of jobs in affected industries to countries such as China and India. In May 2010, CBO confirmed that a cap-and-tax system would raise the overall unemployment rate and cause real (inflation-adjusted) wages to be lower. Industries most affected by the national energy tax would include manufacturing, transportation, mining, and oil and gas production.
Forcing Individuals onto Obamacare: According to CBO, as individuals lose their jobs and employer-provided health care as a result of the national energy tax, they will be effectively forced into government-run health care. According to CBO, "Some people would lose health insurance coverage associated with their previous employer, though the recently enacted health care legislation will provide new opportunities for individuals to purchase health insurance. Moreover, people who lose their job tend to have more health problems later in life, and losing a job can cause family life to suffer."
Hurts Communities: CBO argues that a cap-and-tax bill would also negatively impact communities and state and local governments. According to the CBO report, "In cases in which a shrinking industry was the primary employer in a community, the entire community could suffer." Possible effects on an affected community include the erosion of a local tax base as employment and economic activity drops and homes could decline in value as laid-off workers sell their homes and move away in search of employment.
Hurts Rural America and Agriculture: The bill squarely targets farms and rural Americans. Rural residents spend 58 percent more on fuel and travel 25 percent farther to get to work than Americans living in urban areas. As prices for gasoline and fertilizer increase, rural America will correspondingly feel the greatest pinch. Importantly, 25 percent of U.S. farm cash receipts come from agriculture exports. U.S. farmers would be at a severe disadvantage compared to farmers in nations which do not have a cap-and-tax system and correspondingly high input costs. However, not only agricultural communities will feel the impact. Food and grocery prices across the country will increase as these high energy costs are passed along to the consumer, further straining families' budgets in every state.
Without China and India: Without the cooperation of developing countries like China (the world's largest emitter of greenhouse gases) and India (expected to increase emissions by 104 percent between 2006 and 2030) global temperature reduction goals of cap-and-tax proponents cannot be attained. According to an MIT study, "With rapid growth in developing countries, failure to control their emissions could lead to a substantial increase in global temperature even if the U.S. and other developed countries pursue stringent policies." China and India have repeatedly warned that they have no intention of restricting their emissions.