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The House Energy And Commerce Committee has approved the American Clean Energy And Security Act of 2009 (cap and trade). Although no members of the committee actually read the nearly 1,000 page bill, the House did employ a speed reader for a day to read part of the bill aloud (think Pittsburgh Pete), which didn't help inform Congress at all, but did provide some excellent material for all the late night talk show comedians.
The aim of the bill, also known as the Waxman-Markey bill, is to reduce carbon dioxide (CO2) emissions from automobiles, coal plants, and factories by 83% over the next 40 years. Here's the bill's primary sponsor, Representative Henry "Clueless" Waxman (D-CA), explaining what is in the bill when he was asked the other day:
"You're asking me ? Well, I certainly don't claim to know everything that's in this bill....I don't know the details. We rely on the scientists."
Excellent leadership, Mr. Waxman.
Steven Pearlstein of the Washington Post describes the cap and trade legislation:
There remains a robust argument over whether the American Clean Energy and Security Act of 2009 represents a crucial step in preserving life as we know it. But there is no question that there are few pieces of legislation that are likely to have a more profound effect on the U.S. economy. It would bring about dramatic changes in the relative prices of energy and goods produced by energy-hungry industries. It would redistribute trillions of dollars in business sales and household income and generate hundreds of billions in government revenue. And it would represent the most dramatic extension of government's regulatory powers into the workings of the economy since the early days of the New Deal.
For all that, there are probably not more than a few hundred people who really understand what's in this legislation, how it would work and what its impact is likely to be.
The other thing to say about it is that it is a badly flawed piece of public policy. It is so broad in its reach and complex in its details that it would be difficult to implement even in Sweden, let alone in a diverse and contentious country like the United States. It would create dozens of new government agencies with broad powers to set standards, dole out rebates and tax subsidies, and pick winning and losing technologies, even as it relies on newly created markets with newly created regulators to set prices and allocate resources. Its elaborate allocation of pollution allowances and offsets reads like a parody of industrial policy authored by the editorial page writers of the Wall Street Journal. The opportunities for waste, fraud and regulatory screwup look enormous.
Sounds just peachy. Sure, cap and trade may cost a million jobs and drive up everybody's energy costs by several hundred to several thousand dollars each year, but we get an enormous new government bureaucracy to boot ! What could possibly go wrong ? Besides, we're in an economic boom period now, right ? Who cares if job losses, costs, and taxes go up ? It's not like we're in a recession or anything, where something like this cap and trade legislation would REALLY hurt.
As if all that isn't enough, here's a little about the 'trade' part of cap and trade from David Sokol of the Washington Post:
If you liked what credit default swaps did to our economy, you're going to love cap-and-trade. Just read Title VIII of the bill, which lets investment banks, hedge funds and other speculators participate in the cap-and-trade market. They don't have emissions to cut; they have commissions to make.
The Waxman-Markey bill imposes a market-based (read: unregulated) trading program on a highly regulated industry that must make enormous long-term and least-cost capital decisions to reduce carbon dioxide emissions. In an unprecedented and unwise fashion, it turns American industry over to the federal Environmental Protection Agency by giving the agency the authority to change the rules on allowances every five years. Is this sound public and economic policy? I think not.
Well, at least Wall Street will make money, even as American industries and American consumers take it up the tailpipe.
I think this cap and trade legislation could work, but it will require the "nuclear option" to succeed. By that, I mean it could work if we use nuclear weapons to destroy China and India, because that's where the rest of our industries and jobs will go if this legislation goes into effect.
Other than that, it sounds great. And after all this, what impact will cap and trade have on the environment ? Beats me. Maybe a little, maybe none whatsoever. Does that even matter anymore ?