Cap-and-Trade Legislation
Floor Speech
CAP-AND-TRADE LEGISLATION -- (Senate - July 13, 2009)
Mr. THUNE. Mr. President, this week we work on the Defense authorization bill. As a member of the Armed Services Committee, that is something in which I have a keen interest. Many of the discussions you heard already and we will hear throughout the course of the week will deal fundamentally with our Nation's national security interests, making sure we continue to fund our troops at the appropriate level; making sure, in terms of pay and benefits, recruiting and retaining the finest men and women in uniform in the world, that they have the very best of technology to use when it comes to doing their jobs. You already heard a discussion about some of those various technologies, platforms--the F-22s and F-35s. I am very interested in the next generation of bombers and the importance of having long-range strike capability so we are able to continue to penetrate some of the more sophisticated air defense systems that are being developed by our adversaries and potential adversaries around the world. It is a great debate to have. It is one we have annually. I look forward to engaging in some of the discussions on these very important and critical national security issues.
I wish to speak this evening to some of the things going on on the domestic front. I always believe if we do not get national security right, the rest is conversation, which is why this Defense authorization bill is so important. But when we do get past the Defense authorization bill, I think we have a couple of big, epic battles that are going to be waged in the Senate coming up perhaps this month; if not, I suggest certainly in the fall. One deals with a bill that passed the House a little over a week ago now, the cap-and-trade legislation. The other deals with the issue of health care reform, which is one-sixth of America's economy. We are talking about an enormous amount of money that is spent in this country every single year on health care.
There is legislation that is moving through the House, and there are discussions in the Senate. The markup has been going on several days now in the Health, Education, Labor, and Pensions Committee in the Senate to report out a health care reform bill that at some point will come to the floor of the Senate and be debated. But these are huge issues of consequence for the American people.
I think the American people need to be engaged. What struck me about the debate that was held in the House of Representatives a couple of weeks ago--which, incidentally, the cap-and-trade legislation passed in the House of Representatives by a 219-to-212 margin. It was hurried through. It was done very quickly. It was a 1,200-some page bill. There was a 309-page amendment that was offered on the floor. I submit that very few, if any, Members of the House of Representatives had an opportunity to read the entire bill, let alone the amendment that was offered to it. It moved very quickly. And this has dramatic consequences for the American economy.
When you start talking about a cap-and-trade bill that will impose essentially what is a tax on carbon that supposedly is directed at polluters but ultimately is going to be paid by consumers in this country, it is very clear that this is going to drive up the cost of energy in this country, whether that is electricity, whether that is fuels, whether that is natural gas, home heating oil. All those things the American people use every single day in their daily lives, they are going to see the costs go up. You can talk about how much, and we have lots of varying estimates about what it would cost. The CBO recently came out with an estimate--and this was highly touted by proponents of the legislation--that it was only going to cost each household $175 a year. CBO also said that in the year 2020, the average cost on a per-household basis would be considerably higher than that; that it would be $890 per household in 2020, with the top quintile paying an average of $1,380.
After some generous assumptions about the enormous government-run wealth redistribution scheme that would be conducted via auction and the free allowances, the CBO came back to this number of $175 per household on average, with the middle quintile facing the highest net cost of $340. However, the figure is only the budgetary cost per household, not a comprehensive economic analysis, and moreover it examines only 1 year of the program, a year that CBO optimistically assumes is relatively low cost and after the expensive transition years. As a result, CBO's estimate really only captures some of the cost of cap and trade, as the report acknowledges. But even at that, the CBO average estimate gross cost by 2020 is $890 additional per household per year in energy costs and with the top quintile paying an average of $1,380.
What is interesting about that is that study did not take into consideration different regions of the country or different demographic groups, different sectors of the economy, different income brackets. All of those are issues that have not been contemplated fully to date and what some of these impacts would make.
I suggest there are going to be significant regional disparities because there are going to be certain areas of the country that are going to pay much more in additional power costs than other parts of the country. I think the transition is going to be particularly difficult for those areas of the country that are employed in industry, such as coal, or living in areas that produce coal or rely heavily on coal-fired power for their electricity generation, and the costs are going to be borne much more significantly by those areas of the country. So the regional differences are going to be especially dramatic when it comes to the electricity sector of the economy. I suggest places such as my home area of South Dakota and the upper Midwest are going to disproportionately pay way more of this burden than are other parts of the country.
A lot of this data, a lot of this information has yet to make it out into the hands of the American people. When the American people find out what is actually happening here in Washington with this cap-and-trade proposal, they get very exercised about it, as I think most Members of Congress found out during the Fourth of July holidays. They went out and traveled across their respective States. They heard, I suspect, what I did--that people are very upset about the notion that we are going to see energy costs go up significantly and they are going to be paying the bill. They have not, I don't think, determined at this point that there is any benefit they are going to derive from it.
The argument is going to be made by proponents of the legislation that this is going to be a good thing because we are going to see significant reductions in CO 2 emissions and therefore that is good for the global climate. Frankly, as we heard last week at the G-8 meeting, there are other countries around the world that do not have a real concern about doing anything quickly, and they have no intention of following the lead of the United States in that regard. As a consequence, we are not going to see anywhere close to the reductions that have been promised. So we have what is pretty clearly a minimal environmental benefit as a result of a gargantuan cost increase--tax, if you will--on the American economy in the form of higher energy costs.
I submit that the cap-and-trade legislation is going to have a profound impact on the economy, and it is something that should not be hurried through. I hope the Senate, if and when it comes to the floor--frankly, I hope it doesn't because I don't think right now this is an issue that ought to be occupying the time of the Senate when we are trying to get the economy growing again. We are talking about with this cap-and-trade legislation actually putting a new tax on the American economy at a time when we ought to be trying to get small businesses invested again, reducing the overall tax and regulatory burden they face, and trying to create jobs and expand the economy, rather than putting a new crushing mandate, top-down, heavy-handed bureaucratic mandate, cap-and-trade program on top of an economy that is already struggling and, as we saw last week, unemployment rates now topping 9.5 percent, perhaps going higher before it is all said and done.
What is interesting to me is there does not seem to be any debate that this is going to raise energy costs. When people get into this argument, it is not a question of if, it is a question of how much.
There are even some on the House side--Representative John Dingell, for many years the chairman of the Energy and Commerce Committee in the House of Representatives, said:
Cap and trade is a tax and it's a great big one.
Representative Charlie Rangel said:
Whether you call it a tax, every one agrees that it is going to increase the cost to the consumer.
I could go on and on. Secretary Geithner. The President himself, when he talked about this particular idea, indicated that costs would necessarily skyrocket. So there is no question but this is going to increase costs to the American consumer. At a time when we can least afford it and at a time when we are trying to get our economy on a pathway of recovery, we ought to be lessening the burden on Americans, not increasing it.
There is a better way. If we look at some of the alternatives that are out there, to me it makes more sense if you can incentivize a certain type of investment as opposed to trying to mandate some regulatory regime. That is a much better way of doing business.
If we want to do something legislatively when it comes to lowering the cost of energy in this country, we ought to focus on reducing emissions by lowering the cost of renewables, by aggressively investing in research and supporting an increased role for types of power that have not been used in this country. We are way underutilizing nuclear power. France gets 80 percent of its electricity from nuclear power. In the United States, we are about 20 percent. We can do better than that. There is no reason the United States cannot be a leader when it comes to clean green energy. One of the things we need to do is build more nuclear plants. That is one of the items on our agenda that we would like to see as part of an energy bill.
I also think there are things we can do in investing in non-carbon-emitting types of technology. I come from a part of the country where we have vast amounts of wind. Some people argue South Dakota is the Saudi Arabia of wind. If we can figure out a way to harness that wind energy, I think we are going to see an increase in economic activity in the upper Midwest. South Dakota would be a great place for that. I hope we can see more investment in wind. We need to make sure we are providing the necessary and appropriate incentives and policy incentives for investment in wind energy.
Solar is something, obviously, where we have a lot of room to grow. Conservation, carbon storage, infusion--all kinds of technologies that are carbon-free sources of energy. But I believe the way we get more of those is to incentivize investments in those areas. It seems to me that would be a much preferable outcome and, frankly, one in which we could get our global partners a lot more interested in and participating in. In fact, it has been suggested--Bjorn Lomborg suggested countries around the world devote a portion of their GDP to these types of non-carbon-emitting energy technologies in research and investing in those so that the burdens are shared equally.
I would suggest every country might do it a little differently.
If I were going to put a plan together like that for South Dakota, I would make it very wind heavy. Other parts of the country might make it nuclear heavy. There are clean green renewable sources of energy available in this country, but trying to impose a heavy tax that will be paid by the American consumer ultimately, to me, seems like a wrongheaded approach, especially at a time when the economy is struggling.
Source