Break Out the Gold Card, This is Going to Hurt

In the past few days we have looked at most of the essential components of the American Clean Energy and Security Act of 2009, otherwise known as the climate bill. There are other things in the bill that we did not discuss such as developing the infrastructure to support electric vehicles and the promoting the growth of the electric vehicle market itself, all of which I would consider sensible items for inclusion in any legislation meant to improve the environment. What I find unreasonable is the cost of this massive bill and how it will impact every person and business in this country.

We focused on the issues that I felt would negatively impact our nation and intrude upon our personal freedoms. We are currently in a recession and there is no doubt that our nation is fighting for her economic survival. The national debt is currently approaching 12 trillion dollars ($12,000,000,000,000.00) and is growing at roughly One million dollars per minute. The debt was over 70% of our gross domestic product (GDP) in 2008. Estimates place the national debt at 90% of the GDP by 2009 and a staggering 101% of GDP by 2011. That means as a nation, we will owe more in debt that the entire annual economic capacity of the country. As our economy continues to recede, these estimates may very well prove to be conservative and the debt to GDP ratio may very well be higher than the estimated levels.

Any reasonable person would look at the situation and realize that these spending practices are unsustainable. The budget must be brought under control and the government’s priority should be to revitalize the strength of American businesses and restore purchasing power to the average American household. None of that will be accomplished through this legislation. In fact, this is nothing more than a hidden tax that provides little or no benefit to the environment.

The government number whizzes claim that this bill will only raise the cost of household energy twenty-three cents per day. However, those figures are connected to the reduction in your personal energy consumption that are calculated in their estimates and do not take into account that the consumer will see an increase in the cost of nearly everything they buy as production and transportation costs that are driven up by this bill are passed on to you.

Ben Lieberman, the Senior Policy Analyst for Energy and Environment in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation prepared a report that was submitted as testimony before the House and Senate Western Caucus on July 30, 2009. According to that report the “higher energy costs kick in as soon as the bill's provisions take effect in 2012. For a household of four, energy costs go up $436 that year, and they eventually reach $1,241 in 2035 and average $829 annually over that span. Electricity costs go up 90 percent by 2035, gasoline by 58 percent, and natural gas by 55 percent by 2035. The cumulative higher energy costs for a family of four by then will be nearly $20,000.”

The report continues, “But direct energy costs are only part of the consumer impact. Nearly everything goes up, since higher energy costs raise production costs. If you look at the total cost of Waxman-Markey, it works out to an average of $2,979 annually from 2012-2035 for a household of four. By 2035 alone, the total cost is over $4,600.”

If the government is confident that the energy costs will only rise about $175 per year, per household, then one must question the provision in this bill to create an “Energy Refund Program to give low-income households a monthly cash energy refund equal to the estimated loss in purchasing power resulting from this Act.” I doubt that would be necessary if the cost impact on American families will be as minimal as the proponents claim they are.

Of course Henry Waxman and Ed Markey couldn’t keep their 90+ grade on the socialist scorecard if there wasn’t some hidden attempt at more redistribution of wealth. The bill will also establishes a rebate program to assist low-income households residing in pre-1976 manufactured homes in purchasing new Energy Star qualified manufactured homes. Oh good! A new “Cash for Clunkers” program only this time it’s for houses. Don’t you just love giving your money away! When it was for cars, the government blew through one billion of your dollars in a single week. I can’t even begin to imagine what this will cost us.

There will also be standards established to create energy efficient building codes for new homes and to rate the efficiency of existing homes. The reason to rate existing homes is to establish the criteria for a home retrofit program with goals to reduce the energy each home uses by 20% and to reduce potable water use. The retrofit program (REEP) has not been written yet so it is hard to say exactly what it will consist of but there will be approved retrofits, home inspections and of course, loans available to facilitate the retrofit. Some critics claim that the stick that goes with this carrot is that you will not be able to sell your home until it complies with the standards written into this act however, I have not found that stated in any of the documents I have reviewed.

The economic impact of the Waxman-Markey bill as stated in Mr. Lieberman’s report, will reduce the economic activity in this country resulting in a loss of $393 billion dollars a year to the GDP. It will also cause a decrease in farm profits of 28% by 2012 and as much as 57% through 2035. And while America suffers, this act will pass out billions to "emerging" nations to help them develop and deploy environmentally friendly technologies. Since the first days of the Monroe Doctrine, this country has never gained one friend through the disbursement of foreign aid or cash assistance. When will we learn?

The bare fact is that the major polluters on this planet; China and India have already stated that they will not agree to impose similar carbon dioxide restrictions within their nations. The U.N. treaty on climate will have no effect on South Korea, Mexico or Saudi Arabia. As I said yesterday, 60 German scientists have issued a joint letter to their President asking that he not sign any tready of this magnitude. Without those nations, the Waxman-Markey bill will have no net effect on global warming and will do little but further burden the American tax payer.

There are some people that will profit though. The “inconvenient truth” for Al Gore is that it has become public knowledge that he has invested $6 million dollars with Hara Software, a firm that makes the monitoring software that will be needed to comply with this legislation. Mr. Gore will be a billionaire through that investment if this bill passes as this $2.5 billion dollar industry swells to ten times that amount if the forecasts are correct.

Nancy Pelosi is also heavily invested in Clean Energy Fuels (CLNE). The exact amount of her investment has not been disclosed but she is reported to hold shares of this company valued between $50,000 and $100,000. Her investment would be more than safe since this bill also places an emphasis on clean and renewable fuels like natural gas and methane.

The bottom line is Waxman-Markey is an expensive, intrusive, bloated, candy-coated energy tax that provides no benefit to the environment. It will fundamentally disrupt economic activity in this nation and place one and a half million people on the unemployment line. But don’t worry, by then Al Gore and Nancy Pelosi will probably be hiring chauffeurs, gardeners and chefs; as they spend the windfall profits they will accrue because of their wise investments. Gee, I wish I could make an investment and then be able to write legislation that sends it through the roof. What lucky people!