The American rush toward economic peril continues.
“Don’t believe the misinformation out there that suggests there is somehow a contradiction between investing in clean energy and economic growth,” commanded President Barack Obama while praising a monstrous climate bill passed by the House of Representatives. “It’s just not true.”
As always, Obama sounded totally sure of himself. But being sure and being right aren’t the same thing.
Without the context of the American Clean Energy and Security Act, the president’s statement would be true enough. Clean energy and economic growth don’t have to be contradictory. Nobody’s saying they are.
The bill in question, however, goes beyond simply investing in clean energy. It establishes an already corrupt cap-and-trade system for emissions of greenhouse gases. It also fosters governmental fuel choice by setting a renewable-energy standard for electric utilities and committing the federal government to spending of $190 billion on the energy technologies politicians like.
Massive intrusion
The bill represents a massive intrusion by government into energy markets. It can’t achieve its goal of lowering emissions of carbon dioxide except by painfully raising the costs of hydrocarbon fuels. To insist, as Obama does, that this won’t create hardship is to overlook much.
But glib claims and propaganda tricks—such as assertions about climactic “tipping points” and “scientific consensus”—are what pushed the US to this economic precipice. Days before the vote on the climate bill, supporters of the legislation trumpeted a Congressional Budget Office report estimating that costs to the average household would be just $175 in 2020. That seems like a small price to pay for saving the planet, even to those who believe the planet’s need for rescue isn’t all that dire.
Again, however, things aren’t so simple. CBO’s analysis came under immediate criticism from economists who said that the agency didn’t fully account for economic responses to elevated energy costs and that it spotlighted a year in which emissions allowances still will be relatively cheap.
The conservative Heritage Foundation, moreover, said CBO’s numbers simply don’t add up. CBO estimates the gross cost of emission allowances at $91.4 billion in 2020. But projected emissions times the assumed price of $28/ton of CO2 imply a cost of $141 billion, which is more in line with CBO’s projections of allowance revenues in 2015-19.
The Heritage Foundation critique, by David W. Kreutzer, Karen Campbell, and Nicolas D. Loris, further criticizes the CBO for treating government spending and distribution of allowance revenue as a direct cash rebate to energy consumers—“that is, that the carbon tax is not a tax if the government spends the money, which is simply preposterous.” And the analysts call “most problematic” CBO’s acknowledged omission of general economic damage resulting from restricted energy use.
The high probability of serious economic damage doesn’t faze Obama, who while disparaging observers who worry about cost resorted to his standard invocation of green jobs. “Make no mistake,” he said, “this is a jobs bill.” Amazingly, one of his cheery examples was California, where “3,000 people will be employed to build a new solar plant that will create 1,000 permanent jobs.”
Little help
A thousand jobs won’t much help a state already leading the nation in economic self-destruction through governmental mischief in energy markets. In May alone, reports the California Employment Development Department, nonfarm payroll jobs declined by 68,900 from the same month a year earlier. The number of people unemployed in California in May was 2.138 million—885,000 more than a year earlier. Putting them all to work would require construction of 716 solar plants of the size Obama mentioned. And, oh yes, the state’s broke.
The rest of the country should in fact treat California as an example but draw conclusions quite different from those intended by the president. The state is reeling from, among other things, egregious energy governance. It shows where the whole country will be headed if the Senate, encouraged by a self-assured president on a spending binge, upholds the House’s mistake.
