Waxman, Cap and Trade: Bring It On

John Dingell is is out and Henry Waxman is in as chair of the House Energy and Commerce Committee. Global warming alarmists across the country are salivating now that one of their own heads a key congressional committee, which will likely pass the Obama administration’s cap and trade legislation to the full house. Given the large Democratic majority in the house, Obama’s enthusiasm for the plan, and the majority’s enthusiasm to do Obama’s bidding, it is likely to pass that chamber.

On its face this would seem like a lamentable development. However, this is exactly the kind of political battle that favors conservatives. Jim Manzi in the latest issue of National Review explains why: (Subscription required but here is large helping)

Cap-and-trade is often presented by advocates as a complicated, technocratic, and “market-oriented” approach to the problem, but in plain English cap-and-trade is simple: It is carbon rationing. Basically, the federal government would make it illegal, in most cases, to emit carbon dioxide at scale without a ration card…

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In order to reduce carbon-dioxide emissions in any serious way, the cap would have to force the U.S. economy to consume a lot less fossil fuel than it otherwise would. Barack Obama has proposed a cap-and-trade program intended to reduce U.S. emissions by 80 percent by 2050. Given that about 85 percent of all energy consumed in the U.S. is produced by fossil fuels, this implies using government fiat to demand the elimination of a majority of all energy that would otherwise be used by the economy over roughly the next 40 years…

But, of course, advocates say that these enormous costs are justified, because we are preventing a global catastrophe. A careful review of the facts indicates otherwise… The current IPCC consensus forecast is that…global temperatures are projected to rise by about 3°C by the year 2100. Also according to the IPCC, a 4°C increase in temperatures would cause total estimated economic losses of 1 to 5 percent of global GDP. …Note that the vast majority of mainstream economists expect the average person in this far future to have an income at least five times larger than the average person of 2008.

This is the central problem for advocates of rapid, aggressive emissions reductions. Despite the rhetoric, the best available estimate of the damage we face from unconstrained global warming is not “global destruction,” but instead something on the order of a 3 percent cut in global GDP in a much wealthier world well over 100 years from now.

Manzi’s goes on to make the point that cap and trade proponents build in implausible assumptions about the weight of future benefits versus the costs of implementing it today. He says that last year’s Liberman-Warner cap and trade legislation was defeated by using this very same argument:

But the defeat in Congress this spring of the Lieberman-Warner cap-and trade proposal …was beaten by pointing out the immediate pocketbook loss it would create for voters today in return for small, uncertain benefits in the far future.

Republicans can win the battle against Obama’s cap and trade legislation. Simply because it comes from The One, and contains “clever drafting” can’t fix the problems with cap and trade. There is no way to reasonably justify the severe short-term costs based on uncertain future benefits that would be negligible at best.

Even if the Democrats cross the Rubicon of 60 seats in the Senate and Republicans fail to stop cap all will not be lost. The program will undoubtedly fail miserably, as it has in Europe, harm the economy, and become a political albatross on Obama and the Democrats. I’ve gone over the deleterious economic effects of Liberman-Warner here and here and here.

This can be a winning issue for conservative Republicans to run on in 2010 and 2012.

One explanation (a powerful one) of the massive Republican defeat was its failure to adequately address middle-class pocket book issues. The Democrats capitalized on that in the last two elections.

However, on this issue Democrats have abandoned that advantage. With cap and trade the Obama and the Democrats have staked out poor ground –of their own choosing–for one of the first fights of the new administration. Conservatives and Republicans have an opportunity here, should they wish to exploit it.

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