Tuesday, June 03, 2008

Senatorial Hot Air

Fire of Liberty

The late Senator Pat Moynihan, who was known for his quick wit colorful commentary, coined the phrase "iatrogenic government" to describe what happens when the federal government and its tinkering politicians discover a "problem" in America and thus draws up some fantastic solution in the halls of Congress that ends causing more detrimental harm or creating newer problems than what originally existed problem. Well the beast of the "iatrogenic government" is raising its ugly head once again within the US Senate with the introduction of the Liberman-Warner climate bill, which attempts to slap a cap-and-trade regime on the emission outputs of our industries, autos, and energy sources in a effort to reduce global warming. Now while folks will hear tons of silly talk about how passing such a bill is "moral" or is for "the children", they fail to look at at the facts about how expensive such lofty goals will be. Thankfully, Robert Samuelson has a great piece out today which he honestly points out the facts about how the policies being advocated in the Liberman/Warner climate bill will bring about greater energy/supply problems in an effort to cut emissions that will at the most lower the temperature by a few degrees. I particularly liked the following:

In one bill, the 2030 cap on greenhouse gases would be 35 percent below the 2005 level and 44 percent below the level projected without any restrictions. By 2050, U.S. greenhouse gases would be rapidly vanishing. Even better, their disappearance would be allegedly painless. Reviewing five economic models, the Environmental Defense Fund asserts that the cuts can be achieved "without significant adverse consequences to the economy." Fuel prices would rise, but because people would use less energy, the impact on household budgets would be modest.

This is mostly make-believe. If we suppress emissions, we also suppress today's energy sources, and because the economy needs energy, we suppress the economy. The models magically assume smooth transitions. If coal is reduced, then conservation or non-fossil-fuel sources will take its place. But in the real world, if coal-fired power plants are canceled (as many were last year), wind or nuclear won't automatically substitute. If the supply of electricity doesn't keep pace with demand, brownouts or blackouts will result. The models don't predict real-world consequences. Of course, they didn't forecast $135-a-barrel oil.

As emission cuts deepened, the danger of disruptions would mount. Population increases alone raise energy demand. From 2006 to 2030, the U.S. population will grow by 22 percent (to 366 million) and the number of housing units by 25 percent (to 141 million), projects the Energy Information Administration. The idea that higher fuel prices will be offset mostly by lower consumption is, at best, optimistic. The Congressional Budget Office has estimated that a 15 percent cut of emissions would raise average household energy costs by almost $1,300.

That's how cap-and-trade would tax most Americans. As "allowances" became scarcer, their price would rise, and the extra cost would be passed along to customers. Meanwhile, government would expand enormously. It could sell the allowances and spend the proceeds; or it could give them away, providing a windfall to recipients. The Senate proposal does both to the tune of about $1 trillion from 2012 to 2018. Beneficiaries would include farmers, Indian tribes, new technology companies, utilities and states. Call this "environmental pork," and it would just be a start. The program's potential to confer subsidies and preferential treatment would stimulate a lobbying frenzy. Think today's farm programs -- and multiply by 10.

I just hope the opponents of the bill hit the proponents over the head with such facts and arguments.

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