Posted: 05/14/2008
Cap-And-Trade Proposals Harm Economy, Poor
NCPA Experts Also Say Policies Will Not Benefit the Environment
DALLAS (May 12, 2008)-Cap-and-trade proposals under consideration in Congress would harm the U.S. economy, disproportionately hurt the poor and fail to produce promised environmental benefits, according to a brief analysis released today by the National Center for Policy Analysis (NCPA).
Cap-and-trade policies place a limit, or cap, on greenhouse gas emissions but allow companies and industries that fall below those limits to sell or trade remaining emissions to those that exceed their limits. The potential market value of those emissions could reach $300 billion per year by 2020, according to the Congressional Budget Office (CBO).
"Cap-and-trade bills will substantially raise prices for gasoline and electricity, inflict severe economic losses on the U.S. economy and lower living standards for lower-income Americans," said NCPA Senior Fellow H. Sterling Burnett, co-author of the NCPA brief analysis. For example, analyses by Science Applications International (SAIC) and the EPA show the severe impact of the bills:
- An SAIC analysis of legislation proposed by Sens. Joe Lieberman (I-CT) and John Warner (R-VA) would increase gasoline prices by 60 to 144 percent and electricity prices by 77 to 129 percent. The EPA estimates the bill would increase gasoline prices by as much as 53 cents per gallon by 2030 and $1.40 by 2050.
- The SAIC analysis concludes Lieberman-Warner would reduce gross domestic product (GDP) by as much a 1.1 percent by 2020. The EPA's analysis concludes that a bill sponsored by Sens. Jeff Bingaman (R-NM) and Arlen Specter (R-PA) could cost as much as $1.2 trillion annually and a bill sponsored by Sens. Lieberman and John McCain (R-AZ) could cost as much as $1.3 trillion annually, while Lieberman-Warner could cost nearly $3 trillion annually.
- Furthermore, the CBO estimates that if cap-and-trade proposals reduce emissions 15 percent by 2010, it would reduce the disposable income of lower-income Americans by 3.3 percent compared to only 1.7 percent for the richest Americans.
"Finally, the benefits promised by cap-and-trade schemes-lower global temperatures-are unlikely to materialize since none of these proposals includes developing nations, like China and India," said D. Sean Shurtleff, NCPA graduate student fellow and co-author of the analysis. "Every economic analysis to date indicates these proposals will harm not only the U.S. economy but also its most economically vulnerable citizens."