What Cap and Trade Reform Means to US Taxpayers

American Clean Energy and Security Act of 2009

Earlier this summer, the United States House of Representatives passed H.R.2454, the American Clean Energy and Security Act of 2009, which claims to “create clean energy jobs, achieve energy independence, and reduce global warming pollution and transition to a clean energy economy.” However, the bill has become quite controversial as it includes a cap and trade “global warming reduction plan” that aims to reduce greenhouse gas emissions by 17% before the year 2020. It also includes new requirements for utility companies regarding carbon technology, incentives for energy efficient homes and buildings, as well as grants for new “green” jobs.

Highly Controversial Legislation

As with most of the recent legislation coming out of Congress, H.R.2454 has quickly become very controversial. Opponents claim that the nearly 1,300 page bill was quickly put together. They also point to its slim 219 to 212 vote passage as a bad sign. Many experts assert that the bill will do little to actually help the environment, and is mostly a way to increase Federal revenue. Currently, only about 15% of the country’s pollution permits are being auctioned off, the rest are just being given away. The new cap and trade legislation makes great efforts to convert the system to become entirely auction based. That way the Government can take more control in auctioning off permits and reap profits from energy companies, who will still be allowed to pollute – but will just be paying more to do so.

Direct Cost to Taxpayers

Like I explained in my television segment the other day, these charges to energy companies will be passed down directly to American taxpayers. Let’s take a step back and consider the domino effect: when businesses have less revenue because of higher taxes, they are going to have to make cuts elsewhere. This means consumers will end up paying more for their monthly utilities, and energy companies will likely have to reduce their work forces to reduce expenses. In Great Britain, they have a cap and trade system in place and the average family pays an estimated $1,300 per year for it. However, here in the United State experts are predicting that the cost could end up being more like $1,800.

Excessive Handouts

Another popular criticism of the American Clean Energy and Security Act of 2009 is the amount of handouts for Congress members to please their constituents. The bill is also stuffed with provisions that are favorable to companies that lobbied for the bill. According to the Center for Public Integrity, over 2,300 different lobbyists worked on the bill, which resulted on “provisions for portable spas and technical standards for hot-food-holders within the body of the bill.” All of these handouts result in direct costs to the average taxpayer.

Funding for Health Care Reform

As Joe Walsh pointed out in an article on Reuters, many experts are predicting that cap and trade taxes could be used to help offset the cost of health care reform. Why? “Because with all currently proposed {health care reform} bills estimated to expand deficits even as Obama pledges not to sign a bill that increases them by so much as a ‘dime,’ ever, he will need carbon cash to pay for Americans' health care.”

Walsh continues to explain that proponents of cap and trade restrictions and working with Senators to create a bill that would not include an immediate public option, but one that could become available down the road once funding was available. Analysts predict that changing cap and trade restrictions to help fund a future public option could be an easy way to get the health care reform bill passed without instant tax increases on the average American taxpayer.