Media Pave the Way for Next President to 'Cap' U.S. Energy Use

     Do you want to be up to $3,700 poorer every year for the next 20 years?

     The Senate is debating a bill this week that has been touted as a solution to global warming – it contains so-called “cap-and-trade” restrictions on energy use. But what you probably haven’t heard from the media is that such a system could cost $1.7 trillion to $4.8 trillion – about the cost of “660 hurricanes – 35 per year – for two decades,” according to The Heritage Foundation.

     That would come out somewhere between a $949 to $3,726 decline in income per household, per year.

     Al Gore said the bill “needs to be stronger.” Presidential candidate Sen. Barack Obama (D-Ill.) wants even more drastic carbon reductions than the current Senate bill proposes.

     According to one analysis, higher gas prices, electricity costs and job losses all could result from the energy-restricting system.

     CNN’s Gerri Willis called the new bill “historic” and “a major step towards cutting carbon emissions.” The New York Times referred to it as a “bold national policy” on June 2.

     Though it is portrayed as an attempt to “contain climate change,” the best-case scenario still would change the world’s temperature only a little more than 1/100 of a degree between now and 2030.

     But that hasn’t dissuaded the global warming alarmists in the media. CNN, The New York Times and The Washington Post have all covered the current form of the plan, dubbed the Lieberman-Warner bill (a.k.a. “America’s Climate Security Act”), positively.

     Time magazine even called it “an attainable good bill” in its April 28 “Special Environment Issue.” The same article endorsed a “cap-and-trade” system like the one that would be set up by Lieberman-Warner, including the concept in its plan for “how America can fight – and win – the war on global warming.”

     Cap-and-trade, as it is commonly known, would forcibly lower U.S. carbon dioxide (CO2) emissions by 70 percent below 2005 levels by making energy more expensive. It would set limits (caps) that become even lower over time, and “trading” by giving away and/or auctioning the right to emit CO2. Utilities and companies emitting less than the limit could sell credits to companies over the limit, which would have to buy the right to emit more CO2.

     The National Association of Manufacturers explained that energy price increases would result from “the inclusion of the cost of carbon” as a “price component for fossil fuels.” Another factor would be “the construction and operation of a more costly suite of energy conversion technologies that help satisfy emission limits,” said NAM.

     All three presidential candidates support the concept of cap-and-trade, and although the Lieberman-Warner bill is not expected to pass this year, Sen. Byron Dorgan (D-N.D.) told the June 1 Washington Post this is a “dress rehearsal for next year.”

     According to Newsweek, both Obama and Sen. Hillary Clinton (D-N.Y.) support even more extensive cuts of 80-percent reduction from 1990 levels, while McCain helped engineer a previous cap-and-trade bill.

     According to Sen. James Inhofe’s (R-Okla.) Environment and Public Works Committee Web site, the current cap-and-trade plan in Lieberman-Warner “is patterned after the Lieberman-McCain bill which an MIT study earlier this year found would cost $3,500 per family of four.” A summary from the Pew Center for Global Climate Change indicated that the Lieberman-McCain would have instituted a cap-and-trade system, but was voted down in 2003.

Since We’re Doing This, How Should We Do It?

    Recent articles in major newspapers and broadcast segments on CNN mentioned criticism of the Senate bill, but even the criticism skipped over questions of the plan’s necessity. Instead of questioning whether cap-and-trade was needed, journalists focused on the fight over details within the bill. Many reports overlooked criticism of the inefficiency of cap-and-trade, its past failures and its futility.

     According to the National Center for Public Policy Research, Dr. Patrick Michaels, Cato Institute senior fellow in environmental studies, said it “would have virtually no effect on the climate.”

     "Say the U.S. actually does what the law says, though no one knows how to. The result is an additional 0.013 degrees (C) of 'prevented' warming," Michaels said.

     Still, The New York Times wrote on June 2 that “the sharpest battle lines have been drawn over the structure of a cap-and-trade system.” The Times buried overall criticism that cap-and-trade could amount to “economic disarmament” until the fourth paragraph from the bottom of the 1,363-word story.

     The Los Angeles Times quoted seven proponents of the bill including two politicians and four left-wing groups, but quoted only one critic in its June 2 story: Sen. Bob Corker (R-Tenn.).

     Despite the media support for cap-and-trade, the system has many critics who say it would act as a “massive” tax on energy that would fall on consumers.

     The Heritage Foundation specifically analyzed Lieberman-Warner and said the economic damage of the bill would equal the cost of “660 hurricanes – 35 per year – for two decades.”

     Heritage also estimated that “the single-year GDP losses” could cost “$949 to $3,726 per house­hold for each of the nation's 117 million households.”

Not a Proven Success, but Failure

     The news media haven’t scrutinized whether cap-and-trade would even accomplish its stated purpose. They could provide context by examining the failures of Europe’s own similar scheme.

     “Europe and the rest of the world is way, way ahead of us on this, and so we can learn from their mistakes, and hopefully we can build something that makes sense,” said carbon trader Howard Gould on CNN’s “American Morning.” His interviewer, Kyra Phillips, didn’t ask about any of the “mistakes” that have been made by Europe.

     The New York Times mentioned the “similar emissions-trading system in Europe” on June 2, but without any indication of its failures.

     CEI’s Horner put it bluntly when he said, “the promise of emissions reductions is absurd – as anyone familiar with Europe’s three years of experience can tell you.”

     A news story from The Wall Street Journal on May 30 elaborated on the problems with Europe’s cap-and-trade system.

     “[E]missions have risen instead of fallen. European regulators note that the program has just completed its pilot phase, but they acknowledge that changes are needed,” reported the Journal. Emissions there have grown about 1 percent per year since 2005.

     According to the Journal, “The failure of Europe's system to shrink emissions is due primarily to one policy blunder: Governments handed out too many carbon permits. When regulators were designing the system, they based the caps on emissions estimates provided by countries, which got estimates from companies. In 2006, the first year actual national-emissions data became available, it turned out that many factories had been given far too many permits.”

     Horner has said that there is no such thing as a “well-designed” carbon cap-and-trade system because “such a scheme is inherently subject to gamesmanship and manipulation rising all the way to outright corruption.” Europe has seen “rampant corruption and soaring emissions,” he said.

Downplaying the Cost    

     Recently a few people have compared global warming to World War II in terms of a threat to the United States. Time magazine altered a historic photograph of Iwo Jima, replacing the American flag with a tree. The cover story, by Bryan Walsh, was entitled “How to Win the War on Global Warming.” With urgency like that behind the cause, journalists quickly dismissed concerns that a Lieberman-Warner-like system would cost trillions of dollars and hundreds of thousands of jobs and raise gas and utility prices.

     “The principal rap against cap-and-trade proposals is that they would be a drag on the economy,” said Time in its April 28 issue.

     “We’d be a little poorer—a sustained battle against climate change will hit our wallets hard, absorbing perhaps 2% to 3% of GDP a year for some time,” Time continued. But the magazine argued people should “think of it” as an “investment.”

     “A little poorer”? The Heritage Foundation estimates a $1.7-trillion to $4.8-trillion GDP drop by 2030. That decline works out to about $949 to $3,726 per household per year, according to the analysis. If Americans were hearing those numbers from journalists, they might be less inclined to think of it as an “investment.”

     “American Morning” fill-in co-host Kyra Phillips interviewed “conservationist and green entrepreneur” Howard Gould on May 29. Instead of citing actual cost estimates for the Lieberman-Warner bill, Phillips blamed business as she asked Gould about the expense of cap-and-trade.

     “[Y]ou’ve got big businesses and you’ve got the coal industry that are opposed to this legislation going, this is, this is not the right timing, this is going to kill the economy,” said Phillips. After Gould responded, “We don’t really have a choice,” Phillips didn’t press the point.

    A few moments later, Phillips asked for Gould’s opinion on a new left-wing group’s study that argued U.S. damages from global warming would cost billions of dollars – “much more costly” than cap-and-trade, she claimed. No opponents of cap-and-trade were quoted in Phillips’s softball interview.

     On May 30, CNN’s Kate Bolduan briefly quoted Sen. James Inhofe (R-Okla.) and “other critics” who “say simply that this bill just comes at too high a cost to consumers right now.” Inhofe was not shown on camera. Bolduan immediately cited proponents of cap-and-trade who argued “[Inhofe and critics] are dead wrong,” then aired video of Sen. Barbara Boxer (D-Calif.), who supports the plan currently being debated by the Senate.

     Continuing to push criticism aside on May 30, Bolduan provided “Issue Number 1” viewers with the Senate committee’s “worst-case scenario, gas prices would go up five—five cents per year.” The media have been constantly complaining about the rising cost of gasoline and how bad it is for the economy, yet when it’s in the name of global warming “five cents per year” is no big deal.

     Even the five-cent rise per year comes out to $1.10 more per gallon by 2030, and according to The Heritage Foundation’s economic analysis of the bill, that’s just the beginning of the costs. Other groups that have studied the impact of cap-and-trade warn that even higher gas prices could result. The National Association of Manufacturers’ estimate provided a high-end projection of about $5 a gallon more for gasoline by 2030.

     A poll conducted by the Public Opinion and Policy Center of the National Center for Public Policy Research (NCPPR) “found that 65% of Americans reject spending even a penny more for gasoline in an effort to reduce greenhouse gas emissions.” And gas isn’t the only thing that would go up.

     “By 2030, average household electricity costs are also expected to increase by $647 annually, and natural gas is expected to increase by $303,” wrote Heritage’s Ben Lieberman.

     NCPPR’s survey also concluded: “When gasoline and electricity price increases are taken together, 90% of Americans reject Lieberman-Warner plan's costs – even the low-range of the projected costs.”

     Even a Huffington Post blogger highlighted the same point made in an unsigned Los Angeles Times editorial on May 28:

     “Cap-and-trade would also have a nasty effect on consumers’ power bills,” because when it is necessary to use more carbon-based power – say in a “very hot summer week in California” – utilities will offset their higher costs by passing the costs on to consumers.

     The New York Times admitted that “setting a price for carbon will raise energy costs throughout the economy,” but not until the second-to-last paragraph of its June 2 story. The Times cited lower Environmental Protection Agency estimates of GDP loss of 0.9 percent to 3.8 percent by 2050.

     To put that in perspective, 0.9 percent is currently the best estimate of how fast the U.S. economy grew in the first quarter of 2008. The EPA estimates show the country losing that much, and more with every passing year, under a carbon-restricting system.

      In a recent WebMemo from The Heritage Foundation, Lieberman called the idea that businesses will bear the cost burdens of cap-and-trade – instead of consumers – a “myth.”

A Forced ‘Market’ Isn’t a Free Market

     According to the news media, the “trade” part of cap-and-trade is a “market-based” solution that offers “incentives” for innovation. But experts say this is no market – it’s just a massive tax increase in disguise.

     Eric Pooley wrote in Time magazine on April 28 that cap-and-trade “harnesses the power of the marketplace to fight warming, a concept that helped Republicans like [Sen. John] McCain, the presumptive GOP nominee, fall in love with the idea.”

     Newsweek also cited McCain’s position on April 14 saying that he “supports cap-and-trade driven by the market, but [is] less clear on mandatory caps.”

     This “market” would be enormous, according to The New York Times: “Experts say it could turn into one of the biggest markets in the world, estimated to be worth over $200 billion a year.”

     Starting the distribution of credits is a controversial issue. They could be auctioned off, where businesses would have to pay for them, or they could be given away to certain businesses – which leaves a door open to favors and corruption.

     Duke Energy CEO Jim Rogers, who is a longtime supporter of cap-and-trade, criticized the scheme. On June 1, Rogers told The Washington Post, “Only the mafia could create an organization that would skim money off the top the way this legislation would skim money off the top.”

     Inhofe said in a June 3 Wall Street Journal op-ed that the bill “represents the largest tax increase in U.S. history.” The Journal itself warned in a June 2 editorial that Lieberman-Warner “is easily the largest income redistribution scheme since the income tax.”

     “Ms. Boxer expects to scoop up auction revenues [for carbon allowances] of some $3.32 trillion by 2050. Yes, that’s trillion,” wrote the Journal. “Her friends in Congress are already salivating over this new pot of gold.”

     The Heritage Foundation also took aim at the concept of cap-and-trade as a “market-based approach.” Lieberman said, “Proponents describe cap-and-trade as a flexible and market-based approach that allows the private sector to find the most cost-effective means of reducing greenhouse gas emissions.”

     “By contrast, critics of cap-and-trade fear that many of the necessary advances are decades away from being technologically and economically viable and that, in the interim, the approach in the Lieber­man–Warner bill can be met only in ways that will drive up energy costs significantly—for all practical purposes, a massive energy tax. The economic anal­ysis of our study largely confirms these fears,” he continued.

     Christopher C. Horner, counsel and senior fellow with the Competitive Enterprise Institute, has said that “cap-and-trade allows them [policymakers] to hide the tax on energy use, burying it in a scheme of artificial, state-created scarcity that they then call a ‘market.’”

     An op-ed by Robert J. Samuelson in Investor’s Business Daily June 2 also attacked the “market” concept. Samuelson is a lifelong journalist who has written a weekly column for The Washington Post and has worked as a contributing editor for Newsweek.

     “Cap-and-trade would act as a tax, but it’s not described as a tax. It would regulate economic activity, but it’s promoted as a ‘free market’ mechanism,” wrote Samuelson.