Battle Born PAC's Blog

Reason magazine takes on the biggest myth liberal proponents of cap-and-tax push -- it will cost nothing and create tons of jobs:

All rhetoric aside, mandates cost money. Today, for example, President Barack Obama declared that new U.S. automobiles must get an average of 35 miles-per-gallon by the year 2016. Yet it is widely acknowledged that meeting this new standard will add $1,300 to the cost of each new car. In general, when prices go up, people buy less. So, all other things being equal, less demand for a product (like cars) means fewer jobs, not more. (Of course, there is one way to raise prices and create more jobs: reduce worker productivity. If policy makers deliberately encourage inefficiency in an industry, more jobs will likely follow. But that reduced productivity also means workers will receive lower wages.)

Producing low-carbon electricity will also cost more money. Currently, producing solar photovoltaic electricity costs about 33 cents per kilowatt hour; wind generated electricity is about 9 cents per kilowatt hour; and coal-fired production with carbon capture and sequestration is estimated to cost up to 10 cents per kilowatt hour. In contrast, producing electricity by means of conventional coal-fired plants now costs 6.5 cents per kilowatt hour and nuclear power comes to 7.5 cents per kilowatt hour.

Once again, all other things being equal, higher costs mean that the energy industry will raise the prices of its goods and services. Which means that consumers will buy less, thus leaving the industry with less to spend on producing goods and services or to pay its workers. Will there be more people specifically employed making and installing higher-cost, government subsidized wind turbines, photovoltaic arrays, batteries for plug-in hybrid automobiles, and weatherized houses? Sure. But on net, there will fewer new jobs thanks to rising low-carbon energy costs.

In testimony before the Senate Energy and Natural Resources Committee last year, Peter Orszag, Obama's Director of the Office of Management and Budget, admitted that a 15 percent cut in carbon dioxide emissions would reduce American incomes. According to Orszag, the lowest quintile of households would pay an average of $680 more each year for goods and services (3.3 percent of their incomes) and the highest quintile would pay $2,180 more (1.7 percent of their incomes) than they would have in the absence of carbon rationing.

Even worse, other estimates put the cost of the Democrats' national energy sales tax even higher -- $4,800 per family.

Here's the bottom line: cap-and-tax = a bunch of low-paying, government subsidized jobs; fewer jobs overall; lower economic growth and higher costs for every American family.