Dallas – Although Sen. John Kerry (D-MA) claims that the Kerry-Lieberman climate bill, which was formally released yesterday, will not raise taxes for Americans and will have "very little if any cost increase to the American consumer," the bill will inevitably have the same negative economic impact of any other tax, according to H. Sterling Burnett, Senior Fellow with the National Center for Policy Analysis.
"A tax by any other name is still a tax," Burnett said. "The increased costs laid on businesses in the Kerry-Lieberman climate bill will result in lost jobs, higher prices, reduced disposable income, and lower standards of living."
Burnett points out that while it is true that Senators have tried to make the bill palatable to everyone by giving away a certain amount of emission allowances to the most effected industries, they are still relying on revenues. These revenues will come from the increased costs of using fossil fuels for energy. Twenty five percent of revenues will be dedicated to reducing the deficit and the rest will be split between rebates and tax credits for consumers to use to offset some of the increased energy costs and investments in politically favored technologies, Burnett said.
As the number of emissions allowances decrease over time, the price for allowances, and therefore, the price of energy, will rise drastically, Burnett continued. "Companies that are unable to cut emissions or purchase allowances on the open market will go under, giving remaining companies increased market power.
Burnett does see some positive aspects to the bill, however. "The nuclear component of the bill does provide incentives that should encourage the building of new nuclear plants, which should increase the reliability of the electric grid while reducing pollution. But unfortunately the bad outweighs the good."
"To make it appear that they are concerned about the costs of higher energy prices, the Senate bill places a price ceiling on the carbon emission caps – no more than $25 per ton per allowance," Burnett said. "However, it allows the price of this cap to rise annually by five percent above the rate of inflation. Individuals on fixed incomes or that have lower incomes will see their standard of living fall each year as the per ton price rises by five percent above the inflation rate."
"Not only will the Senate bill negatively affect the already struggling economy, but few new areas will be opened to domestic oil production under the bill as well," Burnett said. "The bill allows revenue sharing with any states that want to take up offshore drilling in order to get buy-in from Senators who favor an increased domestic offshore production, which should be strongly encouraged. However, it allows adjoining states, who object to drilling, to veto expanded drilling. For example, if Virginia wants to allow more drilling, New Jersey could stop it. This allows Senators from both states to get what they want, without changing the status quo at all."