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CAP AND TAX: A BUREAUCRATIC DELIGHT

U.S. Representative Ed Royce

June 27, 2009

[Publisher's Note:  As part of an ongoing effort to bring original, thoughtful commentary to you here at the FlashReport, I am pleased to present this column from United States Congressman Ed Royce.  Biographical and contact information for Representative Royce can be found beneath his column.]

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Each year I give thousands of constituents a Capitol tour.  We are all proud of our nation's capital.  In the spring, when many come, its magnificent cherry blossoms bloom, and its monuments always inspire. 

Yet the federal government that dominates the city is far less impressive.  While in Congress, I have seen the good, the bad and too often, the really ugly side of many of the dozens of government agencies in Washington. 

What does this have to do with today's pressing issues?  The Democrats in Congress, with President Obama's backing, are pressing hard to give Congress and federal bureaucracies a whole lot more power with their very flawed energy bill, passed by the House of Representatives on Friday.  Bad idea.    

The crux of the Democrat's bill is "cap and trade".  Businesses and utilities bid on (or are granted) the right to emit carbon dioxide.  In turn, they may sell unused credits, supposedly creating incentives for conservation and the development of renewable energies.  Over time, the government shrinks the cap, reducing the amount of carbon emissions.  Sounds good?  Here are some of its many problems: 
  • This Washington remaking of energy markets will raise a single household's energy bill between 79 and 129 percent.  Do the math: your energy bill of $160 a month could soar to nearly $400.  Candidate Obama himself said, "electricity rates will necessarily skyrocket."  Family energy costs will rise on average by $3,000 a year.  Cap and trade will increase the prices of gas, food, consumer products and nearly every item you buy.  Republicans in committee offered an amendment to this bill to suspend the program if gas hit $5 gallon; the Democrats rejected it.   
  • U.S. manufacturing plants will relocate to countries with no such taxes, eliminating American jobs.  Various studies suggest anywhere from 1.8 million to 7 million U.S. jobs could be lost.  Indiana's governor writes, "'Closed: Gone to China' signs would cover Indiana's stores and factories."  As if American manufacturing doesn't have enough challenges.  And for what... 
  • Experts have calculated that the bill would at best reduce global temperatures by 1/10th of one degree, Fahrenheit. 
Just as big a problem as what's in the bill is what's left out.  Provisions for more nuclear energy, which emits virtually no carbon emissions, are no where to be found.  Today, about 20 percent of our energy is nuclear generated.  Yet we haven't built a single nuclear power plant since the 1970s.  This energy bill does nothing to encourage nuclear power plant construction, a sure job creator.  Ironically, the Obama Administration is promoting nuclear energy use overseas.  Democratic opposition to do the same at home is deeply ingrained ideology, even though the Department of Energy reports that the best way for utilities to reduce carbon emissions is to increase their nuclear energy generation. 

How did this bill pass?  Democrats got the votes by dealing.  Powerful members of Congress wrote their top interests into the bill.  Other lawmakers leveraged their "yes" vote to advantage their interests, including with free and lucrative carbon credits.  Tens of billions of dollars are on the table.  One thing for sure: if made law, the same congressional players will keep working, doing all kind of bureaucratic meddling. 

You'd think we'd have learned a thing or two from the large role Congress played in bringing about the current mortgage crisis?  In that case, quasi-government Fannie Mae and Freddie Mac, and the Department of Housing and Urban Development felt constant congressional pressure to keep the riskiest of loans rolling for "affordable housing," inflating the real estate balloon that burst.  This cap and trade scheme will give the Environmental Protection Agency, Energy Department, Treasury Department, Internal Revenue Service and many other bureaucrats new-found levers over our energy markets.  Many in Congress will have these bureaucrats in their crosshairs to game the system as this massively complex plan is established, implemented and enforced.         

Amazingly, one key supporter of this 1201-page bill admitted, "The truth is, nobody knows for sure how this thing is going to work."  He gets honesty points, I guess.  But his crap shoot approach means that "cap and trade" will be all the more vulnerable to shenanigans as it is implemented.  Ambiguity is a fixer's best friend.      

Where does it end?  Cap and trade gives Washington 17 percent control of the economy.  Nationalizing health care, the next priority for many congressional Democrats, would give it another 16 percent.  The federal government runs General Motors.  It now has a huge equity stake in many financial institutions, and on and on and on...  This is a set-up for inefficiency and worse.  We have seen one powerful member of Congress pressuring GM to reverse a management decision to close a facility in his district.  This is only the beginning.      

This is the Washington my constituents don't see.  The power grabs and political maneuvering can be as ugly as the city is impressive.  The Democrats are relentlessly politicizing our economy.  Let's hope this initiative's energy is sapped in the Senate.      
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You can contact Congressman Royce (via the FR) here.

U.S. Representative Ed Royce (R) is serving his seventh term in Congress representing Southern California's 40th District, based in Orange County. He and his wife, Marie, are longtime residents of Fullerton, CA.

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