Gulf Oil Spill ‘Crisis’ May Revive Growth-Killing Cap-And-Trade Bill

July 20, 2010 04:07


Prior to the Gulf disaster, the American Power Act (the Senate version of cap-and- trade) seemed all but dead.  This is as it should be. But with the Senate back from the July 4 recess, either the American Power Act will be explicitly taken up or another clean energy bill will be proffered to which the key provisions of the American Power Act will be attached. Call your legislators at 202-242-3121.

IBD Editorials

As White House Chief of Staff Rahm Emanuel expressed in the midst of the financial crisis, this administration follows the rule “Never allow a crisis to go to waste.” And following President Obama’s Oval Office address, it is apparent that many in Washington are doing their best not to let the oil spill crisis in the Gulf “go to waste.”

Prior to the Gulf disaster, the American Power Act (the Senate version of cap-and- trade) seemed all but dead.  This is as it should be. But with the Senate back from the July 4 recess, either the American Power Act will be explicitly taken up or another clean energy bill will be proffered to which the key provisions of the American Power Act will be attached.

The problem is that there is no real link between cap-and-trade regulations and the crisis in the Gulf.  As President Obama himself admitted in a speech at Andrews Air Force Base in March of this year:

“The bottom line is this: Given our energy needs, in order to sustain economic growth, produce jobs, and keep our businesses competitive, we’re going to need to harness traditional sources of fuel even as we ramp up production of new sources of renewable, homegrown energy (emphasis added).”

Therefore, even if cap-and-trade legislation were passed, we will still need to drill for oil and natural gas.  Furthermore, cap- and-trade regulations do not fix the problems that led to the Gulf crisis in the first place, so we will still need to fix these problems.

All that would change if cap-and-trade legislation were passed is that President Obama and Congress would have chosen the worst possible time to impose job-killing legislation on the economy.

The U.S. economy has been growing thus far in 2010, but not at the robust pace one would expect at this phase of an economic recovery, and the joblessness rate remains unacceptably high.

Additionally, the looming tax boundary and other policy mistakes the administration has already made have set the economy up for a major economic downturn in 2011.  Piling cap-and-trade regulations on top of all of this will only make a terrible economic situation even worse.

There have been many economic studies that have assessed the economic damage created by cap-and-trade regulations, including an analysis performed by two of the authors.  Depending on how the regulations are implemented, most studies find cap-and-trade regulations will cause a significant reduction in our rate of economic growth.

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