Senate's "Green" Bill Could Put Americans in the Red

| by John Rafuse

December is quickly approaching. This is particularly important for Capitol Hill’s energy and environment set – the countdown to Copenhagen is in full force. Most importantly, Congress’ current climate change proposals are now at center stage.

But in all the haste to pass a climate bill that attempts to reduce emissions and bolster renewable fuels, where does the American worker stand?

Sadly, both the Kerry-Boxer climate bill in the Senate and the House-passed Waxman-Markey bill pick and choose what jobs should flourish and which ones will be eliminated or shipped overseas. Americans are struggling through the worst job market in 30 years; now is not the time to pass laws that will cripple the economy and increase unemployment. Policymakers should instead focus on growing our economy and creating new employment opportunities in all American industries.

One of the primary concerns regarding climate legislation, therefore, is American jobs. According to a new report from the Congressional Budget Office (CBO), H.R. 2454 (Waxman-Markey) and other proposed cap-and-trade schemes would kill jobs in industries that produce energy from oil, natural gas and coal and also energy-intensive industries such as steel and automobiles. Cap-and-trade will cause these job losses because certain industries will be hit by a decline in overall sales, and also have to deal with higher production costs. This new CBO analysis also goes on to find that cap-and-trade would shift jobs away from both industries that rely on conventional energy and services that require carbon-based energy.

So, if Congress’ climate legislation is going to shift U.S. jobs away from companies that produce carbon-based energy and provide employment opportunities for workers in a new “green” economy, where exactly will these new jobs be created?

Workers are not concerned about in which industries, or in what part of the economy, the government is interested in creating jobs. They want more employment opportunities that are well-paying and long-lasting. A brief survey of states nationwide reveals that jobs in all sectors of the economy are desperately needed. Unemployment in California stands at 12.2 percent; in Nevada, 13.2 percent; and in Michigan, a staggering 15.2 percent. Yet cap-and-trade advocates including President Obama and Sen. Boxer (D-Calif.) argue that capping emissions and trading emissions allowances will be a “green” stimulus, and will benefit the economy.

However, “green job” creation will not outpace net job loss created by a cap-and-trade scheme. Cap-and-trade advocates claim that current climate legislation would jumpstart new industry in the U.S., but U.S. News & World Report points out that the “House-passed version of cap-and-trade is all about jobs: jobs lost, jobs never created, jobs sent overseas, and, unbelievably, jobs people will be paid for doing long after they cease to exist.” How do we know this is true? Just look at the huge safety net built into the legislation for all the employees of energy intensive industries that will be out of work if a cap-and-trade bill becomes law.

Further, according to CBO Director Douglas Elmendorf, petroleum refiners, coal miners, crude oil developers and natural gas producers will suffer significant job losses. In recent testimony to the Senate Energy and Natural Resources Committee, Director Elmendorf admitted, “The fact that jobs turn up somewhere else for some people does not mean that there aren't substantial costs borne by people, communities [and] firms in affected industries and affected areas.”

In addition to job losses, cap-and-trade will also stretch Americans’ already thin budgets. The Obama administration has admitted that cap-and-trade will have devastating effects on American families’ wallets and their ability to keep their jobs and find new ones. An internal White House document recently showed that cap-and-trade will cost families $1,761 annually. With less income available to workers across the U.S., cap-and-trade will further exacerbate distortions in the current job market. Dr. Richard Newell, administrator of the Energy Information Administration, told Congress that the Waxman-Markey bill increases delivered energy prices. And CBO Director Elmendorf warns that the cap-and-trade provisions in the House climate bill would cut U.S. GDP by between 1 percent and 3.5 percent by 2050.

What’s more, the free allowances distributed under Congress’ cap-and-trade plan will directly harm the average worker’s potential. Peter Orszag, director of the White House Office of Management and Budget (OMB) has said, “Giving allowances to energy producers would disproportionately benefit higher-income households and would preclude the possibility of using the allowance value to reduce taxes on capital and labor.” Thus, this missed opportunity to help U.S. workers will further make America less competitive in the ever-increasing globalized market. Highlighting this concern, Sen. Landrieu (D-La.) worries, “that higher carbon costs could encourage energy companies to move refining operations overseas, a decision that could make the U.S. more dependent on foreign sources for gasoline and other refined products.” If these operations do move overseas, the U.S. oil and natural gas industry – an industry that employs 1.7 million Americans – will shed many of its workers.

If Congress passes any climate policy, it must not only help our environment, but also stimulate our floundering economy. That means promoting not just new “green” jobs, but all types of jobs, including work that services our conventional energy sources.

The clock is ticking, but Congress must not rush to pass a climate bill before Copenhagen, especially given the fact that the unintended consequences for the American worker may be substantial. Washington needs to focus on creating all types of jobs, from traditional manufacturing jobs to jobs in renewable energy. And our nation’s policymakers need to do it now.