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April 2009 Commentary
Cap and trade will pass the buck … to your bill
 by Richard G. Biever
Senior Editor
In his short time in office, President Barack Obama has shown an affinity for invoking great past Americans both left and right.
When it comes to energy issues at least, one leader seemingly ignored so far by both the White House and the Democrat-controlled Congress is President Harry Truman — the straight-talking Missouri Democrat — and his famed “The Buck Stops Here” slogan.
Despite all of the recent rhetoric about change and a new openness, passing the buck is still business as usual in Washington.
The energy plan the administration is proposing in its 2010 budget concocts a carbon “cap-and-trade” program that would be an expensive backdoor tax on electric consumers.
By electing Obama and putting the Democrats in control of Congress, Americans indicated they want something done about carbon emissions blamed for global climate change. Most folks realize such action would mean an increase in electricity costs. But cap and trade would raise rates beyond reason. Under the plan, electricity rates for Indiana electric cooperative members could rise between 30 and 40 percent.
Bruce Graham, CEO of the Indiana Statewide Association of Rural Electric Cooperatives, observed, “The economic ramifications of such increases will be devastating to families already struggling to make ends meet and threaten the viability of energy-dependent manufacturers and other Indiana employers.”
Cap and trade would create a new property right to greenhouse gases. The administration wants to auction these rights off to the highest bidders to create what The Wall Street Journal called “a giant revenue windfall” which Congress would then spend.
Cap and trade involves setting limits on emissions from utilities and industries which are actually producing the useful commodities we need, like electricity, and auctioning the rights to emit those gases to all comers. Those that emit carbon would have to buy these allowances back. Indiana would be hit especially hard in the coming decade since almost all of our electricity is generated by burning coal which cannot be substantially replaced with carbon-less sources anytime soon.
The National Rural Electric Cooperative Association noted the plan plays into the hands of wealthy capitalists who don’t always have consumer interests at heart. (See link.)
The administration’s budget projects raising $646 billion from the auction of emissions credits between 2012, when this new artificial system would start, and 2019. These “climate revenues” will become the sixth largest source of federal income. Cap and trade will cause electric bills to be raised, yet conveniently shield politicians from the public’s raised eyebrows and ire when the bills hit the mailboxes.
“We’re supposed to be living in a new era of fiscal honesty, so let’s start with cap and trade,” The Wall Street Journal noted in a recent editorial. “If it brings in revenue that the government then spends, it’s a tax, and politicians should start referring to it as such.”
As a former Democratic congressman from Oklahoma, NRECA CEO Glenn English said he knows what the politicians favoring cap and trade are thinking. “A cap and trade is very attractive, because basically you turn this issue over to the folks on Wall Street. And if you think they have done a wonderful job the last six months, you are turning your electric bill over to them,” he told the nation’s electric co-op leaders in New Orleans in February. “Any way you go, this is a tax, either through cap and trade or through a straight carbon tax.”
A straight carbon tax is the other climate change funding option. Electric cooperatives lean toward this proposal and are working with leaders more akin to Harry Truman’s way of thinking to get it done. While a carbon tax could increase electric bills by placing a levy on carbon fuels, it would mitigate the end cost to consumers. It would also let utilities know up front what they’ll need to do and allow them to plan ahead. Cap and trade is much more volatile and uncertain.
 “A carbon tax is the honest straightforward way to do it,” added English. “It is your elected officials, who have the responsibility for taxes in this country, who will have to determine how much tax should be placed on your electric bill. But the uncomfortable thing for elected officials is a carbon tax is out front, and all of their constituents know that they have placed that tax upon them. And taxes are not very popular.”
Electric cooperatives are working with lawmakers to make sure paying for climate change programs is done right. Co-ops need the active help of their member-owners to join a grassroots effort to keep Washington’s politicians accountable and to use climate change revenue to fund only climate change programs. Please go to www.ourenergy.coop to let your voices be heard about this issue.
“In the end, it is the responsibility of our elected officials to pass taxes and not pass the buck,” said English. “Cap and trade is passing the buck.”
Written By: eceditor
Date Posted: 3/25/2009
Number of Views: 936
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