Lost in the ongoing debate over health care reform was a recent decision by Senate Democrats to delay yet again the introduction of their so-called cap-and-trade legislation. The decision, announced earlier this month by Sen. Barbara Boxer, the chairwoman of the Environment and Public Works Committee, is a sign that this misguided legislation has not gained the momentum Democrat leaders had hoped.
In reaction to the announcement, the Wall Street Journal said: "The latest delay is probably a submission to reality, which is a rare thing in the current political environment -- and a major victory for the U.S. economy, at least for now." I agree completely. Considering the blow cap-and-trade legislation would have on family budgets, the nation's economic recovery, and our long-term competitiveness, the news of the bill's delay was a welcome development.
THE CARBON TAX
The House of Representatives narrowly approved cap-and-trade legislation in June. The legislation would ostensibly curb global warming by reducing the amount of carbon dioxide released into the atmosphere. In order to achieve this, companies that emit carbon dioxide -- such as power plants, petroleum refiners, and manufacturers -- would be forced to purchase allowances from the federal government for each ton of carbon dioxide emissions they produce.
The cost of these allowances would in effect be a massive tax levied on energy producers, manufacturers, and other companies across our economy. This massive new tax would not simply be absorbed by the companies. It would be passed along to consumers by way of higher energy prices. This is not just my prediction. As a candidate for president, then-Sen. Obama admitted: "Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket."
Since energy is used to make and provide other goods and services, Americans would see higher prices across the board. In writing recently about cap-and-trade, Patrick Fleenor, the chief economist at the Tax Foundation, said that "other effects will be less obvious. Food prices will rise because energy is used extensively in the production and transportation of agriculture products." In fact, during testimony before Congress, the director of the nonpartisan Congressional Budget Office said it was unlikely any consumer product's price would remain the same under a cap-and-trade program.
A recent study released by the Heritage Foundation provides a window into how a cap-and-trade system would negatively impact Mississippians. The group found that by 2035, Mississippi's gross state product would be reduced by $3.4 billion if the House-passed cap-and-trade bill became law. Energy prices for everyone in the state would rise. By 2035, the study stated electricity prices would increase by more than $1,000 per household, and Mississippians would pay $1.27 more for a gallon of gasoline.
Cap-and-trade would also severely impact agriculture, our state's largest employer. Under a cap-and-trade system, the American Farm Bureau Federation reported input costs for agriculture would rise by $5 billion. A recent report by the University of Missouri-Columbia found that under cap-and-trade, a typical corn, soybean, and wheat farm in that state could see increased costs of $11,649 in 2015 and $30,152 in 2050. Results anywhere close to this in Mississippi would be disastrous for the nearly 30 percent of workers in our state employed directly or indirectly by agriculture.
Our economy still has a long way to go before fully recovering. Unemployment has jumped to a 26-year high of 9.7 percent. The last thing our economy needs is for Congress to implement a massive new energy tax that will trickle down and negatively affect every facet of our economy. That is exactly what a cap-and-trade program would do. Such a scheme is wrong for our country, and I will continue working to ensure its defeat.