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The Impact Of Cap-And-Trade On Manufacturers Using Coal-Generated Energy

Floor Speech

Location: Washington, DC


Mr. LATTA. Thank you, Mr. Speaker. I appreciate the opportunity to have this hour with my colleagues to talk about a very, very important issue facing this country.

The issue that's facing this Congress is cap-and-tax. Why is it important? Well, as you can see from this chart right here, Cap-and-Tax Vulnerability by State. I'm from Ohio. I represent the largest manufacturing district in the State of Ohio as well as representing the largest agricultural district in the State of Ohio.

If you see from this map where it says, the vulnerability key from high, medium and low, you will see that Ohio, along with a good part of the Midwest, is all facing a very, very tough time under this proposal.

At the same time I know when I am back home, I talk to the folks; and they say, Well, who's proposing this? I say, If you look from California to Washington. You go from Washington, D.C., up the coast to Maine, that's where it is. You look at that--very low vulnerability. That concerns me. It concerns me because, as I said, manufacturing is the lifeblood in my district. I would like to talk about it for just a few minutes.

First, every week I go out in my district. I go out in that district, and I go into plants. We manufacture everything from car parts, to batteries, to windshields, to washing machines. You name it, we make it.

My district, when people say, What's your largest city? It's my hometown of about 30,000 people. So over 140 miles east to west we have a lot of small manufacturers out there. We have large manufacturers. We have a large General Motors power train plant. When you keep going across, you have a Chrysler plant. We have a furniture
manufacturing plant. As I mentioned, we have a washing machine plant.

We go across it, and then we have a lot of smaller ones. We have plants that might employ 50, 100 people. But those are the folks that make this economy run because small business is the main economic engine for this country.

So when I see things like this where you look at the vulnerability, I see that right off the bat, we're in trouble. But we're also in trouble because Ohio, being a large manufacturing State in total, we have another situation out there. And that situation is this: When you look at the plants that we've had, we've had to grow, as our former Governor and now Senator George Voinovich used to always tell us when we were in the legislature together, that we had to work harder and smarter in the State of Ohio.

Well, a lot of factories are that way now. They don't employ as many people. But at the same time, we have watched a lot of these plants, because of the economic downturn, having to lay people off. Every week I go out into these plants. I remember one not too long ago I went into the plant, and they said, We'd like to take you in the back. They usually had around 180 employees. They said, We're down to about 70. They said, We make brass fittings; and with those brass fittings, they're in competition against the world. And of course that means the Chinese right now. They said, It costs us X number of dollars to make this product, and at the same time the Chinese can make it for 45 cents.

They can't have any more impact on them, especially if we're going to raise the price of energy. We can't have a national energy tax because if we do that, these companies are going to shut down, and they're never going to open up again.

Back in 1982 we were coming out of that recession that started back in the Carter years when--you might all remember--we had 21.5 percent interest rates, double-digit inflation, double-digit unemployment rates. It was tough; but people still thought, When this thing's over, those factories are going to open up. I'm going to have my job back. Not so today. Not so today because when people start looking around--and we're in a global economy.

I was a county commissioner of Wood County for 6 years. We used to compete against some parts of Ohio and over in Indiana and Michigan, but now we're competing against people on the other side of the globe, and they're going to eat our lunch if we're not careful.

When we have these situations, like I said, that you go into these plants, and these folks are saying, We can't have one more increase or we're out of business, they mean it.

Then the question is going to be when they come to me and say, Well, where am I going to get a job? Or like last weekend I spoke to a commencement address. I asked them beforehand, I said, Just out of curiosity, what would you like me to talk about? They said, What we'd really like you to talk about is telling our graduates what you're working on, what you're helping to try to do to make sure that--where we are going be when we come out of this tough economic situation that we're in. So you have to start these things off by saying, You know, I'm not going to paint you any kind of a rose-colored picture here.

If we work hard and we do the right things here in Congress, we're going to survive. But if we pass the wrong pieces of legislation, I can't go back to that same college in a couple of years and look at those next graduates coming up and say, You know what, you're going to have a job, because they might not. So what we have to do is think about these things.

Just to show you on another chart something that the Heritage Foundation put together, they took all 435 congressional districts. What they did was, they put together a manufacturing vulnerability index. They took what your State's percentage of energy usage from coal was, and then they took from each district the number of manufacturing jobs.

This is one of the times you don't want to be at the top of the list. My good friend from Indiana, who will be on in a couple minutes here, unfortunately ranks number one in vulnerability in this country because of the number of manufacturing jobs and coal generation in the State of Indiana. I'm number three because I have 80,623 manufacturing jobs, and we get 87.2 percent of our energy from coal. You put those two things together, and my manufacturing vulnerability index percentile rank is at 99.5 percent, which puts you at three.

When I go across my district, I can't go out there and say, Things are just fantastic. I'm telling them, Right now I want to try to keep you in business, but I will tell you, if we start passing these bills in this Congress to put a national energy tax on you, you're in trouble. And not only are you in trouble, but every generation coming up in Ohio is in trouble because these jobs aren't going to come back. These jobs are not going to come back.

When you look, as I said, from 1982 when people thought, Well, we are going to come back. Why? Because the United States was at the top of the heap. Today the Chinese have become, in 2009, the number one manufacturing country in the world. We got knocked off after over 100 years being on top. Not anymore. That's why we have to start thinking about our future. When you talk about what the folks want to do here, they need to look around the world a little bit.

Not too long ago in the Washington Times there was an interesting article. The headline was Chinese Official Aims Emissions Cost At Consumers. The folks here in Congress are saying, Well, it's not fair if we do all these things. We need to have the rest of the world cooperate with us. Well, guess what. Let me just read you one quote. This is from their lead climate negotiator in China who said this:

``As one of the developing countries, we are at the low end of the production line for the global economy. We produce products, and these products are consumed by other countries. This share of emissions should be taken by the consumer, not the producer.''

Interesting philosophy. They can produce it, but they're not going to pay anything for it. They want us, for consuming it, to pay that cost. But at the same time in this country what we're going to be doing is we're going to be paying on both ends because we're going to be paying to produce it. It's going to be very difficult for these manufacturing jobs in States like Ohio and Indiana to stay in one spot.

The one thing would be that they might say, We're going to leave and go to another State. But I've already had companies that are multinational say, You know what, we don't even have to be in Ohio. We don't have to be in the United States. We'll just produce it in another country. That's where we are. And I'll tell you what, the future is very bleak if we start looking at these things.

Last summer we talked about an all-of-the-above energy plan for this country, and the American people got it. Because first of all, the American people went to the gas station, and they saw, like in Bowling Green, Ohio, $4.19 for a gallon of gasoline. People understood right off the bat what was happening. But sometimes when they hear about cap-and-tax, cap-and-trade they say, Well, we're not really sure what that is. But it will affect everybody immediately when this thing starts.

Let me give you a couple of statistics here from a Heritage Foundation report. This is about the negative impacts on consumers. This is from the Heritage Foundation. By 2035 this legislation would, one, reduce the aggregate gross domestic product by $9.6 trillion, destroy 1.1 million jobs per year on average with the peak year seeing unemployment rise by over 2.5 million jobs, increase the average family cost of four by $4,800 a year, raise electricity rates by 90 percent, raise residential natural gas prices by 55 percent, and increase inflation-adjusted Federal debt by 26 percent or an additional $29,150 per person after adjusting for inflation. That's what this cap-and-tax, this national energy tax is going to get us. This is a massive tax. We can't afford it.

Going back to this chart, when you look at the States that are using a lot of coal and you have a lot of manufacturing in your district, well, we can't take it.

Now, let's go to the bottom of the chart. For those that are in favor of it, you look at their percentile rank. Zero. Well, that's out in California. Very little manufacturing. When you look at the number of manufacturing jobs in the bottom four of California, you've got 15,500 and 19,000 manufacturing jobs in a congressional district. Again, compare that with Indiana 3, which has almost 104,000 manufacturing jobs, you wonder why we're concerned about this in the Midwest. You wonder why we're concerned about this when we talk about making sure that our people have jobs in the future.

Let's think about the tax bases out there. We've got areas in the State of Ohio that are going to be devastated when you take these kinds of numbers, and we're not going to have these jobs anymore. What's going to happen to the local school districts? What's going to happen to the municipalities? What's going to happen to the fire departments? Everything? They're all going to be affected. So again, we can't afford this, and it's a tax on the American people. It is a loss of jobs that we can't afford in this country.


Mr. LATTA. Well, I thank the gentleman, and he is absolutely correct. When you look at these margins that these companies are working with today, they are slim.

It's the same thing in my district. You know, I get in those plants every week. When I go in those plants, they show me what one blip of an electrical costs. I have massive, heavy energy users in my district, especially on the electrical side. With one blip, they could say, You know what? We're done. We'll go overseas. We don't need this, and we don't need one more Federal regulation. We don't need one more government bureaucrat telling us how to run our business, and we're out of business in this country.

Then what do we tell our constituents? What do we tell the next generation of Americans out there? That you don't have a job. What do you have to look forward to in the future? It's not very bright when you look at this piece of legislation.

You know, the President said when he was running for office that, Under my plan of a cap-and-trade system, electricity rates will necessarily skyrocket.

That will cost money. They will pass that money on to the consumers. It goes from one to the next, and it's going to finally get down to those honest people who are going to try to be in those factories, making a product, finding out first they don't have jobs and, at the same time, that their electricity rates at home are just going to skyrocket. How are they going to make a living? How are those kids going to go to college?


Mr. LATTA. I thank the gentleman.

If I could just comment on a couple of things that he said.

I think you're absolutely right. I know when they shut the lights on us right here on this floor last year when we were down here talking about energy--and it wasn't hard to remember that we were talking about 65 or more percent of all of the energy that we were consuming in this country was being imported in this country. I remember those T. Boone Pickens commercials saying the largest transfer of wealth in history was occurring. I believe the number was like $700 billion per year. And so when you see those things happening, it's hard not to get up here and speak out on that.


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