Robbing Bismarck to Pay Boston
Cap-and-trade is an interstate wealth-transfer program.


On June 6, 2008, the U.S. Senate rejected a motion to end debate on the Lieberman-Warner Climate Security Act, which would have established a “cap and trade” (CAT) system to regulate greenhouse-gas emissions and set ambitious targets for emissions cuts. That same day, ten Democratic senators who opposed the bill — nine of whom had nonetheless voted in favor of cloture “to help their party save face,” as Time reported — sent a letter to Harry Reid, the Senate majority leader, and Barbara Boxer, chairman of the Senate Committee on Environment and Public Works, expressing their concerns.  
In their letter, the ten lawmakers called CAT “perhaps the most significant endeavor undertaken by Congress in over 70 years.” They argued that the final legislation should include strong provisions to (among other things) reduce the costs of carbon-capping, spread the burdens “across states and regions,” safeguard American manufacturing jobs, protect working families, boost spending on energy technologies, and ensure the responsible use of CAT revenues.  

All ten of those Democrats — Evan Bayh (Ind.), Sherrod Brown (Ohio), Carl Levin (Mich.), Blanche Lincoln (Ark.), Claire McCaskill (Mo.), Ben Nelson (Neb.), Mark Pryor (Ark.), Jay Rockefeller (W.Va.), Debbie Stabenow (Mich.), and Jim Webb (Va.) — are still in the Senate. The debate over Lieberman-Warner spurred them to form a “Gang of 16” along with six more of their Democratic colleagues. This group will be an important faction in the looming CAT battle. Its mere existence shows that anxiety over CAT transcends party lines. Indeed, whatever else Senate Democrats may agree on, they are far from united on President Obama’s climate agenda.

Obama is seeking to enact a CAT program under which the federal government would impose a hard cap on greenhouse-gas emissions and then auction off 100 percent of pollution allowances. These allowances would be bought and traded by companies based on their respective carbon footprints. The CAT system would begin in fiscal year 2012. Its goal, according to Obama’s budget blueprint, would be “to reduce greenhouse gas emissions approximately 14 percent below 2005 levels by 2020, and approximately 83 percent below 2005 levels by 2050.”  
This would essentially require a nationwide economic transformation, with coal-dependent states and manufacturing areas facing especially steep challenges. In early March, Politico reported that the Gang of 16, headed by Senator Stabenow, “is reconvening to brainstorm ways to soften the blow of Obama’s proposed climate program on their states’ economies.” The gang includes Energy and Natural Resources Committee chairman Jeff Bingaman (N.M.), Robert Byrd (W.Va.), and the two senators from North Dakota, Kent Conrad and Byron Dorgan.  
Small wonder. New Mexico, West Virginia, and North Dakota are all heavily reliant on carbon-heavy coal power for their electricity needs. According to preliminary data from the Energy Information Administration (EIA), coal accounted for roughly 48.5 percent of all U.S. electricity generation in 2008. But its share of the electricity mix varied widely from region to region and from state to state. Coal power provided 97.8 percent of total electricity in West Virginia, 94.5 percent in Indiana, 94.4 percent in Wyoming, 90.9 percent in North Dakota, 85 percent in Ohio, 80.9 percent in Missouri, and 73.5 percent in New Mexico, compared with 14.8 percent in Connecticut, 14 percent in New York, 6.9 percent in Oregon, 2.1 percent in Maine, 1.2 percent in California, 0 percent in Vermont, and 0 percent in Rhode Island.  
Those numbers help explain why certain Democrats are so apprehensive about CAT. When it was suggested that Democratic leaders might use the budget-reconciliation process to prohibit a filibuster of climate legislation, 33 senators — 25 Republicans and 8 Democrats — sent a letter to Senate Budget Committee chairman Kent Conrad and GOP ranking member Judd Gregg to counsel against the maneuver.

“We oppose using the budget-reconciliation process to expedite passage of climate legislation,” they wrote. “Enactment of a cap-and-trade regime is likely to influence nearly every feature of the U.S. economy. Legislation so far-reaching should be fully vetted and given appropriate time for debate, something the budget-reconciliation process does not allow. Using this procedure would circumvent normal Senate practice and would be inconsistent with the administration’s stated goals of bipartisanship, cooperation, and openness.”  


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