Cap and Trade and Tax and Spend
Carbon caps will hinder growth and kill jobs.


Stephen Spruiell

Just before many of them left for Copenhagen, House Speaker Nancy Pelosi and her fellow Democrats jammed a $154 billion “jobs bill” through the House on a party-line vote. Over half of the bill has nothing to do with job creation: It consists of aid extensions for the unemployed. A further $27 billion is pledged to protect the unionized employees of bankrupt state governments from experiencing the layoffs and wage cuts that workers in the private sector have suffered. As our own Daniel Foster and others have noted, the average public-sector employee already makes significantly more than his private-sector counterpart, and the gap is widening.

Never mind that. The point was to allow Democrats to put their names on a “jobs bill” before heading home for the holidays to their increasingly disappointed constituents. But many of those same Democrats are taking a detour through Denmark, and their constituents deserve to know that their work there is all about killing jobs, not creating them.

The point of Obama’s visit to Copenhagen today is to build support for a cap-and-trade program at home. The House has passed a bill that would create one, but the Senate has yet to act. According to a study commissioned by the National Black Chamber of Commerce, cap-and-trade would cost between 2.3 million and 2.7 million jobs. That’s a net figure, which includes the “green energy” jobs the bill would create. The Heritage Foundation has estimated job losses in the same range.

The Congressional Budget Office and the Energy Information Administration have also concluded that the bill would kill jobs. CBO director Doug Elmendorf testified that “the net effect of [cap and trade] we think would likely be some decline in employment during the transition.” The EIA reported that the program would “become a drag on the economy and reduce job creation by hundreds of thousands of jobs under any of the 11 different sets of assumptions that it analyzed,” according to

The bill includes a tacit admission that it would be a job-killer: To prevent mass layoffs, it would subsidize the industries hit hardest by higher energy costs. Refineries and utility companies would get billions of dollars’ worth of free carbon permits to offset the costs associated with capping their emissions. Manufacturing concerns would be eligible for cash grants to help with the higher energy costs such caps would impose.

The bill would also create a program to supplement the unemployment benefits of workers who were laid off. If a worker could demonstrate that he lost his job due to higher energy costs, he could apply for help from the Climate Change Adjustment Assistance program. The program would be similar to Trade Adjustment Assistance, with one key difference: Free trade spurs economic growth and fuels job creation, and there are few principles in the science of economics more settled than that. Carbon caps, by contrast, would hinder growth and kill jobs. And while the theory of anthropogenic global warming is based on sound scientific principles, the CRUtape letters revealed that the direst predictions of catastrophic warming were the work of scientists who twisted the data to yield attention-grabbing results.

Now U.S. leaders are in Copenhagen offering the same set of bribes to the developing world. Secretary of State Hillary Clinton has announced that the U.S. will help raise $100 billion a year to fund the global equivalent of the Climate Change Adjustment Assistance program. In both the domestic and the international case, we should view these offers of “assistance” for what they are: an admission that sharp curbs on CO2 emissions will come with enormous costs, and those costs will manifest themselves as lost jobs.

– Stephen Spruiell is a staff reporter for National Review Online.


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