In an interview yesterday, President Obama criticized a provision of the cap-and-trade bill that would impose tariffs and other trade penalties on countries that do not enact their own caps on greenhouse gases. “At a time when the economy worldwide is still deep in recession and we’ve seen a significant drop in global trade,” he said, “I think we have to be very careful about sending any protectionist signals out there.” Proponents of the measure argue that it is necessary, because the bill will put American industry at a disadvantage to countries without similar caps.
I don’t see how Obama gets around this problem. The bill is full of admissions that its critics are correct when they say it will cost people their jobs — take the “climate change adjustment assistance to adversely affected workers,” for instance. Presumably this would work like “trade adjustment assistance” works now: If you can demonstrate that you lost your job to import competition, the trade adjustment assistance program will supplement your unemployment benefits. Just substitute “carbon rationing” for “import competition.”
With so many frank admissions that cap-and-trade is a job-killer — including in the text of the bill itself! — does Obama really expect Congress to listen to his lectures about the dangers of protectionism? The only alternative he has to offer is wishful thinking, as if China is going to see the wisdom in our approach and follow our lead. Congress isn’t going to buy that, and rightly so. You can add “potential trade war” to the growing list of costs associated with this bill.