Grover Norquist's Testimony for Senate Cap-and-Trade Hearing

Grover Norquist, President of Americans for Tax Reform had the following testimony submitted for the Congressional record at yesterday's Senate hearing on the Kerry-Boxer cap-and-trade bill.

An exceprt from the testimony reads:

Increased burdens on lower class families will also come in the form of new regulations on home sales. The Waxman-Markey bill contains 397 new regulations, one of which requires almost all homes to undergo environmental inspections prior to sale. These inspections will increase home prices, as additional inspections and repairs increase base prices. This cost increase is passed on to the buyers making home ownership more difficult. This will also eliminate the “fixer-upper” type homes upon which many low income buyers depend. Many low income families buy less-than-perfect homes because they are cheaper and they can perform needed repairs and improvements themselves. If the home has to pass an inspection prior to sale, the seller will have to make all of the necessary improvements before selling the home. The cap and trade proposal considered today will make home ownership nearly impossible for millions of Americans.

See below for the full testimony or click here for the PDF document.

Testimony Submitted for the
Full U.S. Senate Environment and Public Works (EPW) Committee hearing entitled, “Legislative Hearing on S. 1733, Clean Energy Jobs and American Power Act”

My name is Grover G. Norquist, and I am the founder and President of Americans for Tax Reform. ATR was founded in 1985 at the request of President Ronald Reagan and serves as a non-partisan organization that opposes any and all tax increases.  

I would like to thank Senator David Vitter (R-LA) and his office for introducing this testimony in the Congressional record for this hearing. The Cap and Trade legislation this Committee is considering is being sold as an attempt to control the climate; however there is no conclusive proof that it will have any effect. Rather there is considerable evidence that this legislation will have a disastrous economic effect on the country. This proposal, S. 1733, the “Clean Energy Jobs and American Power Act,” will negatively impact the economy, hurt families, and kill jobs. It will also make the United States less competitive in the global marketplace while allowing other countries take the lead with an unrestrained economy.

A recent Freedom of Information Act (FOIA) request, issued by the Competitive Enterprise Institute (CEI), to the U.S. Treasury Department reviled the government’s internal reports estimate a cap and trade program will cost between $100 to $200 billion dollars in new taxes per year. This is the equivalent of a hike in personal income taxes by about 15% and the average American household would pay an additional $1,761 a year.  Another study by The Institute for Energy Research (IER) found that Waxman-Markey will increase taxes on electricity from coal and natural gas-fired power plants by $1 billion.  

Americans will also feel increased pain at the pump as a result of this legislation. A study by Senators Kay Bailey Hutchinson (R-TX) and Kit Bond (R-MO) found that the Waxman-Markey bill will result in a $3.6 trillion gas tax. That breaks down to an additional $2.0 trillion tax on gasoline, a $1.3 trillion tax on diesel fuel, and a $330 billion tax on jet fuel. 

These massive new taxes on energy producers and every American family will be far more destructive to those in the lower and middle class. On September 12, 2008, then candidate-Obama said, “I can make a firm pledge.  Under my plan, no family making less than $250,000 a year will see any form of tax increase.  Not your income tax, not your

payroll tax, not your capital gains taxes, not any of your taxes.” However, later, President Obama said, “Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket.”  The President’s own Treasury Department noted that the increase in rates would be the equivalent of a 15% personal income tax increase by raising an estimated $100 to $200 billion per year.

President Obama, not candidate Obama was right. Prices will skyrocket, and it will be those that make less than the $250,000 he promised that will be harmed the most.

As the Hutchinson-Bond report explained, the average household spends five percent of its annual budget on fuel costs. For most lower and middle class working families, gasoline is necessary to get to work and make a living. These families also tend to have longer commutes than the rich and will be hit harder by increased fuel costs. 

The Institute for Energy Research has found that the Waxman-Markey bill will result in a $14 billion redistribution of resources from the poor to the rich. This is primarily because shareholders and those involved in trading allowances will be in a position to make money, while those with lower incomes will be paying for the increased taxes and costs.
   
Increased burdens on lower class families will also come in the form of new regulations on home sales. The Waxman-Markey bill contains 397 new regulations, one of which requires almost all homes to undergo environmental inspections prior to sale. These inspections will increase home prices, as additional inspections and repairs increase base prices. This cost increase is passed on to the buyers making home ownership more difficult. This will also eliminate the “fixer-upper” type homes upon which many low income buyers depend. Many low income families buy less-than-perfect homes because they are cheaper and they can perform needed repairs and improvements themselves. If the home has to pass an inspection prior to sale, the seller will have to make all of the necessary improvements before selling the home. The cap and trade proposal considered today will make home ownership nearly impossible for millions of Americans.

Beyond the direct economic impact of this energy tax, it will also dramatically change the American way of life. Increased travel and commuting costs coupled with an increase in cost to heat and cool homes and keep the lights on means many families will have to make a major shift in priorities. They will also have limited discretionary income for consumer purchases. Families will be forced to live in smaller houses and drive smaller cars. Communities will be constricted because of increased commuting costs, and people will have fewer employment opportunities.

Increased energy costs and regulatory burdens are going to destroy jobs in America, sending them overseas to countries like China and India. The Black Chamber of Commerce estimated cap and trade would kill over 2.7 million jobs every year through 2030. The Heritage Foundation estimated 1.1 million jobs lost from 2012- 2030 and 2.5 million each year after that. Even the liberal Brookings Institution estimated 1.7 million jobs would be lost per year.

We are told that these job loses will be offset with new “Green Jobs.” The Institute for Energy Research has released a study about the “Green Jobs” program in Germany, and found that not only are these jobs costly, they are also unsustainable. Government subsidies for the solar industry have had a net cost from 2000-2010 of $73 billion (US$) and wind subsidies have cost $28 billion (US$). When compared to the US economy, which is five times the size of Germany’s, we can see that it would cost us approximately half a trillion dollars. The entire wind and solar industry is dependent on government handouts including the “Green Jobs” we are told are created from this scheme. The government must pay an estimated $240,000 (US$) for every solar employee. As soon as the government handouts go away for these jobs, so do the jobs. Not only do these new jobs create a new class of people dependent on government welfare, they also kill productive jobs.  A Heritage Foundation study has estimated that net job losses, jobs that will be destroyed even if we take the government-dependent “Green Jobs” into consideration, will be 1.145 million.

With a void in U.S. based jobs, and the global economy continuing their demand, these manufacturing jobs will go to countries such as China who not putting economic-shackles disguised as climate change legislation on their economies. While the U.S. is imposing higher taxes and energy costs on its citizens and businesses, China is increasing its production and carbon emissions. The result will be the US committing economic suicide while having no proven effect on the climate.

As the United States considers economic destruction and China continues to prosper, what will we gain for all of our sacrifice – increased job loss, higher energy costs and an increased burden on already strained American families? Climatologists estimate that the cap and trade energy tax this Committee will soon consider will at best lower the world-wide temperature by hundredths of a degree by 2050 and no more than two-tenths of a degree by the end of the century. 

On top of not reducing the temperature, it also won’t reduce our usage or dependency on fossil fuels. In 2015, the US is expected to consume 127 billion gallons of gasoline. As a result of cap and trade, by 2050 we would consume 100 billion gallons of gasoline. In 2015, however, we will use 78 billion gallons of diesel fuel and 31 billion gallons of jet fuel. In 2050, we will use 118 billion gallons of diesel and 48 billion gallons of jet fuel. While gasoline consumption is expected to slightly decrease, diesel consumption will increase by 30 billion gallons, and jet fuel consumption would increase by 17 billion gallons.  A recent Environmental Protection Agency (EPA) analysis of the Senate Kerry-Boxer draft concluded that “average household consumption [of energy] would be reduced by less that 1% in all years.” 

I agree with the New York Times reporter John M. Broder who wrote, “Cap and trade… is almost perfectly designed for the buying and selling of political support through the granting of valuable emissions permits to favor specific industries and even specific Congressional districts.”  

In conclusion, what is the real purpose of this legislation? It will not create jobs; in fact it will destroy jobs and cripple the economy. It will also not help the environment or reduce our dependency on foreign oil. It will raise taxes and energy costs on every American family and force more jobs to our economic competitors. We believe in an “all of the above” energy approach that incorporates a diverse blend of energy sources without raising taxes and/or increasing the regulatory burden on businesses and without growing the size and scope of the federal government. Thank you.

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