U.S. Senators John McCain (R-Arizona) and Joseph Lieberman (D-Connecticut) in January 2004 introduced a modified version of the Climate Stewardship Act they had championed in 2003. A new study by Charles Rivers Associates documents the hefty national and state-by-state costs the modified McCain-Lieberman bill would impose.
Defeated in Senate
The 2003 bill mandated a reduction in U.S. greenhouse gas emissions to 2000 levels by 2010, and cuts to 1990 levels by 2016. In essence, the bill called for implementation of “Kyoto-lite” energy restrictions on the U.S. economy.
Recognizing the speculative nature of global warming predictions, the limited impact greenhouse gas reductions would have on future climate, and the hefty economic costs associated with McCain-Lieberman, the U.S. Senate defeated the 2003 bill by a vote of 55-43.
Low-Cost Alternative?
McCain-Lieberman 2004 is being advertised by supporters as less costly than McCain-Lieberman 2003. Forecasts of global warming remain speculative, however, and global warming alarmists themselves admit any feasible reductions in greenhouse gases would have very little effect on climate.
McCain-Lieberman 2004 retains the mandate to reduce greenhouse gas emissions to 2000 levels by 2010, but it drops the subsequent requirement to reduce emissions to 1990 levels. Charles Rivers Associates, in cooperation with the National Black Chamber of Commerce’s United for Jobs project, analyzed the projected costs of McCain-Lieberman 2004 in a study released in June.
According to the study, McCain-Lieberman 2004
- will cost the average U.S. household at least $600 per year by 2010, rising to at least $1,000 per year by 2020;
- will cost the U.S. economy at least 39,000 jobs in 2010, and at least 190,000 jobs by 2020;
- will force at least a 13 percent rise in electricity prices by 2010, and at least a 19 percent rise in electricity prices by 2020; and
- will force at least a 9 percent rise in gasoline prices by 2010, and at least a 14 percent rise in gasoline prices by 2020.
In an observation that will be important to both state and federal governments, the study notes the economic costs of McCain-Lieberman 2004 will reduce tax revenues. The federal government will lose at least $7.5 billion in annual tax revenue by 2010, with the states suffering similar, proportional losses. The declining revenues will be compounded by greater spending pressures than baseline forecasts, as higher unemployment and falling purchasing power result in demands for greater social spending to care for the unemployed and compensate for falling living standards.
Even Bigger Bite
The new study also analyzes the economic costs of national implementation of the New England governors’ proposal to reduce emissions to 80 percent below 1990 levels by 2050. According to the study, if implemented nationally the New England governors’ proposal
- would cost the average U.S. household at least $1,300 per year by 2010, rising to at least $2,300 per year by 2020;
- would cost the U.S. economy at least 250,000 jobs in 2010, and at least 610,000 jobs by 2020;
- would force at least a 31 percent rise in electricity prices by 2010, and at least a 43 percent rise in electricity prices by 2020; and
- would force at least a 23 percent rise in gasoline prices by 2010, and at least a 37 percent rise in gasoline prices by 2020.
Under the New England governors’ plan, the federal government would lose at least $18.8 billion per year in tax revenue by 2010, with the states suffering similar, proportional losses.
The new Charles River study is especially informative for state legislators because it breaks down costs on a state-by-state basis reflecting local economic factors.
For example, the study reports Illinoisans would suffer even more under McCain-Lieberman 2004 than the national average. McCain-Lieberman 2004 would cost the average Illinois household at least $700 per year by 2010 and at least $1,100 per year by 2020. Similarly, the New England governors’ plan would disproportionately affect Illinoisans by forcing at least a $1,400 decline in average household income by 2010, and at least a $2,400 decline in average household income by 2020.
James M. Taylor is managing editor of Environment & Climate News. His email address is [email protected].
For more information …
The June 2004 Charles River Associates study, “Analysis of State-Level Economic Impacts of the McCain-Lieberman Bill,” is available online at http://www.unitedforjobs2004.org/ufj/wrapper.jsp?PID=8040-5&CID=8040-060704A.
