CAP and TRADE

"This is Mitch Daniels, governor of Indiana.

"The role of the loyal opposition is important in our democracy. It imposes a duty to wish for the nation's success, to express not just disagreements, but agreements where they exist, and to leave partisanship at the water's edge.

"I do wish President Obama well. I support his education reform ideas, anti-fraud initiative in social programs, and the great example he and his family are setting for families across America. And I endorse wholeheartedly his stated commitment to 'government that works.'

"One policy being pushed by the President and House Speaker Nancy Pelosi is, I regret to say, a poster child for government that cannot work. The scheme to radically change the sources and the cost of American energy through a system known as 'cap and trade' may be well intentioned, but it will cost us dearly in jobs and income, and it stands no chance of achieving its objective of a cooler earth.

"The national energy tax imposed by Speaker Pelosi's climate change bill would double electric bills here in Indiana, working a severe hardship on low-income families, but that's only where the damage starts. In a state where we like to make things, like steel and autos and RVs, it would cost us countless jobs, many of them heading off-shore to China and India. Our farmers and livestock producers would see their costs skyrocket. And our coal miners would be looking for new work, while we leave affordable, homegrown energy idle in the ground.

"And all for what? Even if one believes the Administration's own computer models, which they claim can predict temperatures fifty years away, the CO2 reductions from their bill will not budge the world thermometer by a tenth of a degree.

"It's become clear that the Pelosi bill has little to do with a cooler planet and everything to do with raising money for the out-of-control federal spending now underway in Washington. Please excuse us Midwesterners for feeling a bit like the targets of an imperialistic policy, devised in places like California, New York, and Massachusetts for their benefit, at our expense.

"We have here a classic example of unwise government: The costs for all Americans will be certain, huge, and immediate. Any benefits are extremely uncertain, miniscule, and decades distant. Surely there is a better way.

"Here in Indiana, we are active in pursuing a better energy future and proving that we can protect the environment, lower energy costs, and create jobs at the same time - all without raising taxes. We have rocketed to national leadership in biofuels. We are the nation's leader in the new technology that can use coal more cleanly. We are serious about major advances in conservation; the best way to reduce both pollution and CO2 is to use less energy in the first place. And last year, we were the fastest growing state in wind power.

"There is tremendous risk in being pushed into an unfair and ultimately counterproductive national energy tax that will cost us dollars today and jobs tomorrow. Let's take a breath, slow down, and work together on conservation, the infrastructure to bring on more wind and alternative energy, and the new technology that will let us use our abundant homegrown coal in ways we can all support. That, Mr. President, would be 'government that works.'

"Thank you for listening."

Just in case you missed it, over the weekend Indiana's own Governor Mitch Daniels gave the GOP weekly radio address. His topic was "cap and trade", a scheme by President Obama, Nancy Pelosi, and other liberals in Washington to hike taxes and increase our electric bills.

Coal power plants and coal mining will be heavily taxed and penalized under this legislation. The "cap and trade" bill currently before Congress will be particularly harmful to Hoosiers, because we get most of our electricity (94%) from coal. A large amount of coal is also mined in southern Indiana, which means that "cap and trade" will cost many Hoosiers their jobs.

Worse still, "cap and trade" will do virtually nothing to help the environment, according to President Obama's own estimates. The real objective of "cap and trade" is to raise taxes to pay for yet more spending by Congress and the Obama administration.

In a recent article in the Corydon Democrat, the Harrison County REMC estimated that "cap and trade" would cause the electric bill of the average Hoosier to go up by around $50 a month.

You can watch Mitch Daniels' address at our website here:

http://www.harrisongop.com/2009/05/mitch-gives-weekly-gop-radio-address.html

The text of his remarks is also available there, in case your internet doesn't do video very well.

Please read up on this important issue, and pass it on to your friends. We can't afford to be silent.

Thanks for your time,

Scott Fluhr
Chairman
Harrison County Republican Central Committee

INDIANAPOLIS — Cap-and-trade is coming, Hoosiers, and you need to pay close attention, try to avoid all the hyperbole in the blogosphere and help your members of Congress make good decisions.

Here’s an Indiana primer on the topic.

WHAT IS CAP-AND-TRADE?

President Barack Obama wants to limit greenhouse gas emissions at 14 percent below 2005 levels by 2020, and 80 percent below 1990 levels by 2050. A cap-and-trade system would allow clean energy users to sell their credits to polluting users while the caps gradually increase. Congress is now considering the Waxman-Markey American Clean Energy and Security Act.

WHY DO WE NEED CAP-AND-TRADE?

According to the Congressional Research Service, the earth’s climate is warming, with observable effects on human and ecological systems. Since 1900, the average global temperature has risen some 1.0 to 1.3 degrees (Fahrenheit), with most warming since the 1970s. The current global temperature is approaching, possibly exceeding, the maximum experienced by human civilizations. Most models project greenhouse gas emissions-driven change to have important impacts on regional economies, human safety and health, ecosystems, with the potential for surprising and abrupt shifts.

WILL CAP-AND-TRADE SOLVE

THIS PROBLEM SOON?

No. The Congressional Research Service notes that the question of appropriate timing of actions is exacerbated by the longtime lags between emissions and climate change impacts, raising potential intergenerational trade-offs. Another research service report notes that “The climate would continue changing for hundreds of years after greenhouse gas emissions concentrations were stabilized, according to most models.” And for cap-and-trade to work, China and India will also have to act. So if Congress passes cap-and-trade, it would be like a gift to our grandchildren, who will have to deal with our massive debts.

HOW WOULD THIS IMPACT INDIANA?

Indiana gets 96 percent of its energy from the cheapest and dirtiest fuel — coal — compared to California’s 1 percent. We are also — by a long shot — the No. 1 state using high intensity manufacturing at steel mills and foundries.

Republicans ranging from U.S. Rep. Mike Pence to Gov. Mitch Daniels call Waxman-Markey an imperialist plot by coastal liberals to tax the Great Midwest. Daniels insists that electricity prices will double under cap-and-trade. They cite a Heritage Foundation analysis that revealed eight of Indiana’s nine Congressional Districts are in the top 20 of those taking the brunt of the original Waxman-Markey. But the bill has changed significantly, easing some of the costs on Indiana and it still has to go through nine House committees, a floor vote and then on to the U.S. Senate.

U.S. Rep. Baron Hill, a Democrat, said after he voted for Waxman-Markey in the House Energy & Commerce Committee last month, “We cannot continue to push the issue of addressing climate change onto future generations.”

WILL WAXMAN-MARKEY DOUBLE

OUR ELECTRIC BILLS?

The problem with Pence’s and Daniels’ statements is that Indiana’s electric bills are going to go up “significantly,” anyway, according to Jim Newland Jr. of NiSource. A Purdue University study several years ago noted that Indiana would run out of capacity soon. Think about how much electricity you use now compared to five or 10 years ago. Seven NiSource customers use 45 percent of its electricity. If Waxman-Markey were to pass, at what point will U.S. Steel say, “To hell with this. We’ll go make steel in Thailand?” And, yet, there were similar costs to industry during acid rain legislation and many found ways to manufacture even more efficiently.

WHAT HAPPENS IF CONGRESS DOESN’T

PASS CAP-AND-TRADE?

The Environmental Protection Agency, or EPA, is waiting in the wings and will deal with it administratively.

WHO SHOULD I TRUST WHEN IT COMES TO CAP-AND-TRADE?

Daniels is right to express concerns over what will happen to Indiana energy rates under Waxman-Markey. He fears that an advantage we have with business is low electricity rates. Indiana’s Republican congressmen have opposed just about everything Obama has initiated, so it’s hard to tell when they’re playing politics, or have a legitimate beef.

They do note that Waxman-Markey doesn’t include emission-free nuclear power. Even liberal critics say that the bill does not invest enough in alternative energy development. Keep an eye on how Sens. Dick Lugar and Evan Bayh approach Waxman-Markey. Both are very progressive on climate issues, and yet they will guard the economic vitality of the state.

WHAT’S LUGAR SAYING ABOUT

WAXMAN-MARKEY?

Lugar’s tree farm has purchased credits on the Chicago Climate Exchange, so he clearly understands that cap-and-trade is not an “if” but “when” reality. In an April 22 letter to Dr. Jane Lubchenco of the National Oceanic and Atmospheric Administration, Lugar urged the Obama administration to “dramatically increase education efforts on climate change for the American public and for policymakers. Passing and implementing far-reaching legislation requires that elected officials explain clearly to the American people why it matters in their daily lives. Americans need detailed information on state-by-state, district-by-district and county-by-county levels on what the impacts of climate change would be on them and what opportunities exist in a new energy economy.”

SO, WHAT’S THE BOTTOM LINE?

Pay attention. Watch carefully how Sens. Lugar and Bayh evolve on this issue, as it will be the Senate that will likely forge the most equitable compromise. If Congress doesn’t, the EPA will.

Brian Howey is publisher of www.howeypolitics.com.

Note: And just in case you were wondering where Baron Hill stands on this issue, read his response to me below. My thanks to many of you for sending in emails, letters and calls to our congressmen and senators. Here's the response I got. I guess we know where he stands...

May 29, 2009

Dear Mr. Matthews,

Thank you for writing to express your concerns about the American Clean Energy and Security Act of 2009. I appreciate hearing your thoughts on this important matter.

We cannot continue to push the issue of addressing climate change onto future generations. It would be a complete shirking of my responsibilities as your Member of Congress to do that. In addition, the Environmental Protection Agency is currently moving forward to regulate green house gases as a pollutant, as per the Supreme Court ruling in Massachusetts vs. EPA.

It is important that Congress set up a reasonable system to regulate emissions from all sectors of our economy, and ensure that targets and timetables included are feasible. Yes, this is a complex issue, and with something of this magnitude the details are absolutely critical. In fact, the original proposal was simply not achievable for Indiana. But, I worked with the Committee to significantly change the bill into a more realistic plan, and that process will continue as the bill moves through Congress. I believe that, although it is not currently a perfect product, the issue is too important to stop the legislative process. That is why I voted in support of favorably reporting the bill out of the Energy and Commerce Committee.

I believe we made several important improvements to the draft. First, in order to cushion our transition to a clean energy economy, the majority of allowances were given to affected industries. These allowances, given to regulated entities, will ensure that prices do not spike and that companies do not receive windfall profits. Second, manufacturing industries will be compensated for their cost of compliance, and countries that do not adopt green house gas standards will face trade consequences from the United States to ensure the continued competitiveness of American manufacturing. Third, the original renewable energy standard was not practicable for Indiana, but it was moderated to a level at which Indiana can achieve results.

Regarding the details, I have worked diligently to safeguard the taxpayers' of Southern Indiana from being unfairly penalized by the bill. For example, I secured language in the legislation that will allow waste-to-energy to count as a source of renewable energy, thus making the overall Renewable Electricity Standard more attainable for Indiana. In addition, I was able to get a provision in the bill that develops a rebate program to make the purchase of energy-efficient manufactured homes more affordable and accessible.

Southern Indiana possesses the tools to play a key role in this process, and I believe our manufacturing base will attract clean energy jobs. Technological advances in clean energy, such as carbon capture and storage technology, can and will be exported all over the world. Our agriculture community will play a vital role in offsetting green house gases, and will also play a crucial role in cost containment. Finally, our universities, such as Indiana University, are well poised to be at the leading edge of our technological future.

I have been in touch with stakeholders in Southern Indiana, working to ensure that our goals and aspirations in this bill are both well intentioned and achievable. I am happy to report that a major power supplier in Indiana is supportive of the bill continuing to make its way through the legislative process. Again, this bill is at the start of a long process. I look forward to making additional improvements to this bill that will strengthen protections for Hoosier families, our agriculture community and local industries.

Thank you again for contacting me about this important issue. Please feel free to call me at 202.225.5315 if you have any further questions or comments. If you would like to receive periodic email updates on my Congressional activities, please visit http://baronhill.house.gov.

· The CRA study’s findings add to a growing body of evidence that demonstrates cap-and-trade would make American consumers poorer and the products they buy more expensive. Moreover, there will be little, if any, environmental impact to justify the high price U.S. families will have to pay, since the trading system will deliver virtually negligible changes in global CO2 emissions

WAXMAN MARKEY MESSAGE POINTS

· Waxman/Markey is the mother of all pork bills. Lawmakers are carving out allowances -- offering up billions of dollars in free emission credits to favored industries. Washington’s pork propensity could turn well-intentioned policy into a special interest bonanza at the expense of the environment and American families.

· We’ve just been through a financial meltdown brought about by unaccountable, non-transparent trading of complex derivatives. Cap and trade would turn the market for carbon over to the same Wall Street banks that got us into this mess. That’s just unacceptable.

· Since cap-and-trade doesn’t offer much transparency, it opens the door for a great deal of closed-door dealings. And that will likely make for a pork-laden policy. The Waxman/Markey bill is still in its early stages, and lawmakers are already offering up billions of dollars in free emissions credits to favored industries.

· The government-regulated trade of carbon dioxide (CO2) not only implements a complex system susceptible Washington’s costly pork habit, it’s also opens the door to manipulation by Wall Street opportunists. The emissions trading system could drive the creation of risky financial tools like the derivates, hedges, credit default swaps that led to our recent economic crisis and the scandals associated with it.

· A cap-and-trade approach to climate change – both the president’s plan and the Waxman/Markey bill – would create a carbon marketplace that is susceptible to manipulation. As Howard Dean recently said in an interview, “I’m terrified of a Bernie Madoff in the cap and trade business.”

· A recent CRA International analysis, commissioned by the National Black Chamber of Commerce, determined that the federal cap-and-trade system outlined in the Waxman-Markey bill would reduce national GDP roughly $350 billon below the baseline level, cut net employment by 2.5 million jobs (even after accounting for new “green” jobs), and reduce annual earnings for the average U.S. worker by $390 by 2030.

· The CRA study’s findings add to a growing body of evidence that demonstrates cap-and-trade would make American consumers poorer and the products they buy more expensive. Moreover, there will be little, if any, environmental impact to justify the high price U.S. families will have to pay, since the trading system will deliver virtually negligible changes in global CO2 emissions.

· By giving away some 85 percent of emissions permits to favored industries for free, the Waxman/Markey bill would profit special interests at the expense of hard-working families.

______________________________
Mark Warner
Business Development
Faulkner Strategies LLC
12801 Sandy Ct
Granger, Indiana 46530
317-417-7556 Cell
574-286-3295 Fax
http://www.faulknerstrategies.com/

Friends,

I hope every Hoosier will take a little time to investigate what's in the massive cap-and-trade bill that passed by the narrowest of margins Friday in the U.S. House of Representatives. If this bill succeeds in the Senate, Indiana might just as well put up signs saying “closed for business” on its borders.

In my 10 years of closely following Congressional activities, I cannot recall any other bill that would have a more devastating impact on Indiana than this legislation. Not only is it potentially the biggest tax increase I have ever seen, it is the most regressive.

It saddens me to think of what this carbon tax bill will do to Hoosiers on fixed incomes who are already having trouble paying their electric bills. This legislation has the potential to practically double those bills almost overnight.

Seven of Indiana's nine Congressional representatives figured out just how bad the carbon tax bill was for Indiana and voted no. To the two who voted yes, Baron Hill and Andre Carson, I can only ask: What were they thinking!!??

Had they exercised the good judgment of the rest of the Hoosier delegation, the tax bill would have failed.

Admittedly, it would have been hard to read all of the bill's 1,300 pages in the few hours they were available to members of Congress before the vote was taken, but key information was available.

For instance, both the Energy Information Administration and Congressional Budget Office published tables showing exactly how each state's citizens would be affected by so-called “cap and trade” allowances established in the bill.

Those tables show that electricity consumers in Indiana would have to pay $763 million more each year for electricity so their power companies could buy carbon offsets. Only Texas would pay more than Indiana!

Perhaps not surprisingly, the bill allocates extra credits to California and New York so their ratepayers won't see an immediate jump in their electric bills.

It's not clear yet what this bill will do to gasoline prices – but they won't go down. Does anybody remember how painful it was to pay in excess of $4 a gallon?

There are two main reasons Indiana remains one of the better states for manufacturing. Our energy costs are relatively low and we have a good quality work force.

This bill wipes out the first reason and punishes our workers with a major new tax they do not deserve.

Supporters of this legislation will tell Hoosiers the Congressional Budget Office estimates that the average cost per family for carbon offsets will be $175 a year – or, as the spin-doctors are saying, “about the price of a postage stamp per day.”

But I would urge Hoosiers to look closely at just how the CBO reached this conclusion.

The CBO found that the “gross” cost of this legislation would be $890 per household. The CBO then assumed that all of the proposed “rebates” to taxpayers and businesses adversely affected by cap-and-trade would actually take place.

In other words, the CBO is taking Congress at its word that this massive pile of new revenue won't be spent by Congress or applied to the hemorrhaging national debt.

Of course not. Congress will give every penny back. Honest!

What's really going on here is that the CBO was asked to make its estimate under the very best of circumstances, not the most likely of circumstances. Now it becomes clear why so many respected economists are estimating the bill's cost as much higher than what the CBO has published.

I recognize that many Americans are legitimately concerned about climate change and what will happen to the planet if we do not rein in CO2 emissions. But I reject the notion that we have to cripple our economy to address these concerns. The technology exists today to produce energy in many ways without pumping CO2 into the atmosphere.

Here in Indiana, we are moving forward with clean-coal technology that offers a very promising solution. Elsewhere in the world, many countries are moving forward with safe, modern nuclear technology that carries none of the dangers associated with the mega-reactors built a half century ago. And, wind and solar can be made cost-effective in some areas of the country with some initial infrastructure expense.

A combination of all of these technologies would result in far more reductions of CO2 than are likely to be achieved under this carbon tax bill. And, with none of the economic handicaps.

Our only chance of heading off such an economic disaster is for Americans to rise up and declare their opposition to it. And in Indiana, we've got more reasons to oppose this bill – 763 million reasons, to be exact – than any other state but Texas.

Gratefully,

Todd Young

Let’s make this simple. “Cap” means that this legislation will put caps on how much electricity states like Indiana can produce from “nasty” coal and fine them for production beyond those caps. Other states who do not produce electricity this way and have used alternatives (nuclear, solar/wind or purchasing electricity from other sources) would be rewarded with the penalties that Indiana will pay. Absolutely no reductions in carbon emissions will be achieved through this legislation. Cap penalties will be passed on to consumers like you and me and our electric bills will double. The Congressional Budget Office has reported that electricity consumers in Indiana will have to pay $763 million more each year for electricity so their power companies can buy carbon offsets. Only Texas will pay more for its electricity than Indiana!

It is pretty easy to see why costal states would be in favor of this legislation….they stand to receive the “trade” payments that you and I pay because we produce electricity from coal. The real mystery is why Indiana Representatives Baron Hill and Andre Carson voted FOR this bill. In short, YOUR U.S. Representative voted for legislation that will hurt Indiana, eliminate jobs and double YOUR utility bills! Oddly enough, if these two legislators had voted against the bill, their votes alone would have stopped it dead in its tracks. The blame for your future utility bill is theirs!

Here’s the bottom line voters: You are absolutely stuck with Mr. Obama for the next three and a a half years. I understand the reasons why many of you voted for him. I don’t agree with any of those reasons and we spent great efforts to warn you that he would lead the country this way. The most liberal Senator in the U.S. Senate is now living up to his reputation that was no secret before November 4th. We cannot vote him out until 2012. Not true with Baron Hill. Any Congressman who purposely votes to allow legislation that punishes his own constituents needs to go! Next year is your chance to do that. I would recommend that all Hoosiers in the Ninth District let Mr. Hill know that they will vote against him in sixteen months. Our Party would certainly welcome you in our efforts to remove him from office.

Next, I would remind every Hoosier that the bill Mr. Hill just helped pass now goes to the Senate. I’m pretty sure I know how Senator Lugar will vote on this foolishness. I’m not so sure how Senator Evan Bayh will vote but if his previous record is anything to go on, I would expect him to vote to double your utility bills as well. And guess what! You get to vote on Senator Bayh next year too! We may yet have a chance to defeat this legislation in the Senate. History shows however, that unless you contact Mr. Bayh soon and in large numbers stating your opposition, Obama’s “Cap and Punish” legislation will be with us for good.

I think I know how Evan Bayh will vote. We already know that Baron Hill loves the President so much that he was willing to sacrifice Indiana jobs and paychecks to support him. November 2010 is our chance to get rid of him and other legislators like him. By the way, Democrats in the Indiana State House are holding up legislation to balance Indiana’s budget right now and you get to vote on all of them next year too! We already have a whole lineup of very good candidates worthy of your votes getting ready to run in all of the above races. Only sixteen more months!

Dave Matthews
Chairman, Floyd County Republican Party