DATE: October 21, 2003

BACKGROUND: Senators Joseph Lieberman (D-CT) and John McCain (R-AZ) have proposed a de facto energy tax on the American public that most likely soon will be debated on the Senate floor. Their bill, titled the "Climate Stewardship Act of 2003" (S.139), would require the commercial, industrial, transportation and electric power sectors in the United States to reduce their emissions of carbon dioxide and other greenhouse gases to 2000 levels by 2010 and to 1990 levels by 2016.1 These reductions are strikingly similar to those in the Kyoto Protocol, which would have required the United States to reduce its' emissions to five percent below 1990 levels by 2012.2 In 1997, the U.S. Senate voted 95-0 on Senate Resolution 98, agreeing not to sign international treaties like Kyoto designed to combat so-called global warming that would harm the U.S. economy and exempt developing nations from emissions reductions.3 The Kyoto Protocol fails this test, as does the McCain-Lieberman proposal.

TEN SECOND RESPONSE: The Senate in 1997 unanimously agreed -- including "yea" votes by both Senators Lieberman and McCain -- that the Kyoto agreement "could result in serious harm to the United States economy, including significant job loss, trade disadvantages, increased energy and consumer costs, or any combination thereof." If only the Senators thought the same today.

THIRTY SECOND RESPONSE: This bill, which is essentially an energy tax, would suppress the amount of energy that can be produced, lead to energy scarcity and higher energy prices. It would harm all sections of the American economy and place a greater financial burden on those that can least afford it - the economically disadvantaged.

DISCUSSION: IThe price increases caused by a restricted supply of energy are regressive, meaning that America's poor and minorities - who already spend a greater percentage of income on energy expenses - would be forced to pay a proportionately higher rate than wealthy Americans.4 According to the federal Energy Information Administration, the average household's energy bill, including the cost of fuel for personal transportation, would rise by 13 percent per year in 2025, or $444 more than what would be paid without the Lieberman-McCain energy tax. Over the same period of time, gasoline prices would rise by 40 cents per gallon and electricity costs would increase by 46 percent.5 Many of America's poor and minority households do not have the disposable income that would allow them to pay for such increases.

FOR MORE INFORMATION:

Bonner Cohen, National Policy Analysis #490, "Tinkering with Energy is Playing With Fire: Cap and Trade Schemes are Regressive, Placing Burdens on Low-Income Communities," September 2003, at http://www.nationalcenter.org/NPA490.html

Amy Ridenour, Ten Second Response #TSR72903, "McCain and Lieberman Push for New Anti-Global Warming Legislation," January 2003, at http://www.nationalcenter.org/TSR1803.html

Amy Ridenour, Ten Second Response #TSR72903, "Inhofe Challenges Colleagues to Understand Basic Facts About Climate Change Debate," July 2003, at http://www.nationalcenter.org/TSR72903.html

Bonner Cohen, National Policy Analysis #477, "No Excuse for Natural Gas Shortage," August 2003, at http://www.nationalcenter.org/NPA477.html

James M. Taylor, "McCain-Lieberman Will Be Costly, Energy Department Warns," Heartland institute Environment News, October 1, 2003, at http://www.heartland.org/Article.cfm?artId=12890

Brian F. Mannix, "A Mountain of Money," TechCentralStation.com, October 9, 2003, at
http://www.techcentralstation.com/100903E.html

S. Fred Singer, Ph.D., "Kyoto Breakthrough," The Washington Times, October 8, 2003, at http://washingtontimes.com/commentary/20031007-095710-8878r.htm

Global Warming Information Center at http://www.nationalcenter.org/Kyoto.html

by Christopher Burger, Program Coordinator,
John P. McGovern, MD Center for Environmental and Regulatory Affairs
The National Center for Public Policy Research

Contact the author at: 202-543-4110 or [email protected]
The National Center for Public Policy Research
501 Capitol Court, N.E.
Washington, D.C. 20002

Footnotes:

1 "Analysis of S. 139, the Climate Stewardship Act of 2003," Energy Information Administration, U.S. Department of Energy, Washington, D.C., June 2003, available at http://www.eia.doe.gov/oiaf/servicerpt/ml/pdf/sroiaf(2003)02.pdf as of September 8, 2003.

2 Mary Novak, "The Kyoto Protocol: Can Annex B Countries Meet Their Commitments?," American Council for Capital Formation, October 1999, available at http://www.accf.org/AnnexB1099.htm as of September 8, 2003.

3 "Bill Summary & Status for the 105th Congress," S.RES 98, Library of Congress, Washington, D.C., available at http://thomas.loc.gov/, or, for the text of the Byrd-Hagel Resolution, visit http://www.nationalcenter.org/KyotoSenate.html.

4 "Shifting the Cost Burden of a Carbon Cap and Trade Program," Congressional Budget Office, U.S. Congress, Washington, D.C., July 2003, p. 2.

5 "Analysis of S.139, the Climate Stewardship Act of 2003," p. 2.