Waxman-Markey: An Exercise in Unreality

Waxman-Markey: An Exercise in Unreality

“Waxman-Markey … seeks a first in economic history: rationing without scarcity or price inflation. [It] allows generous ‘offsets’ so that carbon-based energy does not, in fact, become scarce. The bill does, however, contain a multitude of new regulations, product-efficiency mandates, and spending programs that will require extensive managerial attention from both the public and private sectors, though to much less effect than promised.”

– Steven F. Hayward and Kenneth P. Green, July 2009

The Waxman-Markey energy bill passed by the House of Representatives is a great illustration of how the government can take an idea that sounds good in theory – emission trading – and turn it into a nightmarish piece of legislation that is larded with pork; perverted by special-interest horse-trading; and will most likely be not only ineffective, but will produce perverse and negative consequences for both the economy and the environment.

As my colleague Steven Hayward and I point out in our most recent AEI Environment and Energy Outlook:

  • The Waxman-Markey legislation will do for climate change what Sarbanes-Oxley did for financial regulation: establish a big new bureaucracy that imposes substantial costs on the economy.
  • The legislation enumerates six hundred tasks the EPA must perform and gives other agencies significant administrative roles.
  • The last time GHG emissions were at the Waxman-Markey target for 2050 was 1910.
  • The liberal use of “offsets” in the bill suggests that even if Waxman-Markey works perfectly, fossil fuel emissions will be reduced by no more than 50 percent [versus 83 percent).
  • Countries such as Grenada and Belize have per-capita emissions close to the Waxman-Markey 2050 levels.
  • The legislation is a giveaway to the people environmentalists claim are destroying the planet
  • .

  • Waxman-Markey is unrealistic and will not fix the problem.

Unfortunately, the Senate is using Waxman-Markey as its launching point for crafting their own legislation. As Steve Hayward jokes, given that Waxman-Markey gives away 85% of the emission permits, and given that the Senate hasn’t started its own horse-trading and buy-offs yet, by the time this is all done, the government might give away 150% of the the available permits. But there is nothing funny about a 1,428-page bill that has been likened to an energy road to serfdom.

The devil is in the details, as it is often said. Waxman-Markey’s devil is monstrously big, and it begins qualitatively, not only quantitatively, by setting up the machinery of control that would politicize energy for an open-ended future. Watering down a bad bill is not good enough.

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Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.