Posted: 10/29/2003
What impact would McCain-Lieberman have on the U.S. economy?
According to an analysis by the Energy Information Administration (EIA) and the Congressional Budget Office, it would be disastrous. For example, the restrictions would likely increase energy costs by 30-50 percent, and reduce U.S. GDP by $106 billion. That amounts to a tax increase of about $1,000 on every American household.
Specifically, the proposed restrictions would cause drastic reductions in the use of coal. Some environmental activists would applaud this, but it would likely result in the elimination of over 50,000 coal industry jobs. Not exactly a recipe for an economic recovery. And it’s not just coal. The EIA study concludes the price of natural gas would increase 16 percent in 2010 and 46 percent in 2025.
What impact would this all have on consumer spending, which many acknowledge has saved the economy in recent years? The EIA study concludes, “because of lower real disposable income resulting from higher prices for energy, consumers will reduce overall spending and savings. Energy services also represent a key input in the production of goods and services. As energy prices increase, the costs of production rise, placing upward pressure on the nominal prices of all intermediate goods and final goods and services in the economy, with widespread impacts on spending across many markets.”
If enacting these restrictions would save the world from environmental collapse, as many environmental activists would have us believe, it might be worth the economic pain. One problem though, neither Kyoto nor McCain-Lieberman’s Kyoto Lite would have any impact on future global warming. According to the National Center for Atmospheric Research, if all the signatories meet their greenhouse gas reduction targets, the temperature difference would be so small it couldn’t be measured by ground-based temperature gauges.