One of the centerpieces of the Obama administration’s agenda is H.R. 2998, the so-called cap-and-trade legislation, which passed the House of Representatives June 26 by a narrow 219-212 margin.
Supporters believe that the bill’s objective — slashing greenhouse gas emissions by 83 percent below 2005 levels by 2050 — can spur energy independence, cut pollution, and create green jobs, all at a minimal cost, pegged by President Obama at about a postage stamp a day for the average American household.
Rep. G.K. Butterfield, a Democrat representing North Carolina’s 1st Congressional District, voted for the bill. Spokesman Ken Willis told Carolina Journal Butterfield “feels there is empirical evidence that humans affect global climate change and the cost of inaction would be higher socially, financially, and environmentally than would taking action.” Willis added that “the bill will have a net positive economic effect on low-income Americans, because 60 percent of greenhouse gas allowances will be used to offset the higher cost of energy.”
Critics, however, say the bill is in fact a national energy tax that will transfer trillions of dollars from consumers to big business over time, and control American lifestyles and behaviors in unprecedented ways while having a negligible impact on global climate change.
Take the bill’s provisions dealing with housing policies. The bill creates and empowers a complex new web of departments, agencies, commissions, advisory boards, and oversight groups at both the federal and state level, many of which will be led by administrators appointed by the president.
Among its many mandates, this sweeping legislation sets national energy-efficiency and renewable standards for utilities and creates national energy labeling and building codes for real estate. By 2012, new homes would have to be 30-percent more energy efficient than the law now requires, and the regulations would mandate homes built in 2016 and later to be 50-percent more energy- efficient than they are now. The model for these new codes comes from California, which economists blame for helping drive up the cost of homes beyond sustainable levels.
(The original legislation would have required homeowners to retrofit existing homes to the new standards when offering them for sale. But that mandate was removed as part of a 300-page “manager’s amendment” added to the bill hours before it reached the House floor.)
Government-imposed energy-efficiency standards will become part of the mortgage underwriting process, with special lending consideration given to “very low-, low-, and moderate-income families” by means of “lower debt-to-income ratio qualification standards.”
For the first time ever, the secretaries of Energy, Education, and Agriculture, along with the administrator of the Environmental Protection Agency, will be empowered to “develop and recommend model mortgage products and underwriting guidelines” that incorporate “energy-efficiency upgrades and location efficiencies in new mortgage loan transactions.”
Under the location-efficient mortgage standard, a borrower’s income for mortgage qualification purposes can be adjusted up or down depending on whether the home for which the loan is to be made will “result in decreased transportation costs for the household.” If not, the property owner will pay more.
Real estate appraisal standards will be revised to include national energy-efficiency regulations. New programs will be created to train, certify, and license appraisers who must consider any renewable energy sources, energy efficiency, or energy-conserving improvements or features of the property being appraised.
Moreover, to meet Smart Grid peak energy reduction goals, Americans will pay much higher energy rates if they use common household products and appliances during the hours of the day that energy consumption is highest. Utilities will be allowed to recoup costs for complying with the standards and can differentiate rates based on “time of use.”
For consumers with plug-in electric drive vehicles, the Federal Energy Regulatory Commission will be authorized to create technology that individually tracks vehicle location, linking that information with the consumer’s electric utility account for automatic billing of electricity usage.
In a phone interview, Ben Lieberman, senior policy analyst in energy and the environment at The Heritage Foundation’s Roe Institute for Economic Policy Studies, said “this bill will inflict economic harm, and believers of global climate change know they have to do serious economic harm to make people change their behavior.”
Americans will pay thousands more each year in higher energy, housing, transportation, and food costs, and “those most affected will be poorer Americans who spend a greater percentage of their income on housing and energy,” Lieberman said.
“Poor people are going to pay a lot more for electricity,” said billionaire investor Warren Buffett in a recent interview with CNBC. The longtime donor to Democratic Party candidates and causes is one of the few high-profile Democrats opposing the bill.
The speed at which this bill passed left little time for debate. The bill took up more than 1,000 pages before the 300-page “manager’s amendment” was added at the last minute.
All five Republicans and two of the eight Democrats from North Carolina’s delegation to the House of Representatives voted against the bill. Democrats voting no were Reps. Mike McIntyre and Larry Kissell, representing the 7th and 8th Districts, respectively.
In a written statement to CJ, Kissell said he “voted against the cap-and-trade legislation because it was not right for our district. . . . Our unemployment numbers are in double digits and our families are struggling to put food on the table. Now is not the time to raise energy prices on our struggling families and our hardworking farmers.” McIntyre’s office did not respond to requests for comment.
Phil Feagan, spokesman for 4th District Rep. David Price, said the congressman “closely reviewed the bill,” but did not read it before voting. “Usually, reading a bill from start to finish is not helpful,” Feagan said. “The congressman relied on cost estimates provided by the Congressional Budget Office, and the bill provides many offsets for consumers to lower the impact of this legislation on poorer Americans. He stands behind his vote.”
Karen McMahan is a contributor to Carolina Journal.