Make no mistake, the so-called Cut Inflation Act unveiled Wednesday by Senate Majority Leader Chuck Schumer, DN.Y., and Sen. Joe Manchin, DW.Va., will do nothing to what his supporters claim – in fact, he will do it rather the other way around.
If passed, the law will increase the prices Americans pay for energy, make the United States less energy secure, and do absolutely nothing for the environment. Perhaps more insidious, it will hurt Americans who live in coal-rich states, like Manchin’s West Virginia, the most.
Focusing only on the energy and climate section of the law, the larger numbers are staggering. Like Oprah Winfrey handing out freebies to her studio audience, the law would use $369 billion in taxpayer funding to distribute favors to all special interests in Washington, D.C.
Renewables — you get $30 billion!
Utilities – You Get $30 Billion!
Doors and windows, you get 10 years of subsidies!
Transportation—you get tens of billions of dollars!
The list spans hundreds of pages and details a combination of tax credits, subsidies and regulations for energy choices preferred by DC’s elite, like wind and solar, while driving up costs. to access more reliable and abundant sources of energy such as gas and oil on federal lands.
The entire bill is based on misperceptions (or misrepresentations) about energy markets. Not only does the energy section of the law begin with extending energy tax credits for technologies that we are continually told are already competitive, but it also dictates a series of new labor and wage regulations. It’s odd given how many times President Joe Biden tells us about the good-paying jobs his environmental agenda will create.
Both cannot be true. Either renewable energy is competitive and creates good, well-paying jobs – in which case the law is useless – or we are being lied to, and the law is just a cynical effort to line the pockets of special interests, hold bureaucrats accountable of Washington and weaken American individuals and businesses in the name of promoting a left-wing agenda.
All of this leads to less energy security, and here’s why:
American energy consumers, that is, families and businesses, value affordability and reliability in their energy choices. In a free enterprise system, US energy companies compete for this market and put a premium on what consumers want. The result is the current American power generation system that, when allowed to operate with minimal government interference, powers the American economy with the affordable, reliable energy we all want.
America’s free enterprise system will also produce the kind of technological advances that Biden and his fellow Green New Dealers say they want. Indeed, as Americans’ preferences change, the market will respond with companies offering new products to meet that demand.
And while that new solar panel or electric vehicle may be more expensive at first, competitive pressures will force manufacturers to develop new business practices and innovate to bring prices down. The result is more energy choices, lower energy prices and a strong and safer energy economy.
But the Inflation Reduction Act replaces this tried and tested system with the historically disproven approach that allows politicians and bureaucrats to attempt to control the economy through legislative fiat and financial corruption.
The problem is not just the waste of taxpayers’ money, but how these policies distort long-term investment decisions.
Huge government subsidies to certain industries make those industries attractive investments, and private investment begins to flow into what the government wants rather than what Americans value.
It starves proven energy sources and promises new investment while funding energy sources and products that consumers otherwise wouldn’t want.
Over time, the market shifts from offering independent competitive products to offering expensive and less reliable products that depend on taxpayer support.
It’s not just theory. Despite decades of subsidies and government-sponsored advertising, wind and solar remain dependent on taxpayer support and government mandates.
Or consider the oil refining industry, which has lost significant production capacity in recent years. It’s not because Americans no longer appreciate affordable gasoline, but because political leaders like Biden have demanded that refiners blend ethanol and have repeatedly declared their desire to end the gas and oil industry.
Americans are now less secure because these policies undermine the refining industry’s incentive to expand current capacity and invest in future capacity, preventing America’s energy infrastructure from meeting demand. The result is higher prices at the pump. The Schumer-Manchin-Biden Act would make matters worse with its massive biofuel subsidies.
According to a summary of the law distributed by Senate Democrats, the bill “would reduce carbon emissions by approximately 40% by 2030.” My colleagues at the Heritage Foundation recently produced a study of an eerily similar policy.
Using a clone of the model used by Biden’s Energy Information Administration, they analyzed the impact of reducing carbon dioxide emissions by 44% by 2030, and the results are staggering.
In summary, they found that such carbon dioxide reductions would result in average annual job losses of 1.2 million with peak annual job losses reaching 7.8 million. Add to that $7.7 trillion in lost economic growth. This represents a loss of income of $87,000 per family of four and an average increase in household electricity expenses of 23%.
Since the target of the Schumer-Manchin-Biden approach is carbon dioxide and coal, the negative impact would be exacerbated in states that rely heavily on the consumption, extraction or refining of conventional fuels like oil, natural gas and coal.
Consider West Virginia, which is not only the second largest coal producer in the country, but also gets 88% of its electricity from coal. It is no exaggeration to predict that the Schumer-Manchin-Biden plan would be devastating for the state.
Some might say the massive economic costs are worth it if we “save the planet”. But here’s the thing: the planet is not in environmental peril. Even the United Nations Intergovernmental Panel on Climate Change downgraded its most extreme climate projections to low probability in its latest assessment.
The actual numbers bear this out, with the death toll from climate-related disasters falling by 96% over the past century. And even if it didn’t, this bill wouldn’t do anything to help.
In fact, eliminating all carbon dioxide emissions from conventional fuels would have virtually no impact on global temperatures, even taking the global warming alarmists’ assumptions at face value (which we absolutely shouldn’t ). Indeed, my colleague from Heritage, Kevin Dayaratna, used the climate model developed by the National Center for Atmospheric Research to demonstrate this fact.
Every American should be very clear about what the so-called Inflation Reduction Act will and will not do. It will line the pockets of special interests, advance a radical leftist agenda, impoverish Americans and give them fewer energy choices. And it will not keep its promises: it will have no impact on the climate and it will not improve the energy security of Americans.
This piece originally appeared in The Daily Signal