The Economic Costs

The Economic Costs of the Lieberman-Warner Climate Change Legislation
Center for Data Analysis Report #08-02

Members of Congress are considering several bills designed to combat climate change. Chief among them is Senate bill 2191--America's Cli­mate Security Act of 2007--spearheaded by Joseph Lieberman (I-CT) and John Warner (R-VA). This bill would set a limit on the emissions of green­house gases, mainly carbon dioxide from the com­bustion of coal, oil, and natural gas.

Since energy is the lifeblood of the American economy, 85 percent of which comes from these fossil fuels, S. 2191 represents an extraordinary level of economic interference by the federal gov­ernment. For this reason, it is important for policy­makers to have a sense of the economic impacts of S. 2191 that would go hand in hand with any pos­sible environmental benefits. This Center for Data Analysis (CDA) report describes and quantifies those economic impacts.

Our analysis makes clear that S. 2191 promises extraordinary perils for the American economy. Arbitrary restrictions predicated on multiple, untested, and undeveloped technologies will lead to severe restrictions on energy use and large increases in energy costs. In addition to the direct impact on consumers' budgets, these higher energy costs will spread through the economy and inject unnecessary inefficiencies at virtually every stage of production and consumption--all of which will add yet more financial burdens that must be borne by American taxpayers.

S. 2191 extracts trillions of dollars from the mil­lions of American energy consumers and delivers this wealth to permanently identified classes of recipients, such as tribal groups and preferred tech­nology sectors, while largely circumventing the normal congressional appropriations process. Unbound by the periodic review of the normal bud­getary process, this de facto tax-and-spend program threatens to become permanent--independent of the goals of the legislation.

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