WASHINGTON— With one heated partisan battle behind it, the climate bill soldiered on to the Senate Finance Committee, where senators on Tuesday began ironing out the costs and economic impacts that could help determine the bill’s ability to pass.
The bill already faces divided support from both parties over concerns it could hurt the energy and manufacturing industries by sending jobs to countries that do not regulate carbon, while providing little environmental benefit.
(Kellen Henry/MNS)
Sen. Max Baucus talks with reporters about the timeline for the climate bill in the Senate Finance Committee
Despite some bi-partisan support in the Senate, co-sponsor Sen. Barbara Boxer, D-Calif., decided to push the bill through her gridlocked Environment and Public Works Committee last week by counting only Democratic votes after Republican senators boycotted the three-day markup.
The finance committee turned the focus from global warming to the economic impacts of the bill, its potential to create jobs and the incentives that would secure firm footing for growth in the renewable energy sectors, with testimony from economists, labor unions and the utility industry.
The bill, sponsored by Boxer and Sen. John Kerry, D-Mass., mandates a 20 percent cut in carbon emissions by 2020, higher than the 17 percent cut called for in the House’s version, whichpassed over the summer.
The Senate bill would set caps on companies’ carbon emissions and create a market for them to trade unused allocations – a provision called “cap and trade.” The mechanism has been criticized by opponents, who say it functions as a tax on carbon, beckons government interference in the market and stands to send American jobs overseas.
As the finance committee chairman, Sen. Max Baucus, D-Mont., will play a major role in how bill moves along. He was the single dissenting Democratic vote in the Environment and Public Works Committee last weekbecause of steep emissions targets. He could hold the bill until after the end of the year, as his committee examines its trade and emission allowances.
On Tuesday, Baucus tempered his concerns with the bill by comparing it to the Clean Air Act of 1990, which resulted in lower cost and fewer job losses than originally thought.
“Let me be clear. We should work to minimize any job losses,” Baucus said. “But we should recognize that in the case of acid rain, the negative consequences were far less than projected.”
The two conservative economists who testified Tuesday said the legislation would depress the economy, but not without receiving questions from Kerry on the validity of some of their research.
Margo Thorning, senior vice president and chief economist for the American Council for Capital Formation, an economically conservative and business-oriented think tank, presented an analysis of the House’s version of the legislation. She found the cap and trade mechanism could reduce total U.S. employment by 80,000 jobs, with a decline between 0.2 and 0.4 percent in Gross Domestic Product by 2020.
Kenneth Green, resident scholar at the American Enterprise Institute for Public Policy, another conservative think tank which supports free enterprise, also voiced concerns about the impacts of cap-and-trade.
“Capandtrade creates a new, poorly understood financial instrument that can be used to leverage debt, potentially creating a massive carbon bubble that bursts once it becomes clear we can’t afford to maintain the scheme,” Green said.
Kerry sparred with the economists at the hearing, citing six other studies which have demonstrated less severe economic impacts, including studies by the Environmental Protection Agency and the government’s Energy Information Administration. He criticized the presented studies for not taking into account the cost benefits of energy efficiency.
“I just find your studies aren’t credible,” Kerry said. “You don’t take into account the cost of inaction.”
However, Iowa Sen. Chuck Grassley, the committee’s highest-ranked Republican, said that the finance committee’s role is not necessarily to determine the environmental value of the bill, but to probe its economic impacts. Grassley also took a stab at the Kerry-Boxer bill’s name, “The Clean Energy Jobs and American Power Act of 2009.”
“By any government regulation, there will inevitably be winners and losers…” Grassley said. “However, an honest cost-benefit assessment requires that we first stop trying to sell this policy as if it will have no cost for Americans and accept the basic economic principle that there’s no such thing as a free lunch.”
With the climate bill falling in line behind the Democrats’ health care bill and more committee debate in the works, the bill’s passage seems unlikely to be smooth or expedited.
Baucus told reporters after the hearing that the markup and the timeline for the legislation would depend on many factors, including the status of the Democrat’s healthcare bill and the U.N.’s summit on climate change, slated forCopenhagen in December.
“There will be other hearings. We’re taking that very seriously,” Baucus said.
But will the committee be ready to markup the bill by the end of the year?
“I don’t know. I can’t promise that we will,” Baucus said.
Kerry also declined to sketch out a timeline for the bill. He told reporters he is concerned with building a strong support base to help reach the 60 votes it needs for the Senate floor by working with Baucus and members of the Agriculture Committee, which also has jurisdiction over the bill. Agriculture chairman Sen. Blanche Lincoln, D-Ark., has said she opposed use of the cap and trade structure in the House’s legislation.
“The main thing to do here is to build the adequate base of support and consensus and that requires sitting with people and working it through,” Kerry said. “If you get into an artificial timeline, then you don’t give people the opportunity to feel that they’re being listened to or their ideas are being processed.”
