AMERICAN ISSUES PROJECT

What exactly does Congress intend to do with cap-and-trade?  The bill awaits the attention of lawmakers as the efforts by Democratic leadership to dictate an overhaul of the American health-care system convulses and stalls.  The House passed Waxman-Markey in early July, but that came before the revelation to most voters of the radical nature of the Democratic agenda, which the health-care debate has made obvious.  The Senate has put off any consideration of cap-and-trade probably until next year, and that assumes the Democratic caucuses can keep enough of their members on board to pass that.

That hasn't kept people from poking at Waxman-Markey, however, even in some surprising circles.  One Senator expressing a great deal of skepticism these days is Russ Feingold (D-WI), one of the most reliably liberal votes in the upper chamber.  Feingold may be liberal, but he also has to get re-elected, and Feingold has begun to discover just how badly Waxman-Markey skews emission credits to favor certain states over others.

He's not the only one, either.  The New York Times reports that other Midwestern states have looked at a recent EPA report on the impact of Waxman-Markey on emissions credits to the various states.  Very clearly, a bias in allocations can be seen, which makes Waxman-Markey a lot less about carbon emissions and a lot more about redistributing wealth on a state-to-state level:

A new U.S. EPA analysis requested by Sen. Russ Feingold (D-Wis.) is spawning a lobbying frenzy among Midwestern utilities that claim the document shows they will be treated unfairly under federal climate legislation.

They say the assessment (pdf) reveals that states like California will receive a financial windfall under a global warming bill, while states like Wisconsin will not get enough help and will have to spike electricity rates as a result.

"The EPA document just confirms the formula will disadvantage Midwest states for decades to come while the coastal states will hit a 'federal jackpot' every year over the life of the new program," said Zachary Hill, senior manager of federal government affairs at Alliant Energy, a Wisconsin-based utility.

They have good reason to complain.  When looking at the results of the allocations, a pattern emerges that shows how Reps. Henry Waxman (D-CA) and Edward Markey (D-MA) favored their own states - and mainly those that favor Democrats. 

The table from the EPA analysis shows the current assumed emissions of each state and the allocation of emission credits for 2012.  In Waxman-Markey, the formula supposedly used to derive this weighs emissions and load equally to determine which state gets how many credits, in millions of tons, for emissions for the year 2012, when the system takes effect.  States that need to emit more would have to buy carbon credits from other states willing to sell excess credits.

So who would need to buy those credits?  Seventeen states have at least 25% of their current emissions stripped from them in this process, again in millions of tons of carbon emissions:

Notice anything odd about that list?  Most of the Midwestern states get hit the hardest, as well as most of the Rust Belt.  Most are also cold-weather states, with Hawaii being a notable exception to the rule.  Wisconsin is the ninth-ranking state on this list, which is why the bill got Feingold's complete and undivided attention.

Which states did the best?  This should surprise no one.  Twelve states lose no emissions credit at all, one loses less than 5%, and two actually get more credits than their current emissions require:

These states will have excess credits to sell if they can succeed in driving down emissions even slightly.  Notice a pattern here?  The entire West Coast gets plenty of credits.  The Northeast does as well, from New York to Maine, Vermont, New Hampshire, Rhode Island.  Markey's Massachusetts only has to cut more than a single unit in order to have credits to sell.  Meanwhile, Waxman's California and the Democratic stronghold of New York already have credits to sell to raise cash, primarily from Midwestern states.

What exactly does Waxman-Markey accomplish?  It imposes arbitrary emissions limits on states, enforced by the EPA.  It demands either compliance or the purchase of credits from either the government or other states.  The federal government will use the money derived from the sale of these credits to fund favored programs, money Congress will allocate through appropriations and earmarks for pet projects back home. 

In other words, it sucks money out of the Midwest and Rust Belt and redistributes it to the West Coast and Northeast, two regions with strong support for Democrats.  Feingold is right to object to it, as are the millions of people living in the states that will have to pay skyrocketing prices to buy energy.  It's the equivalent of Minnesotans paying state tax in both Minnesota and California, and Wisconsinites paying in both Wisconsin and New York.  The entire scheme is a shell game intended to bilk suckers in the sticks for the benefit of the sophisticates on the coasts. 

Ed Morrissey writes for Hot Air, where he also has a daily political talk show. Ed has written for the Washington Post, the New York Post, the New York Sun, and has made numerous television and radio appearances. He lives in Minnesota with his wife, son, and two granddaughters.

Posted 10-15-2009 9:38 PM

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