Last Friday, House Republicans re-introduced legislation that would fund the federal government for the remainder of fiscal year 2011. This iteration included deeper cuts that would reduce spending for the rest of the year by a total of $100 billion compared to the President’s budget proposal. Though the new proposal includes $16 billion in unwise cuts to security spending, taking their initial spending reduction proposal back to the drawing board for more cuts shows lawmakers’ commitment to putting the federal budget on a sustainable path, and is a promising step forward.
Among the several needed cuts made by the House majority’s revamped proposal is a provision to prohibit funding for the Environmental Protection Agency (EPA) to regulate carbon dioxide (CO2) under the Clean Air Act. This spending cut proposal is a move that makes economic and fiscal sense. Congress never intended the Clean Air Act to cover carbon dioxide (CO2), and the result of doing so would be economically catastrophic.
As Congress follows through on its commitment to rein in federal spending, spending reductions within the EPA should be a no-brainer. The EPA recently started the process of regulating CO2 emissions by requiring facilities that emit more than 25,000 tons of CO2-equivalent per year to report its emissions to the EPA, and newly constructed or modified facilities that emit more than 75,000 tons per year will require EPA-issued greenhouse gas permits. These rules mostly affect larger energy-intensive companies first (over 10,000 entities), including fossil fuel power plants and petroleum refineries. But because most of America’s energy needs come from carbon-emitting fossil fuels, American energy consumers will be hit hard.
These higher energy prices have rippling effects throughout the economy. It may well be that some businesses will experience an increase in employment, such as General Electric and Siemens, which stand to make millions because they are the two largest manufacturers of the coriolis flow meters used to measure emissions. But overall, companies are burdened with significantly higher energy costs and higher administrative costs that will be reflected in their product prices, which will ultimately affect American consumers. The higher prices make businesses’ products less attractive to consumers and thus less competitive. As a result, total employment would drop along with the drop in sales. The overall economic effect will be trillions of dollars extracted from our economy and over 1 million jobs killed—even after counting for the highly touted “green job” creation.
Congress should use every tactic available to prohibit the EPA from regulating CO2. Congress should legislatively prohibit the EPA from regulating CO2, use its oversight authority to investigate the agency’s scientific distortions and flawed conclusion that CO2 is a harmful pollutant and use its power of the purse to deny any funds to the EPA to regulate greenhouse gases. Congress should also ensure that unelected bureaucrats cannot regulate our economy using other acts besides the Clean Air Act, such as the Endangered Species Act, the Clean Water Act, and the National Environmental Policy Act.
Reining in the powers of the EPA is sound policy and would move Congress one step closer to achieving the deep and widespread federal spending cuts crucial to putting the nation’s fiscal house on a sustainable path in the years to come.
Co-authored by Kathryn Nix.
Nicolas Loris is a Research Assistant at The Heritage Foundation’s Roe Institute for Economic Policy Studies. Loris studies energy, environment and regulation issues such as the economic impacts of climate change legislation, a free market approach to nuclear energy and the effects of environmental policy on energy prices and the economy.
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