Capitol Comment: Cap and Trade is a $3.6 trillion gas tax on all Americans

U.S. Sen. Kay Bailey Hutchison Oct. 29, 2009, 9:00am

There's something the Democratic lawmakers who are pushing cap and trade legislation don't want the public to know. The controversial climate change legislation winding its way through Congress will impose a massive new national gas tax, raising the cost of gasoline and diesel and jet fuels.

An analysis of the Waxman-Markey cap and trade bill revealed this gas tax hike will reach $3.6 trillion and it will impact every American and important segments of our economy.

The goal of this climate change legislation is to actually increase the price of traditional forms of carbon-based energy, such as coal, gas, and oil, so that consumers will respond by using less of it.

Some lawmakers call this "setting the price on carbon." Economists refer to this kind of policy as a price signal. But the bottom line is that the price of energy will go up. Ultimately, all Americans will directly or indirectly pay for the higher fuel prices the cap and trade legislation will precipitate.

Americans travel over 200 million vehicle miles each month, and annually we spend nearly $1.2 trillion on gasoline and oil. The average household spends five percent of its annual budget on fuel.

For many, gasoline is a mandatory expense. And this legislation disproportionately hits middle and lower income households that tend to have longer daily commutes and must drive in order to work. These families will be hit especially hard by the projected $1 per gallon increase for the additional gas tax the cap and trade legislation will bring.

Further, Americans will be double-hit by the gas tax when it results in higher prices for goods and services, such as groceries or utilities, that they must continue to purchase. Energy costs are among businesses' top operational expenses already.

While companies face a variety of energy expenses, ranging from heating and cooling their workspace to powering equipment and lighting, operating their vehicles is the most costly. Every company from the small town local florist to a package delivery service with nationwide operations will be hard hit.

In order for these businesses to withstand the heavier tax burden and to remain profitable, they will be forced to pass these energy cost increases along to consumers through higher prices.

Several industries will be more severely penalized by the gas tax than others. Our nation's farmers and ranchers, who are tasked with producing high quality goods for much of the world, will be harmed by Waxman-Markey's $2 trillion tax on gasoline and $1.3 trillion tax on diesel fuel.

Gas and diesel-fuel powered equipment, ranging from tractors to combines to fertilizing systems, are the operational foundation of American farms and ranches. Under the climate change legislation, they will face $550 million in higher fuel costs in 2020 and $1.65 billion in 2050.

The American trucking industry will be another target of the cap and trade gas tax. In 2007, 1.7 million drivers of tractor-trailers logged 145 billion vehicle miles, consuming 28.5 billion gallons of fuel.

That equates to $34,560 in annual fuel costs. That number will skyrocket under Waxman-Markey. And when you consider that the average self-employed truck driver earns $43,545 in net revenue, the gas tax is essentially a new tax on the middle class.

Of course, truckers will not suffer these higher gas taxes alone. Their costs are shared by all consumers. At some point, nearly everything bought or sold must be shipped from a manufacturer to a retailer. Thus, the sweeping effects of the gas tax will actually harm our entire economy.

Despite all this pain for families, farmers, truckers, and businesses, there is no gain for our environment. Even the U.S. Environmental Protection Agency Administrator, Lisa Jackson, admits unless China and India impose similar draconian taxes and regulations there will be no effect on world temperatures.

So what is the purpose of the increase in costs to every American, and the consequent loss of jobs, if they will not have an effect on the global environment?

Under the majority Congressional leadership, trillion dollar figures have been discussed so nonchalantly in Washington recently that, unfortunately, they're starting to lose their shock value. Americans must know that the $3.6 trillion gas tax is a very real number with consequences for all of us.

That is why I will fight the Waxman-Markey and Kerry-Boxer bills. We can improve the environment and economy through American ingenuity and technology advancement, not with taxes and mandates that increase costs and burden American families and businesses.

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