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A Project of The Annenberg Public Policy Center

Obama’s GOP Critics: Carbon Copies

In his oil spill speech, President Barack Obama praised "a strong and comprehensive energy and climate bill." A chorus of Republican critics denounced the same thing as a "job-killing energy tax." Both sides know that battles are won or lost on how an issue is framed. And the truth is more complicated than either side admits.

House Republican Leader John Boehner issued his statement even before the speech was given:

Boehner: President Obama should not exploit this crisis to impose a job-killing national energy tax on struggling families and small businesses.

Rep. Bob Latta, a Republican lawmaker from Ohio, must have thought that sounded pretty good. He put out an identical statement shortly after the address:

Latta: President Obama should not exploit this crisis to impose a job-killing national energy tax on struggling families and small businesses.

Another House Republican, Roy Blunt of Missouri, was on board with the idea, too:

Blunt: I was stunned to hear the president use the BP oil spill disaster as an opportunity to push for his job-killing national energy tax plan.

That "job-killing national energy tax" phrasing has been part of the GOP songbook since at least last fall. The "national energy tax" Republicans are referring to is the cap-and-trade legislation passed by the House a year ago to curb greenhouse gas emissions (the Waxman-Markey bill). There’s a cap-and-trade bill pending in the Senate as well, sponsored by Democratic Sen. John Kerry and Independent Sen. Joe Lieberman. Both bills, while not identical, put a price on carbon emissions. In his June 15 speech Obama referred approvingly to the House bill:

Obama: Last year, the House of Representatives [passed] a strong and comprehensive energy and climate bill –- a bill that finally makes clean energy the profitable kind of energy for America’s businesses. Now, there are costs associated with this transition. And there are some who believe that we can’t afford those costs right now. I say we can’t afford not to change how we produce and use energy -– because the long-term costs to our economy, our national security, and our environment are far greater.

The cap-and-trade legislation is not a "tax" in the traditional sense. But it does aim to raise prices of carbon-based fuels. As for the "job-killing" part of the Republicans’ catch-phrase, official estimates put the potential constraint on future job growth over the next 20 years at somewhere between 388,000 (under the most optimistic assumptions) and 2.3 million. (For details, see our Oct. 27 article, "Cap-and-trade: ‘Green Jobs’ or Job Killer?") Based on those estimates, CBO Director Doug Elmendorf testified last year that "total employment would probably be reduced a little compared with what it would have been without such a policy."

That was all in reference to the House bill, however. A different bill is now pending in the Senate, and sponsors Kerry and Lieberman say "job creation" is one of their goals. So far there has been no official estimate of the employment effects of their American Power Act. But one Washington think tank has published a policy brief projecting a modest net gain in jobs.

Researchers Trevor Houser, Shashank Mohan and Ian Hoffman, in a brief published by the Peter G. Peterson Institute for International Economics, estimated that the loss of jobs brought about by higher energy prices and reduced drilling and mining activities would be more than offset by added spending required in the electricity sector. As a result, their computer modeling predicts an average net gain of 203,000 jobs through the year 2020.

Houser, et al, May 2010: The American Power Act prompts $41.1 billion in annual electricity sector investment between 2011 and 2030, $22.5 billion more than under business as usual. Given that the United States is currently below full employment with most economists projecting a slow labor market recovery, this investment is more stimulative than inflationary in the first decade, resulting in an average annual increase in US employment of 203,000 jobs above business as usual, with the net of the jobs lost in fossil fuel production and as a result of higher energy prices between 2001 and 2020.

We’re told that CBO is looking at the Kerry-Lieberman bill as well, though there is no guarantee that it will emerge as the main Senate energy bill.

Because another thing the president said last night? "I’m happy to look at other ideas and approaches from either party."