SARAH PALIN ON CAP&TRADE

The 'Cap And Tax' Dead End
Sarah Palin, July 14, 2009 (Washington Post)

SUMMARY
Now it is clear what the soon-to-be former Governor Palin intends to do with her newly proclaimed freedom from political responsibility. She will join together with Ann Coulter and Monica Crowley in the ranks of conservative women speaking out for the Party of No.

Palin’s first target: “I am deeply concerned about President Obama's cap-and-trade energy plan, and I believe it is an enormous threat to our economy. It would undermine our recovery over the short term and would inflict permanent damage.”

Mistake number 1: The cap&trade system recently passed as part H.R. 2454, the American Clean Energy and Security Act of 2009 (ACESA), comprehensive energy and climate legislation, was not written by the President but by Representative Henry Waxman (D-Calif), Chair of the House Energy and Commerce Committee, and Representative Ed Markey (D-Mass), Chair of the House Energy Committee.

Ever larger portions of allowances will be auctioned to generate federal revenues. (click to enlarge)

Mistake number 2: Cap&trade is not an “energy plan” but a way of dealing with the greenhouse gas emissions (GhGs) that are the etiological factor in global climate change. Cap&trade will, however, generate revenues that will, in part, be invested in a New Energy economy to create jobs and more revenues and build New Energy volumes to bring the cost of emissions-free energy down over the long run.

ACESA also includes a very wide range of incentives and prescriptions to expand and improve U.S. energy policy.

As part of its effort to bring the U.S. into the world’s fight against climate change, ACESA includes a compromise cap&trade system that is most definitely NOT the one proposed by the President. If it was President Obama’s cap&trade system, it would be much stronger. Instead, it is the best cap&trade system the imperfect political process can move through Congress in this immensely difficult year. If the ACESA legislation manages to get through the Senate and to the President’s desk, it is highly likely he will sign it and take ownership of it because, unlike the soon-to-be former Governor, the President understands politics is the art of the possible and understands a good leader stays and fights for something better the next time around rather than retreating to a corner from which to shout “No.”

Revenues will be used to ease the impacts. (click to enlarge)

The soon-to-be former Governor proclaims that the unemployment rate is at “its highest mark in more than 25 years and is expected to continue climbing” and worries that a cap&trade system will aggravate the situation: “Job losses are so certain under this new cap-and-tax plan that it includes a provision accommodating newly unemployed workers from the resulting dried-up energy sector, to the tune of $4.2 billion over eight years. So much for creating jobs.”

The soon-to-be former Governor is apparently so in love with saying “no” she cannot appreciate the qualities of a plan that says “yes.” The transition to a New Energy economy, like all transitions, will cause changes. Energy legislation passed during the years of compassionate conservatism (now thankfully gone by) simply funneled opportunity to the entrenched Old Energy establishment. Among the many important things the legislation now in Congress does, it (1) provides for the funding of New Energy, (2) caps and progressively reduces GhG spew, (3) creates a market-based system through which businesses can profit if they stay competitive and (4) provides support and retraining for those caught in the transition.

Covering the costs of transition is what the soon-to-be former Governor rightfully notices as a significant amount of money included in the legislation for “newly unemployed workers…” It is aimed at moving such workers out of jobs in Old Energy that absorb huge taxpayer subsidies, generate spew, and will eventually expend available raw materials and into jobs in New Energy and Energy Efficiency that are based on repowering the nation with inexhaustible domestic raw materials like sun and wind that do not spew, jobs that are not based on burning but on building, jobs that cannot go away to other countries where life and labor are cheaper because they are done in and for U.S. homes, offices, public places and public spaces.

The soon-to-be former Governor seems to have spent so much time supporting her husband’s oil & gas industry activities that she didn’t get to the well-documented reports from the solar energy and wind energy and Energy Efficiency industries showing the millions of jobs that will come out of building and maintaining New Energy and retrofitting the nation for Energy Efficiency. (See, for example, ACEEE SAYS ENERGY/CLIMATE BILL SAVES MONEY, MAKES JOBS and MORE JOBS IN WIND NOW THAN IN COAL and SOLAR ASKS FOR POLICY, PROMISES JOBS IN SUN)

The soon-to-be former Governor closes her trifling effort at a “think-piece” (despite its clear lack of substantive thought) with a predictable diatribe about how great Alaska is doing with its energy. A few points about that.

Palin's pipeline may need a cap&trade system to get built. (click to enlarge)

She contends that U.S. energy policy must shift the national economy away from dependence on foreign sources: “We have an important choice to make. Do we want to control our energy supply and its environmental impact? Or, do we want to outsource it to China, Russia and Saudi Arabia? Make no mistake: President Obama's plan will result in the latter.”

The soon-to-be former Governor offers no explanation for how sustaining U.S. dependence on oil sources that long ago peaked in the U.S. and are dwindling to less than 3% of the national supply can keep the nation from dependence on imports. She also fails to explain how a massive shift to New Energy can fail to alleviate dependence on imports.

Missing no opportunity to mention one of the few significant accomplishments of her brief and truncated Governorship, she describes a proposed natural gas pipeline as “the largest private-sector energy project in history.” First, it is, in fact, subsidized by enormous benefits provided by the federal and state tax systems to the oil and gas industry. Second, it is also an environmental abomination that could only happen in a third-world style petro-economy like Nigeria or Alaska where leaders like Palin get support for backing the oil and gas industry and citizens get pay-offs not to fight it.

Furthermore, the pipeline she celebrates could very well fail to win final financing, due to the plummet in natural gas prices. If prices are sustained, it will be due to the anticipated price on spew the cap&trade system will impose that will drive demand for natural gas in preference to coal.

There is one point on which NewEnergyNews and the soon-to-be former Governor are in complete agreement: “For so many reasons, we can't afford to kill responsible domestic energy production or clobber every American consumer with higher prices…Can America produce more of its own energy through strategic investments that protect the environment, revive our economy and secure our nation? …Yes, we can…”

Those are her words and NewEnergyNews takes no issue with a single one of them. That she rejects a cap&trade system as a path to those ends is merely her profound failure to understand good, patient, increment-by-increment governance. Which is why she is the soon-to-be former Governor.

A difference in approaches. (click to enlarge)

COMMENTARY
The soon-to-be former Governor’s principled opposition to cap&trade should give great comfort to the President’s former supporters on the political left who, like her, have been unable to reconcile themselves with the plan’s dimension and economic sophistication and who, like her, consider anything of greater arithmetic depth than grammar school times tables as ripe for fraud by financial titans.

The soon-to-be former Governor takes note of Warren Buffet’s observation that the transition to an energy system in which power producers who spew are required to pay for their spew will make energy prices higher. In fact, rising international demand for energy resources has already started driving power prices higher. Cap&trade will only add to higher energy prices until the market forces built into it drive power producers to New Energy in big enough volumes to drive the cost of New Energy down. Ms. Palin heard about the Buffet remark but seems to have missed politically neutral reports from the Congressional Budget Office (CBO) and Environmental Protection Agency (EPA) showing the impacts of cap&trade on lower-income groups will be small.

The Congressional Budget Office says the costs will not be inordinate and shows lower-income households profiting. (click to enlarge)

Perhaps the soon-to-be former Governor will not have time to familiarize herself with the details of the cap&trade system she so handily preaches fear of until she can slip the surly bonds of the Governorship that weigh her down so dreadfully. NewEnergyNews can help. It is this simple: The cap&trade system will auction off an increasingly larger portion of the allowances the spewers must purchase to go on spewing. Part of what the spewers pay for those allowances will be returned to utility ratepayers, the largest part of it to the lower-income 40% of the ratepayers, to offset rising energy prices. The other part of the revenues from the allowance auction will be invested in New Energy to drive production and build economies of scale that will force costs for it down.

Even though her position is unsubstantiated by actual fact, the soon-to-be former Governor has every right to advocate on behalf of the “abundant coal” and “mountains of oil and gas” and “the possibility of nuclear energy.” If citizens back her, they can perhaps expect to win short term financial benefits for the chosen few in the Old Energy establishment. It is simply a fact that the nation has better choices, in the New Energies.

The Environmental Protection Agency also says the costs will not be inordinate. (click to enlarge)

The nation’s prosperity, the soon-to-be former Governor wrote, “has always been driven by the steady supply of abundant, affordable energy.” Very true. U.S. dominance of the 20th Century was very much attributable – for those with a limited knowledge of history – to its great good fortune of having had immense oil supplies just as it took the international stage, from the 1920s to the 1970s. But that oil supply peaked in the early 1970s. Now the nation’s abundant, affordable energy is the wind, the sun and its ability to innovate. If it follows leaders like the soon-to-be former Governor, it risks becoming a second-rate or a third-world nation.

The soon-to-be former Governor makes some incredibly shallow observations about the efficacy of supply-side economics, failing to have noticed that the Bush administration’s best efforts at supply-side economics successfully reversed the biggest budget surplus in U.S. history into the biggest budget deficit in U.S. history in one brief, disastrous Presidency.

Who does the soon-to-be former Governor think is responsible for the record unemployment she makes so much of at the outset of her misguided diatribe?

This essay has cautiously stayed with facts and avoided “the personality-driven political gossip of the day” for which the soon-to-be former Governor Palin derides the media. As a political leader who has little more than personality and folksy phrases to offer the voting public, she has suffered slings and arrows and has the scars to show for it. What she still fails to understand is that she can only hope to participate in substantive dialogue when she offers substance.

Can you spot the dead fish? (click to enlarge)

QUOTES
- Eleanor Roosevelt: “A mature person is one who does not think only in absolutes, who is able to be objective even when deeply stirred emotionally, who has learned that there is both good and bad in all people and all things, and who walks humbly and deals charitably with the circumstances of life, knowing that in this world no one is all-knowing and therefore all of us need both love and charity."
- Sarah Palin: “Only dead fish go with the flow…”
- NewEnergyNews: “Pick your wisdom.”