Obama's Carbon Plan Will Hurt US Poor the Most
Newsmax

The Obama administration on Monday announced a proposal that would cut carbon emissions at existing power plants by 30 percent by 2030 compared to 2005 levels — a move that will have a severe impact on lower-income Americans, an economist warns.

Americans in the lowest fifth of the income distribution spend 24 percent of their income on energy, compared to 4 percent for those in the top fifth, according to Diana Furchtgott-Roth, a former chief economist at the U.S. Department of Labor and a senior fellow at the Manhattan Institute.

"Obama's new proposed cuts in carbon emissions, in the form of 'cap-and-trade' proposals that were rejected by the Democratic House and Senate in the first two years of his presidency, will raise the cost of energy, particularly electricity, and hit the poor hardest," she writes for Real Clear Markets.

Every state would have to meet its emissions target by ensuring that plants reduce emissions, reducing consumer demand, or investing in renewable energy sources, such as wind and solar power.

But electricity from solar power costs twice as much as electricity from natural gas, and this too would raise costs and hurt the poorest Americans the most.

New coal plants would have to employ new technology at a cost of billions of dollars a year for consumers, and many plants would close, Furchtgott-Roth asserts.

According to the Congressional Budget Office, the emissions reduction program would cause job losses in coal mining, oil and gas extraction, gas utilities, and petroleum refining.

Senate Minority Leader Mitch McConnell called Obama's plan "a dagger in the heart of the American middle class."

Even the Democratic opponent vying for McConnell’s Senate seat, Kentucky Secretary of State Alison Lundergan Grimes, blasted the proposal, calling it "more proof that Washington isn't working for Kentucky," NBC News reported.

Furchtgott-Roth also pointed out that the new costs borne by U.S. energy producers would raise prices on domestic goods and allow foreign producers from countries with less stringent policies (or no policy at all) to charge less for their goods than American producers. This would mean fewer jobs in the United States and more jobs offshore.

She added: "For those concerned about economic growth, poverty, and inequality, cap-and-trade makes no sense, either nationally or regionally."

Editor's Note:

• 3 Things Obama Won’t Tell You About the Economy