What effect will President Obama’s having ordered the Environmental Protection Agency to go to war against U.S. coal-fired power plants have upon the U.S. economy?
If you guessed “a negative one”, you’re correct! One very telling confirmation of that outcome is being reported by Amy Harder of the National Journal, who has obtained a copy of a talking points memo being distributed by Ken Berlin of the “Energy & Environment Team”, under the auspices of the pro-Obama Climate Action Coalition (emphasis ours):
A talking points memo sent Monday night ahead of President Obama’s speech Tuesday on climate change tells Obama supporters to downplay economic arguments and words like “regulations.”
The memo, obtained by National Journal, includes a “do’s and don’t's” list of phrases to use (and not use) when advocating for action on climate change. “Do discuss modernizing and retooling power plants and innovation that will create green jobs... Don’t try to suggest net job increases,” reads one part of the memo.
More from the 14-page memo’s “do’s and don’t’s” list: “Do inform audiences about the nature of the problem, who is at fault, and what can be done... Don’t debate the increase in electricity rates. Instead pivot to health & clean air message.”
At least they’re being up front in confirming their belief that regular Americans will be negatively impacted by the President’s action, as the environmental advocates plan for their electric bills to rise. It is also clear that they expect that President Obama’s direction to limit the operations of U.S. coal-fired power plants under the regulatory authority of the 1970 Clean Air Act will fail to generate sustainable jobs for the economy.
Speaking of which, just what has been the economic track record of the 1970 Clean Air Act?
We got an answer yesterday, June 26, 2013, in the Congressional testimony of Michael Greenstone, an economics professor from MIT, who is the director of the Hamilton Project at the Brookings Institution, which he provided in his prepared remarks before the U.S. Congress’ Joint Economic Committee, in which he notes that there has been a significant cost with the benefits that have been achieved (emphasis ours):
The Clean Air Act is a classic example of a regulation with significant benefits and costs. Before its passage in 1970, there were few constraints on businesses that emitted pollution as a byproduct of their operations. The result was poor air quality. As one small example, white collar workers in Gary, Indiana often brought an extra shirt to work because the first would be dirty from the air and unfit to wear by midday. Even more importantly, some of my research, as well as research by others, has found that the polluted air led to elevated mortality rates that reduced the lifespans of the American people.
Obviously, no business sets out to cause these impacts; but, in trying to maximize their profits, it was not in their interest to install expensive pollution abatement equipment when their competitors did not. As a result, they did not act to adequately reduce emissions.
At the same time, the Clean Air Act’s regulations require firms to alter their production processes in ways that raise their costs. Indeed, some of my recent research finds that an important set of Clean Air Act rules has raised polluting industries’ costs of production by roughly 2.6%. This has reduced firms’ profits and led to higher prices for consumers. Further, it has caused regulated firms to scale back their operations, which led to employment losses at those firms. Although the ultimate effect on the level of jobs in the economy is likely minimal in normal economic times, recent research indicates that workers who lose their jobs due to regulations often face prolonged periods of unemployment and become reemployed at lower wages.
In considering the technical challenges involved in reducing the kind of pollutants that the 1970 Clean Air Act was really written to address, its success was pretty easy to achieve at a pretty low cost. Even so, higher costs were permanently imposed upon Americans and the Act drove real job losses.
Today, the costs of complying with the kind of new regulations being sought by President Obama and his environmental activist supporters would come with a much higher price tag. In President Obama’s lackluster economy, which the environmental activists are so determined to deflect attention away from, the inevitable outcome of imposing such poorly considered restrictions would mean poorer Americans and permanent job losses.
Never mind that the President Obama is also directing the EPA to twist the Clean Air Act in ways it was never intended to stave off a supposedly imminent crisis that by all real scientific measures, is falling far short of the kind of climate change doom that environmental activists have been faithfully predicting for decades, and which might actually warrant such regulation.
It took an act of the Supreme Court to knock down the U.S. Congress’ antiquated view that the America for which the Voting Rights Act was written hasn’t changed at all since the act was written. That the world doesn’t work the way that either President Obama or his environmental activist supporters think it does and that what they’re doing in using the power of government to impose their beliefs onto others is more harmful than beneficial might ultimately require a similar wake up call.
Workers' Compensation Institute