Midwest Shoulders Pelosi’s National Energy Tax

“All politics is local,” Tip O’Neill once said. That axiom is especially true when it comes to energy policy.

Thus, no one would have been surprised to see the struggling Midwest, especially Indiana, Michigan and Ohio, reject the Waxman-Markey global-warming bill — a de facto national energy tax — in bloc. There is no reason for an economically depressed region to embrace a policy that would raise energy prices, create higher unemployment levels and harm the economy.

Yet the Michigan and Ohio congressional delegations appeared to embrace the proposal. What did the members of Indiana’s Congressional delegation know that those of Michigan and Ohio did not?

Let’s step back and compare the three states. Each relies more on coal for electricity production than the national average, especially Indiana (94%) and Ohio (87%). All three states have high concentrations of manufacturing — Indiana is number one in the country; Michigan and Ohio are third and fourth, respectively. They also have unemployment rates above 10%, with Michigan’s above 14%.

Indiana’s congressional delegation recognized the Waxman-Markey proposal as a recipe for economic despair. In 2012, Indiana would lose 35,000 jobs and $2.8 billion from their state economy, while their state budget deficit increased by $116 million. With those numbers, it’s not surprising that seven of the delegation’s nine members rejected the cap-and-trade approach

The reality was so stark that three of the delegation’s five Democrats broke rank with House Speaker Nancy Pelosi (D-Calif.) and President Barack Obama. Sen. Ben Nelson (D-Neb.) put it best last month when he succinctly described his position on cap-and-trade: “I think you have to think what the impact is at home … Certainly, I want to support the president when I can. But I can’t when I can’t.”

One has to wonder what got lost in translation in Michigan and Ohio. In 2012, Michigan would lose 52,000 jobs and $4.4 billion from their state economy, while their state budget deficit would increase by $169 million. For Ohio, those numbers are 62,000 jobs, $5.4 billion in economic losses and $203 million more in deficits. Of the 18 Democrat Congressmen in those two states, only two crossed the partisan divide to join all 15 Republicans in opposition.

Perhaps it’s worth reflecting on O’Neill’s observation and looking within the states. In Indiana, Gov. Mitch Daniels (R) has been a strong critic of a cap-and-trade regime. Earlier this year, Daniels wrote that “[t]he Waxman-Markey legislation would more than double electricity bills in Indiana. Years of reform in taxation, regulation and infrastructure-building would be largely erased at a stroke.” The state’s chief executive (and presumably its citizens) is keenly aware of the dangers.

Interestingly, the governors of Michigan and Ohio seem intoxicated with the mythology surrounding a cap-and-trade regime. Gov. Jenifer Granholm (D) of Michigan proclaimed she was “proud to [be] supporting federal climate change legislation and urge[d] Congress to work with us to develop a strong partnership as we create new jobs.” Gov. Ted Strickland of Ohio delivered this gem: “I think wind turbines are beautiful to look at, quite frankly.”

Daniels is keenly aware of the facts and has made an articulate case against taxing 94% of his state’s electricity generation. Granholm and Strickland, to date, have not.

What does all of this mean though for the Senate? Probably not much, though this dramatic regional split will certain focus attention on six senators who already figure to be under scrutiny. The real question is will Senate Majority Leader Harry Reid and Sen. Barbara Boxer (D-Calif.) follow the House playbook written by Pelosi and Rep. Henry Waxman (D-Calif.)? Their arm twisting, cajoling and horse trading are now infamous.

Every American should be concerned about the addition of 310 pages at 3 a.m. before the vote and gratuitous “sweeteners” such as $3.5 billion in lending to a new federal power authority for renewable energy and economic development. That last-minute addition secured the vote of Ohio Congresswomen Marcy Kaptur.

Of particular concern, though, for manufacturing states like Indiana, Michigan and Ohio is the laughable language concerning China and India. The Environment Protection Agency (EPA) will study whether “China and India have adopted greenhouse gas emissions standards at least as strict as those standards required under this Act.” What if they do not comply? The EPA “shall notify each Member of Congress of [their] determination, and shall release [their] determination to the media.”

Perhaps the people of Indiana realize that Waxman-Markey is indeed a jobs creator, but those jobs will be in China, India and other countries who do not join our carbon-rationed and growth-limited regime. The good people of Ohio and Michigan should take notice.

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