President Obama's plan to curb electric utility carbon dioxide emissions won't do much to delay global warming but will please liberals who delight in extending government control over ever larger segments of the economy.
CO2 composes about 80 percent of harmful emissions. Having failed to win congressional approval for a federal system of tradable emissions permits, the president will require each state to implement a CO2 reduction program.
By 2020, he wants to cut U.S. emissions from all fossil fuel uses by 17 percent of 2005 levels. However, China already emits nearly twice as much CO2 as either the United States or Europe. Every 18 months its pollution grows enough to replace the savings the United States will accomplish by hitting the president's target over 15 years.
Environmentalists argue that by setting an example the United States can bring China along. However, diplomacy has not worked on just about every other Sino-American issue ranging from trade protection to peacefully settling territorial disputes in the South China Sea.
Environmentalists and the president offer the preposterous claim that CO2 regulations will lower electricity rates and make U.S. manufacturing more competitive.
Most utilities are already under intense pressure from big industrial users to lower costs and rates, and are replacing coal with newly abundant natural gas and renewables where those make economic sense. Along with more fuel efficient cars, which appeared in large numbers before Obama imposed higher mileage standards, those have lowered U.S. emissions by 9 percent from 2005. Accelerating this process by fiat will require utilities to scrap and write off still economically viable coal fired plants, and pass those costs onto customers through higher electricity prices.
Those will send jobs to China, where power generation and manufacturing are not as clean as in the United States, and actually increase CO2 emissions and accelerate global warming.
EPA-proposed limits on utility emissions are but the first step. Next up will be direct regulations for heavy industries like petrochemicals.
Already, through mileage requirements, the Transportation Department is micromanaging the auto sector; through Obamacare, Medicare and Medicaid, Health and Human Services controls how doctors practice medicine and how hospitals are run; through Dodd-Frank, the Treasury and Federal Reserve micromanage banks and are forcing smaller banks to sell out to larger regional and Wall Street banks; and by linking grants to states to the Common Core, the Education Department is wresting control of schools from local boards; and the list goes on.
President Obama is encouraging the states to adopt minimum wages that far exceed what is required by inflation since the federal standard was last adjusted. This will be bring millions more Americans within the sphere of federal and state mandated wage rates, and effectively make the federal and state governments the custodian of the most essential, and formerly private, bargain struck between employer and worker.
None of this is new. Bill Clinton aggressively inserted the Justice Department's Civil Rights Division into all aspects of how businesses evaluate and compensate employees.
The consequences for U.S. living standards have been devastating. Since the beginning of this century, GDP growth has slowed to 1.7 percent, half the pace accomplished in the prior two decades, and annual jobs creation has slowed to 560,000 from 2 million. Since the financial crisis began, businesses paying wages in the bottom third of all employers, such as fast food restaurants, have added 1.9 million jobs; whereas those in the top two-thirds, such as financial services, have shed about as many. In the bargain, median annual family incomes are down $5,000.
As Washington seizes control of more economic decisions, millions more Americans become dependent on government to negotiate their pay, and supplement their shrinking incomes with food stamps, Medicaid, Obamacare subsidies, and the like.
Socialism is delivering on its promise to make everyone, save state planners in Washington, equally miserable.
Peter Morici is an economist and business professor at the University of Maryland.
Notice about comments: