Energy Bill Text Says It Will Cost Americans Money; Targets Help Only to Low-Income Families
July 2, 2009The "cap-and-trade" energy bill, which passed the House of Representatives last month, frankly admits Americans will experience "loss in their purchasing power." But only low-income households will qualify for help.
The bill also lays out an Energy Refund Program to offset the higher energy costs, but only for low-income households.
The American Clean Energy and Security Act of 2009 would create a scheme to force companies to purchase permits that enable them to emit a certain amount of greenhouse gases into the atmosphere.
Ben Lieberman, senior policy analyst for energy and environment at The Heritage Foundation, gave dollar estimates for how much the legislation would cost in his June 22 testimony to the Senate Republican Committee.
"The higher energy costs kick in as soon as the bill's provisions take effect in 2012. For a household of four, energy costs go up $436 that year, and they eventually reach $1,241 in 2035 and average $829 annually over that span. Electricity costs go up 90 percent by 2035, gasoline by 58 percent, and natural gas by 55 percent by 2035. The cumulative higher energy costs for a family of four by then will be nearly $20,000,” Lieberman said.
To compensate for higher energy prices brought about by the “cap-and-trade” system that the energy bill creates, the bill lays out an Energy Refund Program that will offer cash compensation for low-income households to mitigate their losses.
While virtually everyone’s energy bills will rise, the Energy Refund Program is essentially a welfare program that will only help households treading near the poverty line.
According to Section 431 of the Act, “The Secretary (of Health and Human Services) shall formulate and administer the program provided for in this section, which shall be known as the ‘Energy Refund Program’, and under which eligible low-income households are provided cash payments to reimburse the households for the estimated loss in their purchasing power resulting from the American Clean Energy and Security Act of 2009.”
Fifteen pages of the 1,201-page bill are dedicated to laying down complex formulas for who will receive this energy welfare, what they will receive and how they will qualify to receive it.
Section 431 specifies that households earning 150 per cent of the federal poverty level or receiving other forms of welfare such as Supplemental Nutrition Assistance -- formerly known as food stamps --Supplemental Security Income or Medicare are eligible for “energy refunds.”
For households that are not already on government welfare, a two-person household would have to earn $21,855 or less to meet the income threshold, while the income of a three-person household could not exceed $27,465, according to the 2009 federal poverty guidelines established by the U.S. Department of Health and Human Services.
The average U.S. household consists of 2.59 people, according to the U.S. Census Bureau’s latest information in 2000.
Eligible households will receive their “energy refunds” monthly through direct deposits, state electronic benefit transfer systems or other mechanisms approved by the Secretary of Health and Human Services.
The refund amounts are also subject to a complex formula that depends on the size and income of each household and the annual rate of loss in purchasing power, as estimated by the Energy Information Administration each year.
“Not later than August 31 of each fiscal year, the Energy Information Administration shall estimate the annual total loss in purchasing power that will result from American Clean Energy and Security Act of 2009 in the next fiscal year for households of each size with gross income equal to 150 percent of the poverty line...”
Applications for energy refunds require only a name, address and signature, and must be processed within 30 days by the proper State agency that administers the refunds.
Like other federal programs, the Energy Refund Program will be subject to annual misappropriation assessments.
According to the Act, its accountability measures will “rely on and coordinate with” those already in place for the Food and Nutrition Act of 2008, which involves the Supplemental Nutrition Assistance Program. This program accounted for $1.7 billion in misappropriations in 2008, according to a report by the U.S. Government Accountability Office in April.
Critics of the energy initiative have issued repeated warnings about its cost, and the language of the Act suggests that lawmakers are well aware of the toll it will take on American households.
But direct energy costs are only part of the consumer impact.
“Nearly everything goes up, since higher energy costs raise production costs. If you look at the total cost of Waxman-Markey, it works out to an average of $2,979 annually from 2012-2035 for a household of four. By 2035 alone, the total cost is over $4,600," The Heritage Foundation's Lieberman said.
Rep. John Boehner (R-Ohio) issued a warning during the last hours of debate before the bill was passed in the House.
“Speaker Pelosi’s national energy tax is a bureaucratic nightmare that will cost families more than ever for electricity, gasoline, food, and other products, and cost millions of American workers their jobs,” Boehner said.
“This is a tax on anyone who drives a car, buys an American-made product, or flips on a light switch. It will drive up energy costs, send millions of jobs overseas to countries like China and India, and place an especially heavy burden on rural America,” Boehner said in a press statement.
“Today, House Democrats made the decision to stand with left-wing special interests rather than with families and small businesses in their districts that will lose so much because of this national energy tax,” Boehner also said. “The American people will not forget this vote.”
The bill now moves to the Senate, where it may face a tougher time.