RESPONSE TO CONGRESSMAN KRATOVIL’S CLAIMS ABOUT HR 2454

Congressman Frank Kratovil has been distributing some very interesting “myths and facts” in defense of legislation he recently supported, HR 2454, also known as ACES or Cap-and-Trade. However, as you will see, the congressman who represents Maryland’s 1^st district has been dispersing some myths of his own. Below you will read Congressman Kratovil’s statements in black and my response in red.

Myths and Facts about the American Clean Energy & Security Act

Opponents of the American Clean Energy & Security (ACES) Act have voiced a number of criticisms of this bill that are inaccurate, misleading, or just plain wrong. In order to help Marylanders understand the truth about this bill, here is an analysis of some of these myths along with the real facts about what’s in this bill.

1.        MYTH:  This bill is a massive energy tax that will cost Maryland families $3,900 per year.

Congressman Kratovil’s explanation:

Critics of this bill are circulating a myth that the American Clean Energy & Security Act raises taxes. It does not.   No taxes – not gas taxes, energy taxes, personal income taxes, or business taxes – are raised even a single penny by this legislation.

Some critics of the bill have pointed to a recent article in the Weekly Standard that citeda 2007 MIT study to support the claim that this bill will increase energy costs for families by $3,900. However, even the author of this MIT study, Professor John Reilly, says this claim is “wrong” and “just silly”. He projects the cost of the bill to be closer to $80 per family per year. Since Maryland’s state laws are already ahead of the curve on energy efficiency and renewable energy production, the impact here will be even less. In one study, the Natural Resources Defense Council projects that the bill will SAVE Maryland families $8 per month once efficiency savings and state-specific factors are considered.

THE TRUTH:

 This bill may not be called a tax on consumers in the legislation, but in the marketplace, it will amount to increased energy expenses which will be passed on to consumers, as all increases in costs are. Think about the last time gas prices increased dramatically. Did your trash company eat those costs, or pass them on to you? All of the disposal companies in my area had rate increases to cover their increased fuel costs for doing business when gas prices increased. When businesses have to pay the government for energy usage, who will actually be left to foot the bill? The consumer will pay for the increased costs that will occur in any energy-using sector of our economy. 

Warren Buffett, the billionaire investor who has been an ardent Obama supporter, even said on CNBC that this legislation is a “huge tax” that will “hurt and awful lot of people.” Obama himself conceded, “Under my plan of cap and trade system, electricity rates would necessarily skyrocket” and these expenses will be passed on to consumers.

To make his point, Congressman Kratovil quotes exactly three words from an MIT professor which he takes entirely out of context as only an adroit politician can. He also claims that this professor projects costs to Maryland families at $80 when the article actually places the cost at $800 a year. The article also explains that some impacts of the legislation were not considered in the study, and once these items are factored, the costs will reach $3,900 per family. Read the article for yourself before accepting Congressman Kratovil’s word: http://weeklystandard.com/Content/Public/Articles/000/000/016/412cwueq.asp?pg=2 http://blog.heritage.org/2009/04/22/earth-day-update-cap-and-trades-3900-per-family-per-year-price-tag/

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2.    MYTH:            This bill will prevent me from selling my home unless I make expensive upgrades and pay for an energy audit.

Congressman Kratovil’s explanation:

The energy efficiency standards in the bill apply only to new construction, not to existing homes. As the National Association of Realtors has acknowledged, the House-approved bill “does not create a federal energy audit requirement” and “exempts existing homes and buildings from any federal guidelines for new construction energy efficiency information labels.”

3.                   MYTH: This bill creates an “Energy Police” that will conduct home inspections to judge whether I’m meeting efficiency requirements

Congressman Kratovil’s explanation:

                This is completely false. Furthermore, energy efficiency standards for buildings will apply only to new construction. Existing homes and businesses are completely exempt. 

THE TRUTH:

These two explanations are misleading. Page 338 of the 1,428 page bill states that this regulation applies to renovations on existing homes as well. The specific guidelines are not mentioned other than fees will be collected to carry out building inspections to make sure they meet the requirements. These fees will be passed on to consumers either directly, through building permits or indirectly, through state taxes. The vague wording of this section will give energy officials broad leverage in enforcing these regulations. (http://energycommerce.house.gov/Press_111/20090701/hr2454_house.pdf)

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4.        MYTH:         Cap-and-trade will destroy Maryland’s economy and cost jobs.

Congressman Kratovil’s explanation:

                Maryland is already part of a regional cap-and-trade system, and since joining this agreement in 2007, the unemployment rate in our state has remained well below the national average. Remember, cap-and-trade is a market-based system that allows energy producers and consumers to reap the benefits of energy conservation through the free market. This bill gives businesses and entrepreneurs strong market incentives to invest in green energy technologies and create new jobs. 

5.        MYTH:         The greenhouse gas emissions reduction goal in this bill (a 17% reduction by 2020) is unreasonable.

Congressman Kratovil’s explanation:

This 17% target is actually less than the goal already in place here in Maryland as a result of state law, which currently calls for a 25% reduction by 2020.

THE TRUTH:

Congressman Kratovgil fails to tell his constituents many important facts regarding Maryland’s cap-and-trade system which he claims has been so “helpful” to Marylanders. First, although Governor O’Malley signed on to this cap-and-trade program known as the Regional Greenhouse Gas Initiative (RGGI) in 2007, it has not yet been fully implemented. In fact, the first carbon auction didn’t take place until the end of 2008, and legislation accompanying this agreement was not passed until the beginning of this year.    The plan for implementing RGGI does not have to be finalized until 2012. At the early stages of implementation, the standards are lax, but as the 2020 goal nears, the standards and penalties for non-compliance become more drastic. Thus, it is too early to measure any negative impact this cap-and-trade program would have on consumer costs. 

Not only that, but Congressman Kratovil also fails to mention that the RGGI was very limited in scope; in fact, manufacturers were specifically excluded from this legislation, so that Maryland businesses could remain competitive with other states and nations. There was fear of job losses and decreased productivity if this exemption was not included. The federal legislation that Kratovil supported HR 2454, does not contain this exemption. Not only that, but RGGI also does not affect the price of gas used to fuel your car, but the federal legislation will. So what impact will this have on businesses or America’s ability to compete with all the other nations that do not punish their companies for productivity? 

Congressman Kratovil, haven’t Marylanders lost enough jobs and experienced enough cost increases for living expenses such as trash removal, electric rates, groceries, etc. during the past year? Hasn’t America lost enough jobs as businesses find it easier and less costly to produce goods in other countries? With unemployment rates at 9.5% in Cecil County and over 7% in Harford County, how dare you burden the people you represent with higher energy costs and more job losses!

There is even a provision in the legislation for government relief for up to three years for workers who lose their jobs as a result of this bill you supported! According to The Washington Times, “adversely affected employees in oil, coal and other fossil-fuel sector jobs would qualify for a weekly check worth 70 percent of their current salary for up to three years. In addition, they would get $1,500 for job-search assistance and $1,500 for moving expenses from the bill's ‘climate change worker adjustment assistance’ program, which is expected to cost $4.2 billion from 2011 to 2019.” (http://www.washingtontimes.com/news/2009/jul/03/energy-job-losers-could-get-windfall/)

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6.        MYTH:         This bill will hurt manufacturers and cost manufacturing jobs.

Congressman Kratovil’s explanation:

A single wind turbine contains up to 400 tons of steel, along with 8,000 parts, from copper wire, gearboxes, and ball bearings to electronic controls. The American Clean Energy & Security Act will greatly expand the market for wind turbines, solar panels, bio-refineries, and any number of other green technologies that can be built right here in the United States by American manufacturers.

THE TRUTH:

With increased burdens placed on manufacturers, we have no guarantee that the steel used for wind turbines will come from the U.S. Much of our steel is imported by countries such as India and China which do not punish their steel industry for energy usage. If this legislation passes the Senate, it will place greater burden on the already faltering U.S. Steel industry, which explains why the steel industry was so opposed to this legislation http://www.redorbit.com/news/science/1689582/steel_industry_protests_capandtrade_legislation/

The steel used in a wind turbine can be easily and cheaply imported, and the very industry Kratovil claims will be helped by this legislation will in fact, be punished with increased manufacturing costs. If this legislation was helpful to America’s steel industry, wouldn’t they support it?

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7.        MYTH:         This bill will hurt farmers, who will be penalized, fined, or taxed for their emissions.

Congressman Kratovil’s explanation:

                Farmers are entirely EXEMPTED from the emissions caps in the cap-and-trade system. However, they ARE eligible to receive credits and allowances for any actions taken to reduce their emissions, which can then be sold or traded on the open market to produce real income for Maryland farmers.   In effect, that means farmers get the best of both worlds – they are not subject to the bill’s restrictions, but they are eligible to reap its benefits. Furthermore, this bill will increase the demand for biofuels and biomass energy production, which will result in more revenue for farmers.

THE TRUTH:

Even if farmers are exempted from the caps on energy, they will still have to pay for the increased costs of energy that are a result of this legislation. They still will need to fuel their farm equipment, and as a result of increased energy rates, their daily operating expenses will skyrocket. This is why the Maryland Farm Bureau and the American Farm Bureau opposed this legislation: The “AFBF and Maryland Farm Bureau strongly oppose H.R. 2454. The provisions of the legislation will impose enormous constraints on the U.S. economy, including agriculture, resulting in a net cost to the sector.” (http://www.mdfarmbureau.com/Files/Government%20Affaris/GovBulletins/GRB2May21-09.pdf)

Also, why was it important for Kratovil to get this exemption in the legislation for his vote to be bought? Isn’t this exemption an admission that this legislation does indeed hurt manufacturers? Why was Kratovil willing to be bribed with a concession for one group of constituents when all of his constituents  will be negatively affected?

In touting biofuels as the wave of the future, Congressman Kratovil has shown that he is either choosing to mislead his constituents or is ignorant of the facts. America has learned two things from our experience in biofuel production:  biofuels require government subsidies which taxpayers pay, making them cost-inefficient sources of fuel (http://www.globalsubsidies.org/en/research/biofuel-subsidies-united-states), and they have increased the cost of food internationally, particularly affecting poorer nations whose people rely on grains for sustenance. (http://www.npr.org/templates/story/story.php?storyId=89545855).

 Also, with increased costs of production for farmers as a result of HR 2454, the cost of biofuel production will increase, requiring more subsidies at taxpayer expense.

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8.                    MYTH:                 It is foolish for Congress to take action before other polluters like China and India have committed to matching our commitment.

Congressman Kratovil’s explanation:

America cannot and should not stand timidly by waiting for China or India to assert global leadership. That is our job. The truth is that we already lag behind other parts of the world in the development and manufacturing of clean energy technologies. If China and India take action before we do, you can rest assured that they will become global leaders in the development and manufacturing of these technologies, while the U.S. misses out on the opportunity to create those jobs here in America.

THE TRUTH:

Congressman Kratovil does not specify which countries we are lagging behind; possibly he is referring to Spain who attempted a cap-and-trade system similar to the one he just voted for. Spain’s unemployment is now above 18%, and for every “green” job created, 2.2 other jobs are lost. (http://www.realclearpolitics.com/articles/2009/06/25/tilting_at_green_windmills_97168.html)

Is this what our Congressman wants us to emulate?

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9.        MYTH:         This bill was published just hours before being voted on, and no one in Congress knew what was in it.

 Congressman Kratovil’s explanation:

The American Clean Energy & Security Act was introduced on May 15, six weeks before the floor vote took place. The legislation was then debated extensively in the Energy & Commerce Committee, which approved the measure three weeks later. After that, the Agriculture Committee held additional public hearings on the bill, in which Congressman Kratovil participated. Rep. Kratovil also read extensive, detailed section-by-section analysis of the bill and has sought out neutral, unbiased sources to better understand its provisions. While there were extensive negotiations on the agricultural provisions of this bill right up until the night before the vote, Rep. Kratovil was an active part of these negotiations and was intimately familiar with the substance of these agricultural changes prior to the final vote.

THE TRUTH:

While I appreciate that Congressman Kratovil has staffers who gave him a section by section analysis of the bill, and he participated in the Agricultural hearings, his constituents didn’t vote for a staffer, nor do they pay a lucrative lifelong pension for a staffer to read and analyze legislation. That is the Congressman’s job.    We are in a sad situation, when a lawyer, Congressman Kratovil, needs to read an analysis of a bill, rather than read the bill directly himself, or needs to seek out sources to understand its provisions. I’m also curious as to whether Congressman Kratovil was able to receive a section by section analysis of the 300+ page amendment which was introduced at 3 a.m. the morning of the vote. It is also important to note that the bill’s own sponsor, Henry Waxman, admitted in a hearing that he didn’t know all the details included in his own legislation! (http://www.youtube.com/watch?v=tRcq0Lxffwc)

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10.     MYTH:  The status quo is working fine and there is no need for Congressional action.

Congressman Kratovil’s explanation:

If Congress does not act, the Environmental Protection Agency will. In 2007, the Supreme Court ruled in Massachusetts vs. EPA that the EPA already has the authority to begin regulating greenhouse gas emissions under the Clean Air Act, an action that would not require Congressional approval. If Congress sits on its hands and allows the EPA to take the lead, then the ensuing regulatory scheme would not include the safeguards and protections for ratepayers or farmers that were included in the American Clean Energy & Security Act. 

THE TRUTH:

At best, Congressman Frank Kratovil simply does not understand RGGI or the federal legislation he supported. Nor does he understand his role as a representative to the United States Congress.   At worst, he is intentionally misleading his constituents in hopes of pulling the wool over their eyes so that he will not have to face the consequences for his harmful vote in favor of H.R. 2454. Either of these scenarios makes Congressman Kratovil an unfit representative of the first district. 

*The non-partisan Chamber of Commerce was also consulted for information included in this ar

Low income families are not winners, because they will continue to be kept dependent on government assistance, but they will be provided relief (i.e. welfare) under this bill.  According to the Library of Congress, “H.R. 2454 would create a refundable energy tax credit, aimed at offsetting the impact of higher energy prices on low-income families. The credit would be based on the average loss of purchasing power for the poorest fifth of people caused by higher prices for energy and other goods under the bill.”

AMERICAN CLEAN ENERGY & SECURITY ACT, HR 2454

This bill which was passed by a narrow margin in the House of Representatives on Friday, June 26,  will have destructive effects on our already hurting economy.  According to the Heritage Foundation, HR 2454 will:

·         Reduce aggregate gross domestic product (GDP) by $9.4 trillion;

·         Destroy 1,145,000 jobs on average, with peak years seeing unemployment rise by over 2,479,000 jobs;

·         Raise electricity rates 90 percent after adjusting for inflation;

·         Raise inflation-adjusted gasoline prices by 58 percent;

·         Raise residential natural gas prices by 55 percent;

·         Raise an average family's annual energy bill by $1,241;

·         Result in an increase of $28,728 in additional federal debt per person, again after adjusting for inflation

Even President Obama conceded, “Under my plan of cap and trade system, electricity rates would necessarily skyrocket”, and he admitted that these expenses will be passed on to consumers.

As Tim Cameron explained in American Solutions, “Billionaire investor Warren Buffett supported Barack Obama's Presidential bid last year, and has never been a proponent of major tax cuts. But in an interview today with CNBC, Buffet slammed the new Energy Tax being voted on in Congress this week saying it is a ‘huge tax’ that will ‘harm an awful lot of people’.

While Buffett's opposition to this legislation underscores the damage the Energy Tax will do to our economy, you don't have to be a financial wizard to know that a massive tax increase isn't the cure to our ailing economy. In fact, it could turn this recession into the next Great Depression.”

HOW DID YOUR CONGRESSMAN VOTE?

FRANK KRATOVIL    VOTED    YES 

Call him at (443)262-9136