Congressional Budget for the United States Government for Fiscal Year 2010

Floor Speech

CONGRESSIONAL BUDGET FOR THE UNITED STATES GOVERNMENT FOR FISCAL YEAR 2010 -- (Senate - March 30, 2009)

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AMENDMENT NO. 731

Mr. THUNE. I thank the Senator from North Dakota for yielding. I call up an amendment I have filed at the desk and ask unanimous consent that it be made pending.

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Mr. THUNE. The Senate is in the process of an important fiscal debate which will set the Federal budget for the next 5 years. The budget process is particularly important as our Nation faces a prolonged recession and an ongoing financial crisis.

I think there are two primary questions facing the Congress at this time. One is, how do we help the middle class cope with the current recession. Secondly, how do we create jobs and investments that will lead us out of this recession?

The Democratically led Congress, I believe, missed a major opportunity to address the economic recession during the debate of the stimulus bill. Rather than providing significant tax relief for middle-class families and small businesses, Congress poured billions of taxpayer dollars into Government programs and pet projects.

The middle class was largely left behind in the stimulus bill. In return for an $800 billion stimulus bill, the average taxpayer gets a temporary tax break of roughly $8 per week, not even enough, in most places, to buy a cup of coffee each day.

Unfortunately, the administration's budget proposal is another missed opportunity to address the fundamental issues that are plaguing our economy. Not only does the administration's budget increase taxes on families and small business owners, it calls for a massive national sales tax on energy as well.

This sales tax, which is implemented in the name of global warming, will dramatically increase energy costs for all consumers. I wish to point out something that President Obama said with regard to that energy cap-and-trade plan. He said:

Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket.

This regressive national sales tax on energy will hit lower and middle-income households at a time when they can least afford it. Now, incidentally, the architect of the President's budget, Peter Orszag, who is the Director of the Office of Management and Budget, agrees that the President's energy tax will have a significant impact on energy prices, and lower income families will bear a greater burden on account of this tax.

Orszag testified before Congress that a cap-and-trade program would increase energy costs which will immediately be passed on to the consumer. During a House of Representatives Budget Committee hearing in 2007, Mr. Orszag stated:

Under a cap-and-trade program, firms would not ultimately bear most of the cost of the allowances, but instead would pass them along to their customers in the form of higher prices for products such as electricity and gasoline.

Orszag is also on record saying:

The higher prices caused by the cap would lower real wages and real returns on capital, which would be equivalent to raising marginal tax rates on those sources of income.

In September of 2008, Mr. Orszag testified before the House Committee on Ways and Means.

The rise in prices for energy and energy-intensive goods and services would impose a larger burden relative to income on low-income households than on high-income households.

Both Mr. Orszag and President Obama, they are not the only ones who believe higher energy prices on account of climate change legislation will have a greater negative impact on low-income families.

I quote from the Wall Street Journal on March 9 of this year:

Cap-and-trade, in other words, is a scheme to redistribute income and wealth, but in a very curious way. It takes from the working class and gives to the affluent; takes from Miami, Ohio, and gives to Miami, Florida; and takes from an industrial America that is already struggling and gives to rich Silicon Valley and Wall Street ``green-tech'' investors who know how to leverage the political class.

I would also quote from Warren Buffet.

That tax [the cap-and-trade tax] is probably going to be pretty regressive. If you put a cost on putting carbon into the atmosphere ..... it's going to be borne by customers. And it's a tax like anything else.

Now is not the right time to place another burden on families who are struggling to make ends meet during the current recession. Many two-income families are now reduced to one. One-income families are trying to make do with reduced wages or fewer hours. Mortgage payments have become a burden too great for millions of families. In light of the unprecedented challenges that are facing the middle class, I find it unconscionable that President Obama and the Democrats in Congress want to place an indirect tax on these families through increased energy costs.

In April of 2007, MIT conducted an economic study of the Sanders-Boxer climate change bill. Interestingly enough, at that time, 2007, then-Senator Obama was a cosponsor of that bill. The proposal he has put in front of us very closely resembles that proposal.

MIT concluded in their analysis of that particular piece of legislation that the Federal Government would take in an additional $366 billion in revenue each year, which is equivalent to over $3,128 per household. That is in the year 2015.

Having said that, if you think about $366 billion coming in in additional revenue to the Federal Government, that means someone in this country is paying that tax. As I mentioned earlier, many have concluded it is not going to be the utilities, those taxes are going to be passed on and borne by power consumers, electric, fuel consumers in this country.

If the MIT study is correct, that would be equivalent to over $3,100 per household. So I think it is important to note that President Obama's cap-and-trade tax is even more stringent than the Sanders-Boxer climate change bill, which I alluded to, which the MIT study makes reference to, which would only increase the national sales tax on energy prices.

In other words, President Obama's cap-and-trade proposal is even more stringent than the one that was analyzed by researchers at MIT who concluded, again, it would cost the average household in this country over $3,100 per year.

President Obama wants to take some of the proceeds from the carbon tax revenue and give it back to families through the Making Work Pay tax credit. The Making Work Pay tax credit totals about $400 per individual and about $800 per married couple. This credit barely covers a fourth of the household costs of the energy cap-and-trade tax of $3,100 per household.

The President's message to the middle class is: Don't worry about paying the additional $3,100 each year in higher energy costs because the Government is going to refund $800 of that total in the form of the making-work-pay tax credit. That comes out to about a quarter of what the tax is going to be, the energy tax that each family will be faced with, if this particular proposal were to become law.

Additionally, a significant number of individuals and married couples making less than $250,000 a year are not going to be eligible for the making-work-pay tax credit and are still going to be hit by the national sales tax on energy. The national energy sales tax is a direct contradiction to President Obama's campaign pledge not to increase taxes on those making less than $250,000 a year. The making-work-pay tax credit does not apply to a lot of people who make under that amount. The energy tax will apply to all of the people in this country to the tune of about $3,100 a year, according to the MIT analysis.

According to a recent Washington Times article, the Obama cap-and-trade proposal could be far more costly than the estimated figures in the Obama budget blueprint. According to this article, President Obama's climate plan could cost close to $2 trillion, which would inevitably be passed on to consumers in the form of higher electricity, gas, and heating oil, as well as higher prices for other goods and services affected by higher energy costs. That is a bad deal for hard-working, taxpaying Americans, and it is the wrong solution to our economic problems.

Like many Midwest States, South Dakota is heavily dependent upon coal power to meet our energy needs. One public power utility in South Dakota analyzed what little details are available on the President's national sales tax on energy and determined that their power costs would increase by $107 million per year by 2015. That represents a 65-percent increase in annual power costs. One of the largest municipal power customers would see their annual costs go up by $13 million for a rural community of just over 20,000 residents. That community is Watertown, SD. One of the largest industrial customers of a municipal power provider would see their electric bill increase by $2 million per year.

Like many other States, South Dakota is trying to deal with the economic recession and is looking for ways to create jobs and help businesses grow. The President's proposal to tax energy will result in a new annual tax of $2 million on just one business in my State. It will kill jobs and stifle economic growth, and it should not be included in the fiscal year 2010 budget resolution.

In the words of the CEO of this South Dakota-based power public power provider:

In plain English, [the President's climate change proposal] represents a perpetual tax increase on our electric consumers.

I want to show another power company in South Dakota, Black Hills Corporation, a diversified energy company serving customers in South Dakota, Colorado, Wyoming, Kansas, Nebraska, and Iowa. They have provided some generic examples of how a cap-and-trade proposal would impact the monthly electric bills of various types of customers. The first chart is at $50 per ton of carbon dioxide, a monthly residential bill increases from $94 to $154. That is your average residential bill. A small commercial customer would see their monthly bill increase from $4,500 to $7,500 per month. You probably can't see, because this is fairly small print, that increase, but if you look at what the estimate is, the current cost being $4,500 for a small commercial customer bill, under the proposed climate change tax, if enacted, that would go up to about $7,500 per month.

So we are looking at about a 67-percent increase per month. When you
start multiplying that out, it becomes a staggering amount of money on an annual basis.

A school customer would see their electric bill--this is the same power company, same statistics that apply to this, about $50 per ton of carbon dioxide--if they had a typical bill today of $15,000, under this particular plan they could see that electric bill go from $15,000 a month to $30,000 a month. Again, you probably can't see the small print, but essentially what it is telling us is that a current $15,000-per-month cost for electricity for a typical school in South Dakota would virtually double on a monthly basis. If you annualized that, that is $180,000 a year additional cost for a school in South Dakota which, in most cases, is struggling to provide school supplies and pay teachers fair salaries.

Finally, take a look at a large industrial customer bill, the current monthly cost for power. With the energy tax that is under consideration in the President's proposal, that would go up to about $234,000 per month under the cap-and-trade proposal.

I guess my point is, when you start looking at the kinds of costs this imposes on industries--and I used these examples from my State and information that was furnished to us by utility companies there--if you take a large industrial customer who is going to see their energy costs increase by $110,000 each month and you annualize that, you are looking at an additional $1.4 million each year on account of this proposal.

The bottom line is, the amendment I have offered would amend the reserve fund included in a future climate cap-and-trade proposal. I know several of my colleagues, Republican colleagues, will be offering amendments to strike or lessen the impact of the President's national sales tax on energy as part of the budget process.

What my amendment does is ensure that any cap-and-trade proposal drafted under this deficit-neutral reserve fund would not increase gasoline prices or electricity rates for consumers. I believe this amendment is the very least we can do for consumers dealing with the economic downturn and businesses struggling to make it through a prolonged recession.

I encourage colleagues to support the amendment. I hope we will not include, in any budget resolution or reconciliation instructions coming back from the House or wherever that might occur, any language that would in any way implement the cap-and-trade proposal. This amendment ensures that doesn't happen in a way that would increase gasoline and electricity rates for customers.

I ask that when we get to the vote, my colleagues will support the amendment.

I yield the floor.

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