Americans For Tax Reform Can't Help But Distort Clean Energy Legislation

October 15, 2010 3:14 pm ET

An Americans for Tax Reform ad attacking Rep. Joe Sestak (D-PA), who is running for Senate in Pennsylvania, uses voters' worries over the state of the economy to falsely suggest that Sestak has "voted to make it worse" by voting in favor of clean energy legislation. In fact, over time, the American Clean Energy and Security Act would boost GDP and create millions of American jobs at minimal cost to families — meaning that Sestak is looking out for the long-term wellbeing of Pennsylvania families, not trying to hit them with insurmountable fees.

Americans For Tax Reform: "Make It Worse"

Higher electric bills. $4 a gallon gas. Thousands of lost jobs. Pennsylvania's hurting, and Joe Sestak voted to make it worse. Sestak voted for Pelosi's job-killing cap and trade plan. A great big tax that would make utility bills skyrocket, gas prices soar. No wonder Sestak won't sign the pledge against tax increases. Higher taxes. Lost jobs. Vote no on Joe Sestak. Paid for by Americans for Tax Reform, which is responsible for the content of this advertising.

Clean Energy Legislation Will Boost The Economy...

Clean Energy Legislation Would Boost GDP By Up To $111 Billion.  According to the University of California-Berkeley: "Comprehensive clean energy and climate protection legislation, like the American Clean Energy and Security Act (ACES) that was passed by the House of Representatives in June, would strengthen the U.S. economy by establishing pollution limits and incentives that together will drive large-scale investments in clean energy and energy efficiency...New analysis by the University of California shows conclusively that climate policy will strengthen the U.S. economy as a whole. Full adoption of the ACES package of pollution reduction and energy efficiency measures would ... boost GDP by $39 billion-$111 billion. These economic gains are over and above the growth the U.S. would see in the absence of such a bill." [UC Berkeley, accessed 1/22/10]

Clean Energy Legislation Would Boost Household Income By Nearly $1,200 Per Year.  According to the University of California-Berkeley: "Full adoption of the ACES package of pollution reduction and energy efficiency measures would create between 918,000 and 1.9 million new jobs, increase annual household income by $487-$1,175 per year... These economic gains are over and above the growth the U.S. would see in the absence of such a bill." [UC Berkeley, accessed 1/22/10]

...And Create Millions Of American Jobs...

Pennsylvania Will Gain 72,000 Jobs From An Investment In Clean Energy Technologies. According to the Center for American Progress and the Political Economy Research Institute, "Pennsylvania could see a net increase of about $6.1 billion in investment revenue and 72,000 jobs based on its share of a total of $150 billion in clean-energy investments annually across the country. This is even after assuming a reduction in fossil fuel spending equivalent to the increase in clean-energy investments. Adding 72,000 jobs to the Pennsylvania labor market in 2008 would have brought the state's unemployment rate down to 4.3 percent from its actual 2008 level of 5.4 percent." [Center for American Progress and the Political Economy Research Institute, Clean-Energy Investments Create Jobs In Pennsylvania, 6/17/09]

Investment In Clean Energy Technology Would Create Up To 1.9 Million American Jobs. According to the University of California-Berkeley, "new analysis by the University of California shows conclusively that climate policy will strengthen the U.S. economy as a whole. Full adoption of the ACES package of pollution reduction and energy efficiency measures would create between 918,000 and 1.9 million new jobs." [UC Berkeley, accessed 1/22/10]

...At Minimal Cost To Families

Reuters: "Climate Legislation Moving Through Congress Would Have Only A Modest Impact On Consumers." According to Reuters: "A new U.S. government study on Tuesday adds to a growing list of experts concluding that climate legislation moving through Congress would have only a modest impact on consumers, adding around $100 to household costs in 2020. Under the climate legislation passed by the House of Representatives in June, electricity, heating oil and other bills for average families will rise $134 in 2020 and $339 in 2030, according to the Energy Information Administration, the country's top energy forecaster." [Reuters8/5/09]

EIA: Clean Energy Legislation Would Cost Only $0.23 Per Day. According to a House Energy and Commerce Committee factsheet of the Energy Information Administration's analysis of the American Clean Energy and Security Act: "The U.S. Energy Information Administration (EIA) has completed an analysis of the American Clean Energy and Security Act (H.R. 2454), as passed by the U.S. House of Representatives... The overall impact on the average household, including the benefit of many of the energy efficiency provisions in the legislation, would be 23 cents per day ($83 per year).This is consistent with analyses by the Congressional Budget Office which projects a cost of 48 cents per day ($175 per year) and the Environmental Protection Agency which projects a cost of 22 to 30 cents per day ($80 to $111 per year)." [House Energy and Commerce Committee, EIA's Economic Analysis Of "The American Clean Energy And Security Act Of 2009," 8/4/09; emphasis original]

CBO: In 2020, Cap-And-Trade Will Only Cost An Average Of $175 Annually, "About A Postage Stamp A Day." In its analysis of the American Clean Energy and Security Act, the Congressional Budget Office wrote: "On that basis, the Congressional Budget Office (CBO) estimates that the net annual economy wide cost of the cap-and-trade program in 2020 would be $22 billion-or about $175 per household." Rep. Edward Markey noted it was "the cost of about a postage stamp a day." [CBO, 6/19/09; House Committee on Energy & Commerce Release, 6/20/09]

Cap-And-Trade Would DECREASE Energy Prices For Low-Income Americans. In its analysis of the American Clean Energy and Security Act, the Congressional Budget Office wrote, "households in the lowest income quintile would see an average net benefit of about $40 in 2020." [CBO, 6/19/09; emphasis original]

EPA: Senate's American Power Act Would Cost Families $79-$146 Per Year Over The Next Four Decades.  According to The Hill: "A new EPA analysis of Senate climate change legislation estimates the plan would impose an average annual household cost of $79 to $146 over 40 years." [The Hill, 6/15/10]

Peterson Institute: American Power Act Would Only Cause "Between A $136 Increase And A $35 Decrease" In Annual Energy Costs Per Household.  In its analysis of the American Power Act, the Peterson Institute for International Economics wrote: "In our analysis, households see somewhere between a $136 increase and a $35 dollar decrease in annual energy expenditures, depending on future improvements in vehicle efficiency. The American Power Act also returns much of the revenue raised through the sale of pollution permits to households, with further mitigates the impact of higher energy prices." [Peterson Institute, May 2010]

Republicans Are Responsible For Upcoming Tax Hikes

Time: Congress Wrote Tax Law To Expire After 2010 Because It Made Cuts Appear Cheaper. As Time reported in 2001:

Topping the list of odd features is the "sunset" provision that repeals the entire bill at the end of 2010. Budget rules require Congress to include a sunset clause in all major tax legislation, but this sunset arrives a year early--after 10 years instead of the 11 years covered by the current budget resolution. That year was shaved off to keep the total cost of the bill under $1.35 trillion. By repealing the legislation in the 10th year, Congress saved billions of dollars. Without the repeal and a few other tricks, the cost of the full 11-year plan would balloon to more than $1.8 trillion by the end of 2011, far exceeding anything the Democrats would vote for. And the cost in the second decade would reach as much as $4 trillion. Even some conservatives on Capitol Hill are dismayed by the apparent dishonesty of the early sunset. After both parties agreed to a smaller tax cut, the conference committee pulled a fast one.

[Time6/3/01, emphasis added]

American Enterprise Institute: Reconciliation "Ploy" To Pass Bush Tax Cuts Means They Expire After 10 Years. According to Norman Ornstein, resident scholar at AEI:

It is worth repeating why we are in this particular car heading toward the cliff. When the Bush tax cuts were on the agenda at the very beginning of his presidency, Republicans in Congress and the White House made a tactical choice to avoid giving Senate Democrats the leverage that a 60-vote hurdle can provide by employing reconciliation (yes, the same tool that those who applied it then condemned roundly when it was used for health care reform this year). It was tricky to use reconciliation for tax cuts, which increased deficits when reconciliation was specifically supposed to be used for revenue-neutral or deficit-reducing programs. But the decision was made to use it for this purpose--but not to violate the proviso that the plan would increase deficits outside the budget window of 10 years.

That meant a ploy of declaring that all the tax cuts would expire entirely after 10 years, including the absurd-on-its-face provision that estate taxes would gradually decline to zero in 2010--and then be fully restored in 2011. From the day after the tax cuts were signed into law, Republicans were campaigning to extend them, in effect admitting that the policy was built around a "never mind" ruse. To be fair, there were plenty of ruses in the health care reform reconciliation, so it is not as if one party is clean--this is legislative politics. But the charges now emanating from Republicans that the Democrats are going to be responsible for a huge tax hike is, shall we say, bemusing. [AEI.org, 7/21/10, emphasis added]

Ezra Klein: Reconciliation Maneuver Meant "Twisting A Budget Process Meant To Reduce The Deficit." According to the Washington Post's Ezra Klein:

In order to maximize the size of the cuts, Republicans had to minimize the influence of minority Democrats on the package. So they chose to run the bill through the reconciliation process. But that posed some challenges. Budget reconciliation had never been used to increase the deficit. In fact, it specifically existed to decrease the deficit. That's why one of its rules was that you couldn't use it to increase the deficit outside the budget window. Republicans realized they could take that very literally: The budget window was 10 years. So if the tax cuts expired after 10 years, they wouldn't increase the deficit outside the budget window. They'd also have the added benefit of appearing less costly in the Congressional Budget Office's estimates, as the CBO duly scored them as expiring after 10 years, which kept the long-range budget picture from exploding.

But the plan was never to have the tax cuts expire. Instead, the idea was that people would get used to the new tax rates, and no future Congress would want to allow a big tax increase, so when the time came, either Republicans in office would extend the cuts or Republicans in the minority would hammer Democrats until they extended them. And that's where we are now: Democrats control the government, so Republicans are screaming about tax increases as a way to get Democrats to extend tax cuts.

It's really hard to know where to start with this one. It's not a tax increase passed into law by Democrats. It's a reversion to old tax rates passed into law by Republicans. It's not how law is supposed to work. It's the result of twisting a budget process meant to reduce the deficit so you could use it to massively increase the deficit.

[Washington Post7/19/10, emphasis added]

Historically, Taxes Are Near Their Lowest

GOP Rep. McHenry: "Marginal Tax Rates Are The Lowest They've Been In Generations, And All We Can Talk About Is Tax Cuts." As reported by Time Magazine, North Carolina Republican Patrick McHenry said: "Marginal tax rates are the lowest they've been in generations, and all we can talk about is tax cuts... The people's desires have changed, but we're still stuck in our old issue set." [Time Magazine, 5/7/09]

Top Tax Brackets Over Time:

Top Marginal Tax Rate

35% In 2010: Currently, The Highest Tax Rate Is 35%.  According to The Tax Foundation, the 2010 tax rate for couples making over $373,650 annually is 35%.  [Tax Foundation, accessed 9/20/10]

  • 39.1% In 2001: The Highest Tax Rate Was 39.1% In 2001. According to The Tax Foundation, the 2001 tax rate for couples making over $297,350 annually was 39.1%.  [Tax Foundation, accessed 4/14/09]
  • 50% In 1986: Highest Tax Rate Was 50% In 1986.  According to The Tax Foundation, the 1986 tax rate for couples making over $175,250 annually was 50%.  [Tax Foundation, accessed 4/14/09]
  • 70% In 1981: The Highest Tax Rate Was 70% In 1981.  According to The Tax Foundation, the 1981 tax rate for couples making over $215,400 annually was 70%. [Tax Foundation, accessed 4/14/09]
  • 77% In 1964: The Highest Tax Rate Was 77% In 1964.  According to The Tax Foundation, the 1964 tax rate for couples making over $400,000 annually was 77%. [Tax Foundation, accessed 4/14/09]
  • 91% In 1963: The Highest Tax Rate Was 91% In 1963.   According to The Tax Foundation, the 1961 tax rate for couples making over $400,000 annually was 91%. [Tax Foundation, accessed 4/14/09]

The Last President To Serve While The Highest Tax Bracket Below 35% Was Herbert Hoover. Herbert Hoover was the last president to serve while the nation's highest tax rate was below the 2009 rate, 35%.  In 1931, during his tenure, those earning over $100,000 were taxed at 25%. [Tax Foundation, accessed 4/14/08]

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