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June 6, 2014

Left tallies 'true cost' of coal with a political calculator

Editor's note: CNHI newspapers that are not weekly subscribers to Taylor Armerding's column may publish this one if they notify him at t.armerding@verizon.net.

Why shouldn’t Americans – in their homes and businesses – have to pay the “true cost” of energy from its various sources?

That is one of the more compelling arguments coming from those who applaud the U.S. Environmental Protection Agency’s 645-page orgy of regulations issued a week ago. The regs, they cheer, finally will force operators of coal-burning power plants to build into their rate structure the cost of belching greenhouse gases and other pollutants into the air.

Yes, that would cause the price of coal to rise. It would thus make clean energy alternatives – wind, solar, hydro – more competitive, moving us into a healthier future that would lower the risk of climate change. (I guess the newer politically correct euphemism is “climate disruption.")

Well, maybe. All sorts of promises are being thrown about, as there are every time President Obama launches yet another initiative to grow the size and power of government.

It will cut carbon dioxide emissions from U.S. electricity generation by 30 percent by 2030 from 2005 levels! It will cut the number of childhood asthma attacks by 140,000! It will prevent at least 2,700 premature deaths! It will cut the number of work and school days lost to illness by nearly 500,000! And all of those benefits will save the American economy $25 billion to $62 billion annually - $7 in health benefits for every $1 invested!

But those benefits, even if they equal the promises, are a bit more modest given some context. The projected reduction in asthma attacks amounts to about 3.2 percent. The projected reduction in carbon dioxide emissions won’t even equal the worldwide increase in emissions from coal each year.

And, actually, nobody really knows for sure. A prediction about almost anything even five years out is a guess. Predictions 16 years out are little more than propaganda, no matter what side of the debate you’re on.

Coal advocates claim the new regulations will eliminate thousands of jobs, lower the average household income by $200 and cost businesses $50 billion annually. They don’t really know, either.

The point about paying the “true cost” of something is a fair one, however. If the cost of a product is subsidized by taxpayers, directly or indirectly, people will purchase more of it than they might otherwise, and competing technologies that might be better for the long-term health of the environment or economy will be at a disadvantage.

So, why not require that we pay the true cost of everything? This would seem to comport nicely with Obama’s regular declarations that this should be a country where “everybody pays their fair share, and everybody plays by the same rules.”

But the idea of expanding the “pay-the-true-cost-of-coal” philosophy into other areas sends the Obama administration and my liberal friends running for the hills. The real Obama philosophy is the Orwellian “everybody is equal, but some people are more equal than others.”

For starters, paying the true cost of everything would mean no more subsidies for energy darlings. No more hundreds of millions for manufacturers of solar panels or wind turbines. No more tax breaks for putting solar panels on your building or house.

Once we go beyond energy sources, it gets even more uncomfortable. Why should "homeowners” (as one of my friends used to say, “I don’t own ‘my’ home. The bank does.”) get a tax deduction for their mortgage payments? That’s cutting the “true cost,” and encourages people to buy bigger homes than they could otherwise afford, which then cost more to heat and cool, thus contributing to climate disruption.

Then there is rampant ignoring of the “true cost” of business failures, embraced by Obama to benefit select groups – his trade union allies – to the point of flouting the law.

As has been well documented, the government’s bailout of General Motors and Chrysler cost taxpayers an estimated $17 billion to $20 billion because the Obama administration, while it did demand that the companies go through bankruptcy, allowed the United Auto Workers to recover far more than secured and other unsecured creditors, in violation of bankruptcy law.

The companies were going broke in large measure because of inflated wage and benefit costs that were not even close to competitive. But instead of forcing the “true cost” of that excess on the companies and the union, the administration shielded them from it.

Under the plan imposed by our “everybody-plays-by-the-same-rules” president, Chrysler’s secured creditors were forced to accept 29 cents on the dollar; other unsecured creditors got nothing; and the UAW recovered most of the value of its unsecured claims.

And that, of course, protected the union from one of the most effective ways to bring a company out of a fantasy world, back to reality and viability. Bankruptcy law allows courts to throw out and rewrite existing union contracts; to eliminate unsustainable pay, benefits and work rules; and to make a company competitive without having to be propped up by more subsidies.

The UAW made some minor concessions, but those mostly applied to future employees and were not even close to what was needed. Indeed, a UAW memo to members said, “For our active members, these tentative changes mean no loss in your base hourly pay, no reduction in your healthcare, and no reduction in pensions.”

So much for requiring people to pay the “true cost” of their choices. The concept is a worthy one, but not if it is going to be so selectively, and politically, applied.

Taylor Armerding is an independent columnist. Contact him at t.armerding@verizon.net

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