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The Honorable Robert E. Latta
Full Committee on Agriculture Opening Statement on Cap-and-Trade Legislation

06/11/09

Good Afternoon. Chairman Peterson and Ranking Member Lucas:

We meet today to examine H.R. 2454, The American Clean Energy and Security Act of 2009, otherwise known as cap-and-trade.  I represent Ohio’s Fifth Congressional District, the largest agricultural and largest manufacturing district in Ohio.  I strongly feel that cap-and-trade legislation is a transfer or wealth and an attack on the Midwest.  I have been working with my Republican Colleagues on the Agriculture Committee, as well as the Rural American Solutions Group and American Energy Solutions Group to show how this legislation will really harm America.  The individuals who are pushing this legislation through Congress are individuals whose districts do no rely on coal for their energy generation, and whose districts do not have manufacturing and agriculture like states such as Ohio.  The ramifications of this bill will be severe job losses and a national energy tax on every American.

This legislation will kill jobs in the United States, and will hit citizens’ pocketbooks hard.  Agriculture is the number one industry in the state of Ohio. Unfortunately, only 0.8 percent of Ohioans are actively employed agriculture.  Farmers in my district are not solely farmers; they are producers who farm full time and many also have full time jobs in industries such as manufacturing.  Ohio boasts over 900,000 manufacturing jobs.  These are the people who will be hit the hardest if this cap-and-trade legislation is passed.  This legislation strikes the agriculture and manufacturing sectors the hardest because of the massive amount of energy they consume.

My district’s main crops are corn, soybeans, and wheat.  All of these crops have a significant operating cost for fuel, seed, electricity, fertilizers, and chemicals, all of which will increase heavily under this cap-and-trade legislation.  Operating costs amount to 71 percent for corn, 50 percent for soybeans, and 72 percent for wheat.  Farmers in my district will not be able to sustain their farms and support their families with these high costs. 

According to the Heritage Foundation, farm income is expected to drop $8 billion in 2012, $25 billion in 2024 and over $50 billion in 2035 if this legislation is enacted.  This represents decreases of 28, 60 and 94 percent, respectively.  In addition, I have farmers in my district that strongly believe in domestic energy production to reduce our costs at the pump and our dependency on foreign oil.  With rising gasoline and diesel prices, the only thing this legislation will reduce is their pocketbooks, with gasoline and diesel costs projected to be at least 58 percent higher.

If H.R. 2454 is enacted, job losses are projected at 1,105,000, with peak unemployment projected at 2.5 million.  This legislation will have even more devastating effects by 2035, as by that time this legislation will have reduced our gross domestic product by $9.6 trillion.  This legislation will result in nothing more than higher energy costs for consumers, particularly in areas such as mine, where coal is the primary energy source.  Over 86 percent of Ohio’s electricity is generated by coal.  The costs incurred from this legislation on the electricity generators will be passed along to the consumers.   Not only will farmers in my district, and throughout the country, be burdened with not being able to afford to operate their farms, this legislation will raise their electric rates, gasoline rates and place an even larger burden on their family.  A family of four could incur costs anywhere from $1,500 to $4,300 per year.  In these tough economic times, this is an unbearable cost on the taxpayer. 

According to the Heritage Foundation’s Manufacturing Vulnerability Index which calculates Congressional districts’ affects of cap-and-trade legislation, the Fifth Congressional District of Ohio will be the third most affected Congressional district in the United States.  This week the Brookings Institution said that cap-and-trade legislation to reduce carbon dioxide emissions would lower the nation’s gross domestic product in 2050 by 2.5 percent, compared with levels it would reach if the legislation was not implemented.  The Brookings Institution went on to say that about 35 percent of all crude-oil related jobs and 40 percent of coal-related jobs would be lost in 2025.

In 2006, China surpassed the United States as the world’s largest carbon dioxide emitter.  According to date from the Global Carbon Project, from 2000 through 2007, global total greenhouse gas emissions increased by 26 percent.  During that same period, China’s carbon dioxide emissions increased 98 percent, India’s increased 36 percent, while the United States’ carbon dioxide emissions only increased by 3 percent.  If the United States were to completely cease using fossil fuels, the increase from the rest of the world will replace United States’ emissions in less than eight years.

We have an Administration that has stated they do not want to burden tax increases on anyone making under $200,000 per year.  However, Americans who make under this amount still use electricity and gas, they still go the service station to fill their gasoline tanks, and they purchase things that have to be manufactured, processed and transported.  With each of these respective items, cap-and-trade will drive up prices.

A 2008 study by Doane Advisory Services calculated the per-acre production cost increases under a cap-and-trade scheme.  With my district’s main crops being corn, soybeans, and wheat, we would see an increase in production costs of each by 27 percent, 15 percent and 27 percent, respectively.  These are direct prices only and would not take into account the high costs of transportation, manufacturing, and processing these crops.

The Fifth District’s rural community relies on eleven different electric cooperatives to supply electricity throughout the district.  Rural utility companies such as the ones in Ohio are more dependent on coal for electricity generation than utilities in urban areas.  According to data from the National Rural Electric Cooperative Association, eighty percent of electricity production by a rural electric co-op is generated by coal compared to fifty percent nationally.

This legislation is a detriment to America’s agriculture.  The Administration states that the agricultural community will benefit significantly from this legislation, however no details have been provided and no benefits are shown for the agriculture and manufacturing sectors.  Plain and simple, this is a national tax on energy and will cost Americans jobs and place an even greater burden on their family budget.  We need American farmers to feed America.

It is time for Congress to take a strong look at this legislation and the devastating effects it will have on our economy, especially how hard it will affect the Midwestern states that rely heavily on agriculture and manufacturing.