Montanans Are the Losers Under Cap-and-Trade

We’re hearing a lot about jobs lately and how important it is to “save or create” them. That’s all well and good, but many of those who on one hand wax eloquent about ways to reward businesses for hiring people are on the other hand feverishly pressing for programs that will make hiring more difficult and expensive. The “cap-and-trade” measures currently rattling around in Washington are great cases in point.

Congress is now debating far-reaching energy legislation that would impose an aggressive cap-and-trade system on greenhouse gas emissions (GHG) and mandate high levels of energy efficiency and renewable energy production. You might be hearing that this legislation is dead in the Senate, but nothing could be further from the truth. Big banks, big business, and other special interests have too much riding on this new financial scheme for it to go quietly into the night. And as usual, the rest of us would foot the bill.

As an example, a study released on February 11th by the Montana Policy Institute (MPI) and the American Council for Capital Formation (ACCF) shows that Montana would stand to lose between 4,964 and 6,761 jobs by 2030 under cap-and-trade. And that’s just the start.

Most jobs would be lost due to lower industrial output because of higher energy prices, the high cost of complying with emissions cuts required by the legislation, and greater competition from overseas manufacturers without the same pressures. Among the hardest hit would be manufacturing jobs—the heart of our state’s economy – and those at the lower end of the wage spectrum.

As Congress debates our energy future, we need to understand what Washington special interests are trying to do to our economy, our jobs and our future. It’s clear from these findings that Montana has nothing to gain—in fact, too much to lose—from cap-and-trade legislation, and that the economic impact of this legislation on Montana is enormous and not isolated to lost jobs.

• By 2030, the average Montana family can expect the price of electricity to increase by up to 61 percent, gasoline 27 percent and natural gas 78 percent. Low income families and the elderly, who spend a disproportionate amount of their income on energy, will be especially hurt.

• Montana would experience a sharp decrease in manufacturing output. The higher energy prices, fewer jobs and loss of industrial output under this legislation are estimated to reduce Montana’s gross state product (GSP) by between $900 million and $1.2 billion in 2030. Coal production alone could decrease by 96 percent. The impacts of artificially higher fuel, feed, and chemical prices on our farming families will force hard choices for them as well.

• State tax revenues would be reduced by as much as $65 million by 2030, forcing Montana policymakers to make hard choices about how to fund basic services, such as law enforcement, hospitals and schools, even as their costs increase with higher energy prices.

Despite the current recession, recent employment figures demonstrate a promising trend. In 2008, while the U.S. unemployment rate rose, Montana’s employment actually grew at a rate of 1.7 percent, and our state’s economy grew at a rate of 1.8 percent.

But much of this growth is tied to mining and the development of our natural resources, areas hard hit by cap-and-trade legislation. In the past ten years, employment in the Montana mining industry has grown 68.4 percent and is now responsible for 16,220 Montana jobs. A recent study by Pricewaterhouse Coopers credited the oil and natural gas industry for 34,210 jobs and a $3.3 billion contribution to the state’s economy. If cap-and-trade legislation is enacted, this growth would be reversed as jobs and production move overseas.

We all want a clean environment. Most of us live in Montana because we love our Big Sky and the beautiful land beneath it. But those shrill voices demanding that we trade our economic well being for a clean environment are trying to drive us into a false choice. Exporting our jobs to cheap overseas labor and our energy production to dirty overseas power plants will not help the environment or reduce greenhouse gases. There are alternatives to cap-and-trade, and a politician’s willingness to look at them can be a litmus test indicating whose interests he or she is really serving.


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Carl Graham is president of the Montana Policy Institute, a nonpartisan policy research organization that equips Montana citizens and decision makers to better evaluate state public policy options from the perspective of free markets, limited government, individual rights and individual responsibility.


Reviewing the Bidding on Health Care “Reform”


Carl Graham

As ideas turn into proposals with Senator Max Baucus’s “Chairman’s Mark,” now is a good time to review the bidding on how well current congressional health care reform plans address their stated goals of increasing access and decreasing costs.  We’ve all been inundated with data lately, so let’s just step back and take a common sense look at the main proposals:

Single-payer system: Turns out most Americans don’t want nationalized health care with the government deciding who gets treated, for what, and at what price; at least not now.  So to kick the can down the road we have…

The Public Option: Government becomes an insurance company to “keep it fair,” but nobody could really explain how they would provide cheaper insurance without killing the private sector.  And what’s the point if the government insurance isn’t cheaper?  So we next had…

Co-ops:  Except that there already are co-ops and there’s nothing stopping more from being created tomorrow.  But wait, this one is better because it will start with billions of taxpayer dollars, receive billions more in taxpayer subsidies, and be run by government appointees.  Or was that the Public Option?  Whoa, just what’s the difference between these two?  Turns out pretty much nothing, which leads us to…

Exchanges: Gee, if only there were some magical technology that would link people with insurers and allow them to compare rates, evaluate terms, and buy policies with just the click of a few buttons.  We could call it the “internet.”  But insurance is very complicated and people make mistakes. So let’s protect them by having government decide which insurance companies can be included and by dictating what they must cover, what they can charge, and what products (like health savings accounts, for example) they can make available.   But wait, if companies have to offer pretty much the same thing at the same price, isn’t that like the Public Option or Co-op, which means there’s not much difference between that and government-run plans?  Hmm, how about if we try…

Mandates: If only everybody had to buy insurance then we’d all share the costs, from each according to his ability and to each according to his needs.  Big insurance and health industry companies love mandates because they effectively lock out competition and lock in profits, which explains why Senator Baucus has received nearly $3 million in campaign contributions from them, according to  But do mandates hold down prices? Massachusetts reached a 97% coverage rate through mandates of various types and has subsequently seen their health care costs rise as much as 42% faster than the national average.1 They’re expected to rise another 10% in 2010, compared to 5%-7% nationally.2 Hmm, so much for mandates controlling costs.

And mandates kill jobs.  If employers are forced to either insure or pay a fine on their low wage employees, how much incentive do they have to retain those employees or hire more?  Low wage earners are the people most easily replaced through outsourcing and mechanization, and the ones who will be most hurt by mandates.

And finally, since the government decides what coverage satisfies the mandate, they effectively control the market, as we saw with exchanges.  Say goodbye to your Health Savings Account, limited coverage, or any other option that lets you control your premium and deductible.  Say hello to paying for mandatory coverage on every ailment, drug, treatment, provider, and everything else with a good Washington lobby and a congressman’s ear.

All of these options kill jobs, explode the deficit, and inevitably lead to a government-run system as private players are squeezed out of the marketplace.  And government programs typically don’t reduce costs or improve services, especially once they achieve a monopoly.

Rather than overhaul one-sixth of the economy with a risky and inevitably wasteful government takeover, let’s do some simple things that promise measurable results and broad bipartisan support.  We can increase competition by allowing people to buy insurance across state lines.  We can reform tort laws to reduce wasteful defensive medicine.  We can provide tax credits and vouchers to individuals rather than companies to provide a safety net and give them a personal stake in controlling costs.  We can reward healthy lifestyles.  These are just a few ideas that address the real problems of cost and access without making a naked power grab.  Why not give some of them a try before committing ourselves and our children to massive debt and complete government control over our health and well being?


1 Cathy Schoen, Jennifer L. Nicholson, and Sheila D. Rustgi, “Paying the Price: How Health Insurance Premiums Are Eating Up Middle-Class Incomes,” The Commonwealth Fund, August 2009, p. 8, Data%20Brief/2009/Aug/1313_Schoen_paying_the_price_db_v3_resorted_tables.pdf,  in Cannon, Michael F, “All the President’s Mandates: Compulsory Health Insurance Is a Government Takeover,” CATO Institute, September 23, 2009.

2 Robert Weisman, “Health Costs to Rise Again,” Boston Globe, September 16, 2009,



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Contact MPI President Carl Graham at 406.219.0508, or email

The Montana Policy is an, independent, nonprofit, nonpartisan policy research center based in Bozeman.  It provides analysis and information to encourage individual freedom, personal responsibility, and market oriented policy solutions in Montana.

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