Donald Lambro

"Waxman and Markey blithely set targets for reducing greenhouse-gas emissions without any serious analysis or even awareness of the colossal costs of energy rationing to American consumers, workers and industry," said Myron Ebell, director of energy and global-warming policy at the Competitive Enterprise Institute (CEI).

"Beyond these enormous economic costs, Waxman-Markey would put big government in charge of how much energy people can use. It would be the biggest government intervention in people's lives since the Second World War, which was the last time people had to have rationing coupons in order to buy a gallon of gas," Ebell wrote in a CEI analysis of the bill.

But the deep damage Obama's cap-and-trade plan would inflict on our economy goes beyond its draconian carbon taxes. Now we learn that the plan could likely start a trade war.

"The bill as drafted clears the way for carbon protectionism," said CEI senior fellow Iain Murray. "It envisages 'rebates' to companies that have to pay higher costs than their international competitors, which amounts to illegal state aid under World Trade Organization rules."

Last month, Energy Secretary Steven Chu told a House panel that the United States would likely have to raise trade tariffs on carbon-intensive imports as a "weapon" to protect American businesses to "level the playing field" with countries that do not impose similar greenhouse-gas restrictions that the Obama administration envisions here.

"If other countries don't impose a cost on carbon, then we will be at a disadvantage ... (and) we would look at considering perhaps duties that would offset that cost," Chu testified.

That provoked an immediate counter-threat from Li Gao, a top Chinese trade official, who told the Dow Jones news service that a carbon tariff would be a "disaster" that would lead to a trade war.

Obama already appears to have precipitated a trade war with Mexico, which announced it is raising tariffs on $2.4 billion of our exports to their country in retaliation to the administration's latest restrictions on Mexican trucking access to U.S. roads.

"Taken together, these provisions (in the cap-and-trade bill) represent the first shot in what is likely to prove a disastrous carbon trade war," CEI's Murray said.

Meanwhile, if the Johanns amendment survives in the budget resolution, which must be reconciled with the House version, cap-and-trade is all but dead in the Senate. Stay tuned.


Donald Lambro

Donald Lambro is chief political correspondent for The Washington Times.