Capping Carbon Emissions May Increase Energy Rates, Orszag Says

OMB director says energy costs may rise to offset health care reforms.

ByABC News
March 1, 2009, 8:14 AM

March 1, 2009 — -- Office of Management and Budget Director Peter Orszag admitted this morning that capping carbon emissions may increase energy prices but said Americans would receive other benefits through President Obama's budget.

"Let's be fair about this," Orszag said in an exclusive "This Week" interview with George Stephanopoulos.

"Either you're going to look at what is collected through the tax code and what's returned through the tax code. And on that basis, there's a tax cut for 95 percent of Americans, or you have to go all in. Let's also count the benefits that families get through Pell Grants, the benefits that they'll receive through constraining health care costs, the benefits that they get from weatherizing their homes, and so on. All in, this budget makes the vast majority of American families much better off."

Republicans have criticized the administration for not being honest about the revenues in the president's $3.6 trillion budget proposal. In particular, many Republicans claim the proposal to create roughly $600 billion from capping carbon emissions will increase energy rates and amount to a tax on everyone.

Former GOP House Speaker Newt Gingrich targeted the energy proposal earlier this week.

"How dumb do they think we are, that they can pretend that an energy tax isn't an energy tax, and they can pretend that every retired American who uses electricity isn't going to pay it, and every person in New Hampshire who uses heating oil isn't going to pay it, and every person who drives a car isn't going to pay it?" Gingrich said at the Conservative Political Action Conference in Washington on Friday.

While Orszag stressed that healthcare reform is "key to our fiscal future," he made clear the administration will not increase the deficit further to pay for health care reforms. If enough revenues don't come in, Orszag said, the administration will not scale back its health care promises.

If that's the case, "we need some other proposal," Orszag said. "We're going forward with health care. We're going to get health care reform done this year. I think this proposal will get enacted. But if it doesn't, then we're going to need to come up with some other offset."