A House panel passed cap and tax, and it goes to the full House next.

The Competitive Enterprise Institute responds:

The House Energy and Commerce Committee has voted to send to the House floor probably the most destructive bill ever passed out of a congressional committee.  The Waxman-Markey energy-rationing bill, if enacted, will be the biggest tax increase in the history of the world.  It will take trillions of dollars from consumers while making massive payoffs to the big business special interests that support the bill.  By raising energy prices through the roof, it will destroy millions of jobs and create perpetual economic stagnation.

The Committee’s Democratic majority voted down numerous amendments that would limit the economic damage.  They voted to continue energy rationing even if gasoline prices go above five dollars a gallon or electricity prices double or unemployment exceeds fifteen percent.  They voted against provisions to restrict speculators manipulating the market in rationing coupons and against suspending the scheme if China and India refuse to agree to undertake their own energy-rationing policies.

The Waxman-Markey energy-rationing bill poses a huge threat to American prosperity and freedom.  It would impoverish Americans and turn America into a third-rate economy.  It must be defeated on the House floor.

Congress is going ahead with this against the backdrop of a much worse economic forecast:

The Fed’s forecasts, released as part of the minutes from its April meeting, show that its staff now expects the unemployment rate to rise to between 9.2% and 9.6% this year. The central bank had forecast in January that the jobless rate would be in a range of 8.5% to 8.8%, but the unemployment rate topped that in April, hitting 8.9%.

The Fed also now expects the gross domestic product, the broadest measure of the nation’s economic activity, to post a drop of between 1.3% and 2% this year. It had previously expected only a 0.5% to 1.3% decline.

Fears of inflation:

Federal Reserve Bank of Philadelphia President Charles Plosser said prices may rise 2.5 percent in 2011, a rate well above central bankers’ preferred range, and cautioned against complacency on inflation.

…The bank president’s inflation forecast for 2011 exceeds central bank officials’ long-run preferred range of 1.7 percent to 2 percent, and contrasts with the concerns of some officials and economists that the economic slump may provoke a broad decline in prices.

The possibility that America’s debt rating will be lowered:

Bill Gross, manager of the world’s biggest bond fund, warned on Thursday the United States will eventually lose its top AAA credit rating, a fear that had already spooked financial markets on Thursday and could keep the dollar, stocks and bonds under heavy selling pressure.

The United States will face a downgrade in “at least three to four years, if that, but the market will recognize the problems before the rating services — just like it did today,” Gross told Reuters.

And rising unemployment figures:

Ohio has an unemployment rate of more than 10 percent, for the first time in more than 25 years.

…Kentucky and Illinois were at 9.8 percent and 9.4 percent respectively. Michigan had the country’s highest unemployment rate at 12.9 percent.

Do Washington politicians even know a world exists outside of their conference rooms?