DATE: October 27, 2003

BACKGROUND: Management Information Services, Inc., a national economics firm with a client roster representing both business and environmental organizations,1 has released a study showing that passage of S. 139, the McCain-Lieberman global warming bill, would impede, or even reverse, the substantial economic progress that Hispanics have achieved over the past two decades.

McCain-Lieberman would require the EPA to create rules limiting greenhouse gas emissions from the electric power, transportation, and industrial sectors and a small portion of the commercial sector. Specifically, these four key sectors of the American economy would be forced to reduce their greenhouse emissions (gases such as carbon dioxide) to 2000 levels by 2010 and to 1990 levels by 2016.

The study, "Potential Impact on Hispanics of S. 139, the McCain-Lieberman Bill," was released by the non-profit organization Americans for Balanced Energy Choices.

In an October 22 press release,2 citing the study's findings, the group cites the following as expected impacts upon the Hispanic community, should McCain-Lieberman become law:

Hispanic earnings will suffer, the growth rate in Hispanic real wages -- already below average -- will be reduced by half, and the income differential between non-Hispanic Whites and Hispanics will increase.

Millions of Hispanic jobs will be lost, Hispanic unemployment will increase by 23 percent, and the progress made during the 1990s in reducing Hispanic unemployment will be reversed.

The problems of unemployed Hispanic workers will be exacerbated, and for young Hispanic workers -- who may soon comprise 30 percent of new U.S. labor force entrants -- the situation will be bleak, as they will bear a disproportionate share of the jobless burden.

Poverty among Hispanics will increase by 15 percent, and the number of Hispanics lacking health care coverage will increase.

Hispanic living standards will decline, incomes will be reduced, the costs of the basic goods upon which Hispanics must spend their reduced incomes will increase, and Hispanics will be forced to spend more of their incomes on basic necessities.

The situation will be even more acute with respect to energy costs, and Hispanics will have to increase their expenditures on natural gas by 50 percent and on electricity by 60 percent.

Millions of poor Hispanics will face a stark choice between "heating and eating," and of trading off increased energy and utility bills against food, clothing, and the basic necessities.

The press release also states the report, which relied heavily on analysis done by the U.S. Energy Information Administration, notes that McCain-Lieberman would increase U.S. energy costs by 30-50 percent, reduce the rate of growth of GDP by 25 percent and of disposable income by 30 percent, increase unemployment by nine percent, and increase inflation by 27 percent. The impacts would cumulatively result in a loss of nearly $1.6 trillion (2002 dollars) in GDP, seven million jobs, and $2,800 (2002 dollars) in disposable income to every person in the United States.

TEN SECOND RESPONSE: Any environmental impact of McCain-Lieberman would most likely be too small to measure, yet the negative economic impact, especially upon Hispanics and low-income Americans, would be dramatic.

THIRTY SECOND RESPONSE: The Lieberman/McCain plan would inevitably lead to energy scarcity and higher energy prices. Experts also predict it would kill seven million jobs, increase unemployment by nine percent and increase inflation by 27 percent.

FOR MORE INFORMATION: Press release of Americans for Balanced Energy Choices, October 22, 2003, available online at http://www.BalancedEnergy.org/hispanicstudy/index.asp

Management Information Services, Inc., "Potential Impact on Hispanics of S. 139, the McCain-Lieberman Bill," full report (pdf copy) at http://www.BalancedEnergy.org/hispanicstudy/hispanic_study.pdf

by Amy Ridenour
The National Center for Public Policy Research

Contact the author at: 202-543-4110 or tsr@nationalcenter.org
The National Center for Public Policy Research
501 Capitol Court, N.E.
Washington, D.C. 20002

Footnotes:

1 Management Information Services, Inc. client list, downloaded from http://www.misi-net.com/clients.html on October 26, 2003.

2 Press release of Americans for Balanced Energy Choices, October 22, 2003, available online at http://www.BalancedEnergy.org/hispanicstudy/index.asp as of October 26, 2003. Links to the full study were available on this page as of October 27.