Reid Changes Tune After Comments on Cap-and-Trade Spark Backlash

Senate Majority Leader Harry Reid backed away Tuesday from his suggestion last week that the government should use the revenue from President Obama's cap-and-trade program for health care reform, the president's number one priority.

That's because the Obama administration has said unequivocally that all money raised by cap-and-trade would be used to offset the increase in utility bills as a result of the cap-and-trade program.

Because Obama would impose a new tax on all emissions, utilities suddenly would have to pay huge sums to continue doing what they do now for free, especially those who use coal, which generates half the entire nation's electricity.

Obama concedes increased costs will be passed on to consumers. An impartial analysis from MIT makes clear the price will be substantial: more than $300 billion in new taxes every year.

Some say it's less and others say it's more. And in states relying the most on coal, it could be a lot more. But whatever it is, Obama and his aides say all but a small portion of those revenues should go to consumers to soften the blow of higher utility bills for both individuals and businesses -- until cheaper, clean energy alternatives can replace coal and other fuels. And supporters of cap and trade say that is the only way to pass it.

"Unless we take care of, to the best of our ability, the people and businesses in states that will be asked to do the most to help us stop global warming, this bill is not going to pass, and it shouldn't," said Sen. Joe Liebermann, I-Conn.

If the money is diverted to health care, it's unlikely any lawmaker from the Midwest would support the program. It would either have to be scrapped or drastically changed.

Reid explained Tuesday that his earlier suggestion to use cap-and-trade revenue for health care reform was only an observation of the coincidence that the energy revenues would be about the same as the cost of health care reform; not that one would be used to pay for the other.

But Reid kept the controversy alive, saying, "We're going to have to pay for it. And I don't know how we're going to do that, but we're going to do it. We're going to pay for it."