The U.S. House of Representatives narrowly passed a cap and trade bill. This legislation is supposed to reduce the amount of carbon dioxide and other greenhouse gases in the atmosphere by establishing absolute limits on total emissions of greenhouse gases. Before businesses can emit a greenhouse gas, they need to have the ration coupons for each ton emitted. The price a firm pays for these allowances are also known as tax revenue. In other words, under cap and trade, the government sets a cap on the total amount of carbon that can be emitted nationally and the companies buy permits to emit CO2. The cap is raised over time to reduce carbon emissions. This means taxes are raised as well, not just on companies but also on the average consumers.
The Wall Street Journal defines the process a little clearer: “The whole point of cap and trade is to hike the price of electricity and gas so that Americans will use less. These higher prices will show up not just in electricity bills or at the gas station but in every manufactured good, from food to cars. Consumers will cut back on spending, which in turn will cut back on production, which results in fewer jobs created or higher unemployment. Some companies will instead move their operations overseas, with the same result.”
The Congressional Budget Office acknowledges the effects in small footnotes at the bottom of their analysis on July 19, 2009. On page four, footnote 3, the analysis states
“The resource cost does not indicate the potential decrease in Gross Domestic Product that could result from the cap. The reduction in GDP would also include indirect general equilibrium effects, such as changes in the labor supply resulting from reductions in real wages and potential reductions in the productivity of capital and labor.”
Guess they thought we would overlook that little detail.
The Heritage Foundation found that cap and trade would cost the economy $161 billion in 2020, which is $1,870 for a family of four. As the bill’s restrictions being, the number rises to $6,800 for a family of four by 2035. On page 12 of the CBO’s analysis footnote nine states
“Trade-exposed industries might not be able to increase their prices to reflect the higher costs that they would face as a result of the cap. As a result, the cost of the cap might fall on workers and shareholders in those industries…”
Why is this cap and “tax” legislation a good idea again? Sure, taking care of the earth is not a bad thing. In fact, we should. But is this really the way to do it? Under the Obama administration, spending has reached a new extreme. This bill will definitely be the largest tax in American history. How do we know it will work? So far, there is no proof.
EPA Administrator Jackson confirmed that U.S. action to reduce CO2 would have no effect on the climate at all. China and India, the greatest emitters of CO2, recently stated their opposition to emissions controls.
With the U.S. acting alone to clean the air, all the cap and trade bill does is create an economic burden on AMERICAN consumers, businesses and families. Republicans in the House offered amendments to the cap and “tax” bill: to suspend the program if gas hit $5 a gallon, to suspend the program if electricity prices rose 10% over 2009 and to suspend the program if unemployment rates hit 15%. Democrats defeated the amendments.
“Republicans” who voted for the cap and “tax” bill are: Mary Bono Mack (CA), Mike Castle (DE), Mark Kirk (IL), John McHugh (NY), Frank LoBiondo (NJ), Leonard Lance (NJ), Dave Reichert (WA), and Chris Smith (NJ). Let them know we are watching them, and we need them on our side.
