The Cap and Tax Fiction

There’s been a lot of joy among the radical environmentalists lately since the Congressional Budget Office (CBO) came out with a report that seems to say that the costs of the pending cap and trade legislation — the Waxman-Markey bill — is small.

At a annual cost of $175 per household, that shouldn’t be much to worry about, should it?

Sure enough, the report does mention this figure, and if you’re willing to overlook some obvious facts, it’s good news. Here’s what the report states:

“On that basis, the Congressional Budget Office (CBO) estimates that the net annual economywide cost of the cap-and-trade program in 2020 would be $22 billion—or about $175 per household.”

That’s what radical environmentalists are gleefully reporting. As a recent Wall Street Journal editorial explains “The biggest doozy in the CBO analysis was its extraordinary decision to look only at the day-to-day costs of operating a trading program, rather than the wider consequences energy restriction would have on the economy. The CBO acknowledges this in a footnote.”

Here’s the footnote the Journal article refers to: “The resource cost does not indicate the potential decrease in gross domestic product (GDP) 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.”

There’s some other problems with the bill, and the Journal piece reports on them: “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 piece reports that Democrats know that steep price increase in energy are coming: “Even as Democrats have promised that this cap-and-trade legislation won’t pinch wallets, behind the scenes they’ve acknowledged the energy price tsunami that is coming. During the brief few days in which the bill was debated in the House Energy Committee, Republicans offered three amendments: one to suspend the program if gas hit $5 a gallon; one to suspend the program if electricity prices rose 10% over 2009; and one to suspend the program if unemployment rates hit 15%. Democrats defeated all of them.”

Recently I attended a public information session regarding rate consolidation in Westar, the large electric utility in Kansas. Several speakers spoke of the hardship that higher electricity rates would case. Something tells me that some of the people are in favor of the Waxman-Markey bill and other “green” measures. Are they will to pay the higher energy costs associated with this bill?

5 Comments

  • CrAP and TRADE = more jobs sent overseas. Just for good measure they put in a few hundred more pages at 3a.m. before the vote. Nothing shady about that……….right?……..

  • If you like the way the government now manages Social Security, Medicare, Amtrak, US Postal Service and the IRS then you will have no problem with the new Cap and Tax, Obamacare, and immigration. Lets review — Social Security is in serious debt, Medicare is in serious debt, Amtrak is sinking, US Postal Service continues to sink, and we all know how much we like the IRS.

    I just read in a recent poll that 40 percent of the people support Obamacare. Are these the same people that don’t pay any taxes.

  • As of today, India said NO to cap and trade. 2nd time that I know of in the last two weeks. Cap and Trade came from ENRON of the 90s. Where are they today? The same place that America will be the next day. NO WHERE. ENRON planned on tax money from the US to pay for green projects in over seas, our return for over seas ZERO. Why should you tax one to give to another with NO return? You dont. EVER, read the full bill this time around and KILL IT ! OR you may have a war in the US over more then just GREEN. I wish all coal power would turn off for 1 hour. You will miss it I am very sure you would the Grid would fall apart and it would take weeks to return.

  • Cap and trade is just the next big way for wall street and the BOT to make a quick buck at everybody’s expenses. We should all see it coming, first it was “junk bonds” then
    the S&L crisis, now it’s the “financial crisis”, next is cap and trade. My family have been farmers for 150 years, and this last spring a company offered to buy the “carbon offset” for
    our CRP land so they could sell it to some corporation to make carbon dioxide. You may not see the humor. It goes something like this. We live in a country were people go to bed every night hungry because they can’t afford food. But our government pays farmers to not farm 1/4 of the farm ground in america and now our country wants to create a cap n trade that will pay us to use that unfarmed ground to allow big companies to polute and raise the price of energy. ONLY IN AMERICA can you screw everybody for their own good, and still be a hero.

  • Would you like to see a change in the world? Have a look at Charles Showalters Pickens Plan Page. Look under McDowell county WV blog. That is clean power and a great return of money to the people. Lets see wal-mart top that as a pledge for return for a poor area. You will love it Mr. Weeks.

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