Cap and Trade: A Regressive Tax

Among the ruling elite, the party of “I won”, there is a consensus that something drastic must be done in order to mitigate the effects of human induced global climate change. They say we must do something to reduce greenhouse gases; we must do something to reduce carbon “pollution”; we must do something!

My first response to this is, “Why?” Why must we take action in this particular case? What is it about carbon dioxide that requires our attention more than any other form of pollution? Are you stumped? I would have to say that I am as well.

There exists a supposed consensus of scientists, despite the large number in opposition that are ridiculed and belittled without the evidence they present being taken seriously, that are convinced humanity is on a course that will alter this planet in a way that will do more harm than good unless we change our behavior.

The solution proposed by the current ruling classes in this country is the American Clean Energy and Security Act, which is essentially a cap and trade program, drafted in a paltry 1,200 pages, drafted explicitly for the reduction of carbon pollution.

According to the Heritage Foundation’s report on the economic impact of this act it amounts to “nothing more than an energy tax in disguise. After all, when you sweep aside all the complexities of how cap and trade operates–and make no mistake, this is the most convoluted attempt at economic central planning this nation has ever attempted–the bottom line is that cap and trade works by raising the cost of energy high enough so that individuals and businesses are forced to use less of it.“1

That particular statement in the report is a bit alarming to say the least–and in a number of ways that should at least worry a lot of people.

S2191 Effects on Jobs and GDP
Heritage Foundation, The Economic Costs of the Liberman‐Warner Climate Change Legislation.

What will this do?

An act, billed as a solution to climate change, designed to ultimately reduce economic activity, output, efficiency, and productivity cannot in any way help us on any course towards newer greener forms of energy production. Again, this is about “inflicting economic pain…that is how the ever‐tightening emissions targets will be met.“1 This is an attempt to force a behavioral pattern on the market, when the market is not ready for it, in a way that will hinder more than just the energy sector.

This will hinder economic development across the nation, across just about every sector; as operating costs rise, jobs will be lost, economic output will diminish, and our high standard of living will likely not be maintained. This would come at a particularly bad time as the government is also moving to takeover healthcare and create a single‐payer system. As a result of the reduction in capital, tax revenues would decrease creating an even greater shortfall in the federal government’s budget; then, healthcare spending would have to decrease, alongside many other entitlements–that is unless the government goes bust first. One can see where this is going pretty quickly.

The left likes to claim they are simply working to help the average person; the thing is, most of their proposals only serve to make the average person more subservient to government.
Frankly, I’m not particularly convinced that carbon dioxide is an issue.

Particularly troubling, though, is why we will be affected by legislation that is designed to regulate an industry many of us have no direct part of:

The only entities directly regulated by Waxman‐Markey would be the electric utilities, oil refiners, natural gas producers, and some manufacturers that produce energy on site. So, the good news for the rest of us–homeowners, car owners, small‐business owners, farmers–is that we won’t be directly regulated under this bill. The bad news is that nearly all the costs will get passed on to us anyway.

What are those costs? According to the analysis we conducted at The Heritage Foundation, which is attached to my written statement, the higher energy costs kick in as soon as the bill’s provisions take effect in 2012. For a household of four, energy costs go up $436 that year, and they eventually reach $1,241 in 2035 and average $829 annually over that span. Electricity costs go up 90 percent by 2035, gasoline by 58 percent, and natural gas by 55 percent by 2035. The cumulative higher energy costs for a family of four by then will be nearly $20,000.1

Simply put, because costs go up for energy producers, our costs will increase as well creating a regressive tax affecting the poor more harshly than the rich; energy is not a luxury good, but will be a luxury only available easily to the rich, elite, ruling classes if this is allowed to become law (one of the problems with this socialist vision is that it is less about the working classes then it is about maintaining power). Granted the consequences might not be seen immediately, but rest assured, they will be seen and they will be terrible for the future economic prosperity of this nation. The chart above, while not reflecting the current cap and trade legislation, shows the possible economic effects of curbing carbon emissions.3

I’m taken aback by this strange agenda, and I hope that at some point we can reverse it’s effects; there is perhaps another Regan waiting in the wings ready to rid us of this Jimmy Carter.2

  1. Liberman, Ben. The Economic Impact of the Waxman‐Markey Cap‐and‐Trade Bill. Accessed 6/30/2009.
  2. I must also confess that I regret ever leaving the conservative fold; I did it briefly as I became disillusioned by the war in Iraq sometime around 2006. I briefly flirted with supporting Obama as well. I apologize. Never voted Democrat, but I do vote Libertarian for the most part.
  3. The Economic Costs of the Liberman‐Warner Climate Change Legislation
  4. Cap‐and‐tax job loss chart of the day; Plus: A Senate reading assignment. Accessed 6/30/2009.