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Cap and Trade is here

Let me start by explaining that I am not a lover of cap and trade.  The systems that have been proposed to date are simply taxes on certain types of energy so that other forms seem to be more competitive.  They also tend to reward industries that can have a flexibility in energy sources while punishing industries that have to purchase high BTU energy sources.  Finally, they can reward industries and organizations that did nothing to improve their energy use – they were just lucky enough to use less carbon.  To make cap and trade look better, you may also see it referred to carbon trading or carbon offsets but a rose is a rose, regardless of its name (or in this case – a tax is a tax, regardless of its name).

The other bad thing about carbon trading is that it doesn’t really tackle all of the problems of greenhouse gas.  I have pointed out many times that methane is a very powerful greenhouse gas and we could do a lot of short term good by cutting the man-made methane production.  Al Gore and his cronies that want to rule the world don’t talk about that because it would mean a major change in eating habits in the US.

I have not taken the time to read President Barack Hussein Obama’s new budget plan but others have (the wonders of the Internet).  BHO has proposed $78.7 BILLION dollars in revenue gained from a tax on fuel related to carbon.  With a US population of 303,824,640. That equates to a tax of just over $250 on every man, woman, and child (we need to spread it out since this tax is a USE tax so it hits every age group and every income bracket).  If we assume the average family is 2 adults and 2.5 kids (4.5 per unit) then we see that each family will kick a bit more than $1,100 in taxes without putting a dime of it on their tax form.  Also, note that they intend to almost triple that tax bill in the next 10 years.

Will the US government spend the money wisely?  Before I let you read more, I give you one thought that I picked up from the Replace Congress site. 

When has the US government ever used our money wisely?

The Wall Street Journal did a great article on the topic in the Opinion section.  Here are some selected parts but feel free to jump over and read their entire opinion.

An Inconvenient Tax

Cap and trade yields ‘climate revenues.’ But don’t call it a t–.

…his own budget reveals that taxes will rise for 100% of everyone for the sake of global warming.

You don’t even have to burrow into yesterday’s budget fine print to discover the “climate revenues” section, … it expects $78.7 billion in new tax revenue in 2012 from its cap-and-trade program. The pot of cash grows to $237 billion through 2014, and at least $646 billion through 2019. If this isn’t tax revenue, what is it?


If it brings in revenue that the government then spends, it’s a tax, and politicians should start referring to it as such. The Administration in fact projects that these “climate revenues” will become the sixth largest source of federal receipts by 2019, outpaced only by individual and corporate income taxes, payroll taxes for Social Security and Medicare and (barely) excise taxes.


….The complex cap-and-trade tax would ripple throughout the energy chain and ultimately the entire economy. All consumers, not just “the rich,” would pay more for goods and services that use carbon energy — though some would pay more than others. A majority of those “95% of working families” probably lives in the middle of the country that relies far more on manufacturing and coal-fired power than do the better-off coastal regions.

…Energy Secretary Steven Chu was refreshingly candid on this point …. Given that higher prices are supposed to motivate the changes necessary to reduce carbon energy use, … he was worried that climate taxes may drive jobs to countries where costs are cheaper. “The concern about cap and trade in today’s economic climate,” he said, “is that a lot of money might flow to developing countries in a way that might not be completely politically sellable.”


Mr. Obama’s budget proposes to spend this windfall on two items: $15 billion a year in more subsidies for alternative fuels, and $65 billion or so a year to finance tax subsidies for workers, many of whom don’t pay income taxes. In other words, once this cap-and-trade tax is on the books, the revenue stream will create political constituencies that depend on it.


By the way, the Congressional Budget Office estimates that cap-and-trade taxes would actually throw off as much as $300 billion every year — not merely $78.7 billion — and in a footnote the Obama budget implicitly acknowledges that its $645.7 billion estimate is a lowball: “All additional net proceeds will be used to further compensate the public.” No doubt.

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2 Responses to “Cap and Trade is here”

  1. Typical of the flim flam we’re seeing so much of from our government these days. Of course they don’t want to call it a tax. They’ll never get this tax passed if they call it what it is.

    In fact, that is the case with much of government today–they’d never get it passed if they called it by its proper name so they create euphemisms that are dutifully adopted by the interest groups behind whatever disaster is currently being pushed.

    Obviously, this rant goes far beyond global warming.

  2. […] you read this site often, you know that I really don’t like carbon trading.  I don’t think it will help solve any problems and it is only a way to tax people and […]