Cap and Trade is a Tax on All Americans

[fossten]

The coming cap-and-trade tax
posted at 4:00 pm on March 2, 2009 by Ed Morrissey

Barack Obama insists that his new tax increases will not affect 95% of Americans, who will not pay even a dime more. He may be right about that, at least directly, but Obama has another plan that will hit every single American with a massive cost burden. The George C. Marshall Institute analyzes the potential impact of the cap-and-trade energy system that Obama espouses and finds a big price tag that only gets bigger as we go along.

First, it will depress growth, which almost everyone predicts (page 3):

Estimated GDP losses vary widely, from a 0.3%-0.5% to 3% drop in GDP below the business-as-usual projections in 2015 and a 1% to 10% drop in 2050. The timeframes of new technology development and growth in existing clean sources of energy, availability of offsets (domestic, international), and banking of allowances are likely to account for most of these differences in GDP costs estimates.

Loss of GDP means a retracting economy, less opportunity, fewer jobs, and a decline in living standards. The Marshall Institute offers the question of whether the US wants that as a tradeoff for the questionable effects of limiting carbon-dioxide emissions into the atmosphere. Unfortunately, the present administration and its backers won’t acknowledge that as the choice before us, preferring to paint rosy pictures of increased living standards and prosperity while the government chokes off energy production, a contradiction they claim to solve with an explosion of “green energy” from sources that don’t exist at the moment.

How do we know that? Even Europe, which led the “green” movement, has discovered that stopping conventional energy production doesn’t magically produce realistic, mass-production alternatives.

But the bad news gets worse. Not only will the GDP drop over both the short and long terms, but the increased price of energy will result in substantial costs to all Americans — not just Obama’s 5% at the top (page 9):

We find that a mitigation path consistent with Lieberman-Warner’s provisions is equivalent to a permanent tax increase for the average American household. This increase is projected to amount to an additional $1100 in taxes in 2008. Moreover, this cap-and-trade “tax” increases over time in real terms from about $1400 to $2000 during 2015-2030 and approximately $2000 to $3000 in 2030-2050. The de facto tax increase becomes quite significant when one considers the average American household spends about $2500 on food annually, or approximately $208 monthly. The decrease in consumption per capita of $277 annually is equivalent to more than one month’s food budget for the average American household, keeping other consumption levels constant.

Another way to gauge this cap-and-trade tax impact is comparing it to auto-loan payments. For example, a new 2009 C-Class Mercedes can be leased for around $429 per month. A decrease in consumption by $1110 amounts is equivalent to 2.5 monthly payments on this luxury car. This tax amounts to almost three and a half monthly payments in 2015 and almost seven payments in 2050.

Great. So we make less, get less, and pay more — or do without. I can’t afford two Mercedes autos now, and given the way the markets are heading at the moment, I may not be able to afford two Schwinns by 2015.

A nation looking to boost growth has to first rely on cheap and plentiful energy. Without that, investment disappears and so do jobs, production, and consumer confidence. John McCain’s Lexington Plan addressed that, even if it took Paris Hilton to explain it properly. It addressed short- and medium-range energy needs by expanding domestic oil and natural gas production and boosting nuclear power while using the proceeds of those industries to develop alternatives for the long term. Without that, all we have is energy rationing … and look how well that worked for us in the 1970s.
Read the entire Marshall analysis, and start letting your friends know that the tax on the other 95% is coming. Soon.

 

[fossten]

http://www.youtube.com/watch?v=dTi7JOU8YzY&feature=related

 

[04SCTLS]

Canada uses the gas tax to fund universal healthcare and other welfare.
Not in a quid pro quo but essentially that's what happens.
Kinda expecting the same thing here.

 

[fossten]

Canada uses the gas tax to fund universal healthcare and other welfare.
Not in a quid pro quo but essentially that's what happens.
Kinda expecting the same thing here.

Then where will all the Canadians go to get their healthcare?

 

[luxuryrules]

Then where will all the Canadians go to get their healthcare?

To expand upon this question, I would ask in addition where the doctors will go to make their money?

A handful of my clients are docs who live in Canada & work up there for eight months of the year, then come down here to work the other four just to make some dough.

 

[shagdrum]

To expand upon this question, I would ask in addition where the doctors will go to make their money?

A handful of my clients are docs who live in Canada & work up there for eight months of the year, then come down here to work the other four just to make some dough.

Good point.

In the long run, becoming a doctor is less and less profitable. Fewer doctor, and quality of healthcare drops. Leads to healthcare rationing. Not a pretty picture.

 

[Calabrio]

To expand upon this question, I would ask in addition where the doctors will go to make their money?

A handful of my clients are docs who live in Canada & work up there for eight months of the year, then come down here to work the other four just to make some dough.

The real question is- where will we find new doctors and highly trained specialists?
Who's going to endure the 8 years of college, residency, and the outrageous responsibility and insurance costs?

 

[foxpaws]

The de facto tax increase becomes quite significant when one considers the average American household spends about $2500 on food annually, or approximately $208 monthly.

Just as a little aside - what 'average' family spends only $48 a week on groceries?

 

[Calabrio]

Just as a little aside - what 'average' family spends only $48 a week on groceries?

A really teeny one?

 

[fossten]

Just as a little aside - what 'average' family spends only $48 a week on groceries?

How very snobbish and elitist of you.

I guess you're not aware of people who live on Mac and cheese and don't get to drive a Cadillac.

 

[luxuryrules]

The real question is- where will we find new doctors and highly trained specialists?
Who's going to endure the 8 years of college, residency, and the outrageous responsibility and insurance costs?

Yep - exactly. Another part of my clientele is dentists, who opted to go into dentistry & orthodontics because there is more money to be made in oral care than in general medicine. Malpractice insurance, coupled with Medicare, Medicaid, etc has severely eaten into doctors' potential to make money.

Just as a little aside - what 'average' family spends only $48 a week on groceries?

A really teeny one?

Yeah, I was wondering about that myself. I can think of exactly one person who feeds her family of four on $200 a month, and that is only through some serious coupon clipping, bargain bin shopping, always using store brand products, buying in bulk, etc. All great money saving measures, but $48/week is a little optimistic.

 

[foxpaws]

How very snobbish and elitist of you.

I guess you're not aware of people who live on Mac and cheese and don't get to drive a Cadillac.

No, it is realistic Foss - The US Department of Labor estimates that the average American family spends $8,876 per year on food. I was just pointing out an unrealistic statistic.

Even just 'singles' spend, on an average, $4,142 per year on food....

Yep, I get to drive my caddy, and eat mac and cheese only when I want to, not because I 'have' to. I live in a great place, and I have a great job.

And I am a bad girl because I speed...

So, I am an elitist snob (oh boy, yet another label for me) according to you. Fine....

 

[Calabrio]

Let me correct the hijack here-
Regard the so-called "cap and trade" policy which is really nothing more than a carbon tax.

What Obama's Cap-And-Trade Plan Will Cost You
March 03, 2009 08:07 AM ET | James Pethokoukis | Permanent Link | Print

A study from the George C. Marshall Institute tries to quantify the costs of a cap-and-trade plan to reduce carbon emissions. They're not small, to say the least: And although this study uses 2008 as a baseline, the Obama plan would hit in 2012 and could come in combo with a hike in investment and incomes taxes for wealthier Americans and the creation of a special healthcare tax:

The authors find that the constraints posed by the Lieberman-Warner cap-and-trade approach is equivalent to a constant (in percentage terms) consumption decrease of about 1% each year, continuing to 2050. Put another way, the cap-and-trade approach is the equivalent of a permanent tax increase for the average American household, which was estimated to be $1,100 in 2008, would rise to $1,437 by 2015, to $1,979 in 2030, and $2,979 in 2050.

Reviewing a host of recent studies, Buckley and Mityakov show that estimates of job losses attributable to cap-and-trade range in the hundreds of thousands. The price for energy paid by the American consumer also will rise. The studies reviewed showed electricity prices jumping 5-15% by 2015, natural gas prices up 12-50% by 2015, and gasoline prices up 9-145% by 2015. As an illustration, gasoline would suffer a 16 cent price increase per gallon at the low end of the estimates to a $2.58 penalty at the high end (using the January 2009 reported retail price of $1.78 per gallon).

http://www.usnews.com/blogs/capital...-obamas-cap-and-trade-plan-will-cost-you.html

Here's a copy of the study:
http://www.marshall.org/pdf/materials/636.pdf

 

[fossten]

Editorial: Cap-and-trade plan will sink Michigan

The Detroit News

President Barack Obama's proposed cap-and-trade system on greenhouse gas emissions is a giant economic dagger aimed at the nation's heartland -- particularly Michigan. It is a multibillion-dollar tax hike on everything that Michigan does, including making things, driving cars and burning coal.

The president is asking for a system of government limits on carbon emissions. The right to emit carbon would be auctioned off to generate revenue for more government spending programs.

The president's budget projects receipts totaling $646 billion through 2019 from the sale of these greenhouse gas permits.

The goal, according to the president's budget outline, is to reduce greenhouse gas emissions such as carbon dioxide to 14 percent below 2005 levels by 2020.

Doing so will drive up the cost of nearly everything and will amount to a major tax increase for American consumers.

Such a tax will hit the Midwest particularly hard, which is why House Minority Leader John A. Boehner, R-Ohio, told the New York Times, "let's just be honest and call it a carbon tax that will increase taxes on all Americans who drive a car, who have a job, who turn on a light switch, pure and simple."

The carbon tax will be paid by energy companies, manufacturers and public utilities, who will pass the cost on to their consumers. Michigan will be especially targeted. It gets 60 percent of its electric power from coal plants, and the state's economy is still reliant on heavy manufacturing such as car and truck assembly and auto parts production.

Michigan will lose as carbon tax money is shifted to states with a greater presence of high-tech and service businesses.

The proposed tax would take effect in 2012 and has the very real potential to throw the nation back into recession, if indeed the expected recovery has arrived by then. It's impossible to raise costs for such basics as manufacturing and energy production by more than half a trillion dollars over a decade and not have the effects felt across the economy.

The nation's gross domestic product contracted at an annualized rate of 3.8 percent in last year's fourth quarter -- the worst economic record in nearly three decades. Is this really a good time to be talking about a carbon tax? How will such talk impact investment decisions?

Obama promises to use some of the revenues for tax relief for certain workers and some of the rest for subsidies for alternative energy. But that won't make up for the damage this huge new tax will do to the economy, especially in Michigan.

A similar program in Europe hasn't worked. European automakers complained about carbon dioxide limits the European Union proposed in 2007 as damaging to the economy.

The Obama cap-and-trade program will place even more of the economy under the control of the federal government. The only upside is that the negative impact it will have on economic growth and job creation will take care of the carbon emissions problem, for sure.