|Obama's $646 Billion Cap-And-Trade Green Tax|
By James Pethokoukis
February 26, 2009
As I see it, the most important single item in President Obama's budget is his
commitment to a cap-and-trade plan (to limit and reduce carbon emissions). It
represents nothing less than an absolutely breath-taking attempt at
reengineering the entire American economy. The White House expects the system
will begin generating revenue for the government in 2012. By auctioning off
carbon permits, the White expects the plan to bring some $80 billion a year
between from 2012 to 2019.
1) What this is, of course, is a de facto business tax that will get passed
along to workers and consumers. (Not to mention the impact on economic growth.)
And not a small tax, at that. Over that same period, the White House expects
regular corporate taxes to bring in some $3.8 trillion dollars. So the
cap-and-trade auction impose an additional 20 percent tax or cost above that
level. And remember that we already have the second highest corporate tax rate
in the world.
2) Of that $80 billion, $15 billion would go toward "clean" energy investment.
The rest would pay for his Making Work Pay tax credits. So what we have is, in
essence, an enormous wealth transfer from job creators to consumers.
3) Let me also go back to something I wrote last summer:
Here is what William Pizer, an economist at Resources for the Future and a
lead author on the most recent report from the U.N.'s Intergovernmental Panel
on Climate Change, said at a symposium earlier this week here in Washington:
"As an economist, I am skeptical that [dealing with climate change] is going
to make money. You'll have new industries, but they'll be doing what old
industries did but a higher net cost.... You'll be depleting other industries."
Of course, many economists will recognize "the green is good for growth" trap
that Obama and Clinton have stumbled into. It's just a modern iteration of the
famous "broken windows fallacy" where people mistake the shifting of wealth
and resources for the creation of new wealth and resources.
Pizer went on to say that calls for dramatic reductions in carbon
emissionsóthe Democrats want 80 percent, John McCain 65 percentówere also
unrealistic unless there was"some event"that really galvanized public opinion.
Instead, what he predicted was a modest price on carbon via a cap-and-trade
plan, a greater push for efficiency, and more regulation of energy-intensive industries.