Politicians want to seem like they're "doing something" when in reality all they are really doing is waving around a piece of paper. Not even the Kyoto treaty would detectably impact climate change. They all want to say this did something, but of course they don't want to go on the record of voting for a direct tax because that's transparent and that threatens the jobs of any member who votes for it. So they come up with a brilliant shame called cap and trade. It's a rationing scheme with a number (the cap). The state decides how much of something the private sector can use. Like nylons or gasoline in WW II, this is is gasoline and electricity from disfavored sources, or in shorthand electricity production that actually works. They set a cap and allocate allowances (rationing coupons) to use electricity. You can sell them if you for fail or move and, you have to buy them if you succeed or stay here.
Now as always on this blog, I disclose all. The cap and trade does not put an electricity limit on every company. However, that's part of the scheme. The Obama admisntiartion says not to worry; that it only covers energy intensive sectors such as energy production, manufacturing, steel, ceramics, glass, chemicals/plastics. What's there to worry about right? None of those things factory into the economy... huh? The same types of companies that have been hit really hard in Euerope with their own cap and trade regulations will be hit really hard here. In order to use the extra electricity they need, they'll have to buy electricity credits from other companies that aren't using their limit of electricity. Those who commit the ultimate sin in America today which is to succeed and those who succeed domestically will have to buy more of these allowances from someone who fails. So the incentive to fail is great, or for example as we saw under Kyoto in Europe the following happens. When cap and trade went into effect in Europe, China reopened old refrigerant factories and said, "Nice treaty you have here, it'd be a shame if you violated it. Of course I could shut down this factory I just reopened for the purpose of being paid to shut it down. If you give me a bag of money, I'll give you a piece of paper saying YOU REDUCED YOUR EMISSIONS. That's all part of the cap and trade scheme, and part of the mess you will always get into when the government sticks its big fat sticky hand into the private sector,
HOW MUCH WILL ITS COST YOU?
The administration expects to raise in revenue from 100-300 billion dollars a year. Just to put this in perspective, the biggest tax in American history, adjusted for inflation was that tax issued to pay off WW II which was $107 billion per year. This will be by far the biggest tax increase in American history. What it does mean to the average household? A CBS reporter said 200 billion lifted from you wallet would be the equivalent of a 15% increase in income tax or about $1761.00 per household on average!
The president's budget director testified recently testified to congress saying, "Consumers pay these taxes. Believe it or not, businesses pass taxes on to the extent they can (did congress really not understand this concept?), and of that they can't, they leave." It's pretty frightening that congress didn't understand a really basic economics principle. But then again, it appears that Obama is an economic illiterate.
So the cost to the average cost to the consumer just for buying the allowances would be that figure. Now you take to the overall loss to the economy and increased prices for everything that has energy in it. Start with energy itself, electronic goods, anything that requires energy intensive manufacturing, appliances, food for example. The cost of everything that has energy in its life cycle goes up. That means it hurts the poor and seniors first and worst because they spend a lager portion of their income of food on electricity and transportation.
Thank goodness that it's currently stalled out in the senate, for now. Most people just don't realize how damaging to the economy this would be. Cap and trade is a horrible idea and another example of the disastrous results of big government.
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