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March 11, 2009
Who Pays for Obama's Cap and Trade?
Who Pays for Cap and Trade?
Cap and trade is the tax that dare not speak its name, and Democrats are hoping in particular that no one notices who would pay for their climate ambitions. With President Obama depending on vast new carbon revenues in his budget and Congress promising a bill by May, perhaps Americans would like to know the deeply unequal ways that climate costs would be distributed across regions and income groups.
Politicians love cap and trade because they can claim to be taxing "polluters," not workers. Hardly. Once the government creates a scarce new commodity -- in this case the right to emit carbon -- and then mandates that businesses buy it, the costs would inevitably be passed on to all consumers in the form of higher prices. Stating the obvious, Peter Orszag -- now Mr. Obama's budget director -- told Congress last year that "Those price increases are essential to the success of a cap-and-trade program."
Hit hardest would be the "95% of working families" Mr. Obama keeps mentioning, usually omitting that his no-new-taxes pledge comes with the caveat "unless you use energy." Putting a price on carbon is regressive by definition because poor and middle-income households spend more of their paychecks on things like gas to drive to work, groceries or home heating.
The Congressional Budget Office -- Mr. Orszag's former roost -- estimates that the price hikes from a 15% cut in emissions would cost the average household in the bottom-income quintile about 3.3% of its after-tax income every year. That's about $680, not including the costs of reduced employment and output. The three middle quintiles would see their paychecks cut between $880 and $1,500, or 2.9% to 2.7% of income. The rich would pay 1.7%.
But the greatest inequities are geographic and would be imposed on the parts of the U.S. that rely most on manufacturing or fossil fuels -- particularly coal, which generates most power in the Midwest, Southern and Plains states. It's no coincidence that the liberals most invested in cap and trade -- Barbara Boxer, Henry Waxman, Ed Markey -- come from California or the Northeast.
Democrats say they'll allow some of this ocean of new cap-and-trade revenue to trickle back down to the public. In his budget, Mr. Obama wants to recycle $525 billion through the "making work pay" tax credit that goes to many people who don't pay income taxes. But $400 for individuals and $800 for families still doesn't offset carbon's income raid, especially in states with higher carbon use.
All the more so because the Administration is lowballing its cap-and-trade tax estimates. Its stated goal is to reduce emissions 14% below 2005 levels by 2020.
We asked the White House budget office for the assumptions behind its revenue estimates, but a spokesman said the Administration doesn't have a formal proposal and will work with Congress and "stakeholders" to shape one. We were also pointed to recent comments by Mr. Orszag that he was "sure there will be enough there to finance the things that we have identified" and maybe "additional money" too. In other words, Mr. Obama expects a much larger tax increase than even he is willing to admit.
Cap and trade, in other words, is a scheme to redistribute income and wealth -- but in a very curious way. It takes from the working class and gives to the affluent; takes from Miami, Ohio, and gives to Miami, Florida; and takes from an industrial America that is already struggling and gives to rich Silicon Valley and Wall Street "green tech" investors who know how to leverage the political class.
Wild Thing's comment...........
Monstrous!
Per the article I noticed “Red State’s” are the most impacted from this new tax scheme.
The Cap & Trade tax is going to be paid by everyone because it will increase costs for energy and every product anyone buys. Goods and services will reflect the increased costs. So much for the "If you make less than $250K you won't pay one dime more taxes" with the Obama tax plan.
To call this anything other than a tax increase is not being honest.
Obama lied....( again! )
Economy died.
....Thank you Lynn for sending this to me.
Posted by Wild Thing at March 11, 2009 06:47 AM
Comments
Actually some of the Blue States are going to get hit real hard by this. Your Northeast states who vote Democrat along with Michigan, Wisconsin, and Minnesota are going to be hammered come winter. It already costs a small fortune to heat a house there, now it'll be worse. They wanted change..
Posted by: BobF at March 11, 2009 10:05 AM
Redistribution of wealth is right. Those who pay taxes will be hit with pollution taxes. Meantime, there will be programs put in place, with plenty of new unionized govt employees, to distribute government funds to multi-generational welfare families and illegal aliens so they won't have to pay these pollution taxes.
Once this cap and trade is put into effect it will grow and grow. Meantime, like the Energy Dept produces no energy, this costly C&P department will have no effect on the climate. It will only be another growth of government and government power over our daily lives.
Posted by: TomR at March 11, 2009 01:14 PM
Is America a great place or what? :{
Posted by: cuchieddie-25th ID Vet at March 11, 2009 06:28 PM
BobF., our State, Florida, went blue, but just barely. It was almost split down the middle this last election and it has mostly gone red before. Our Gov. Crist is a rino waaaaa and can hardly wait for the stimulus. It is horrible and embarassing how he behaves about Obama.
Posted by: Wild Thing at March 11, 2009 07:43 PM
Tom, thank you for your input about this.
The more it is explained the more of a nightmare what they are doing is made clear.
These people have waited for what they have today. A person like Obama and a majority in the Houses. God help America.
Posted by: Wild Thing at March 11, 2009 07:51 PM
cuchieddie-25th ID Vet, yes it sure used to be.
Posted by: Wild Thing at March 11, 2009 07:52 PM
