Cap and Tax: the Democrats #1 PriorityPolicy

First, check out the video:

Second, as an alternative, Rep. J. Randy Forbes (R-VA04) continues to advocate for the New Manhattan Project and is introducing the bill again. The bill:

Calls on the United States to reach 50% energy independence in 10 years and 100% in 20 years, and will award competitive prizes to the first individual or group who can reach any of seven established energy goals:

- Double CAFE standards to 70 MPG while keeping vehicles affordable
- Cut home and business energy usage in half
- Make solar power work at the same cost as coal
- Make the production of biofuels cost-competitive with gasoline
- Safely and cheaply store carbon emissions from coal-powered plants
- Safely store or neutralize nuclear waste
- Produce usable electricity from a nuclear fusion reaction

This Cap and Tax plan is a terrible idea. It outsources jobs, hurts small business, doesn’t really address climate change, and costs the taxpayer an average of $1200 MORE per year. Gee, what’s not to love?

Hopefully Congress gets smart on this one. But just to be sure, you better let them know:

  • Bob

    If we implement Obama’s energy plan, including cap and trade, we will see $6.00 a gallon gas by 2011. Obama was a board member on on the foundation that gave seed money to start the Chicargo Climate Exchange
    North America’s only cap and trade system for all six greenhouse gases, with global affiliates and projects worldwide. The charity was the Joyce Foundation on whose board of directors Obama served and which gave nearly $1.1 million in two separate grants that were “instrumental in developing and launching the privately-owned Chicago Climate Exchange
    Right now carbon offsets are a voluntary market and offsets are currently trading at about 75 cents a metric ton. However EPA values them at $20.00 a metric ton and in Europe and Austrailia offsetts can fetch $10.00 and $25.00 a metric ton today. If we implement cap and trade the current price will soar and the way the offsets are traded will reward Obama supporters the most.

  • tx2vadem

    The last estimate I saw from CBO put the average net economy-wide cost at $175 per household. Where do you get the $1,200 number from?

    On those other quick hits, whether it outsources jobs depends on a number of things. Labor is so much cheaper in China and India today that I doubt this would have more than a negligible effect. The other point would be we don’t know the outcome of global discussions on this. We may be better positioned for a global system if we come to the table with something in hand.

    On small business, assuming they are all sole proprietorships, partnerships or S-Corps, the effect on the top two quintiles of income earners is $340 and $245 respectively. This hardly seems like something that would cripple small business. Much of the cost can be avoided by some simple energy efficiency measures. The biggest cost of this will be on utilities and they are not small businesses.

    On addressing climate change, it certainly does. I don’t know how you can argue that it doesn’t. It will effectively increase the cost of fossil fuels which will make substitutes more competitive. It alters price signals in the market place so that consumers will make different decisions. It does this in a rather round-about, administratively-complex way, but it does do that.

    I’d agree that there are better ways to go about this. A carbon tax, for example, set at a sufficient level per metric ton of carbon would do all of the same without the additional administrative burden. But the idea of a carbon tax is unpopular because it is too transparent.

    As to Forbes’s idea, I don’t see how this would really do anything. If fundamentally price signals are unchanged, then petroleum and coal will remain the dominant sources of fuel for the foreseeable future. The market will respond to that signal and why would private industry invest money in R&D for a cheap alternative when the status quo is still cheapest? There is also the question of whether these prize awards fundamentally alter the financing decisions for such projects. On an uncertain project like those outlined, the expectation for return would be rather high. An uncertain payout at the end of the project, in my mind, would not change any financing decisions. There is a grant program included, but again it is hard to see whether this changes financing decisions. Also, I don’t understand how this piece of legislation would even change the status quo for what national labs and universities are currently working on and receiving funding for. His bill has relatively insignificant appropriations (as compared to GDP or even total federal outlays). Without a significant change in capital allocation in the economy, how does he expect this “New Manhattan Project” to work?

  • Bob

    We only need to look to Spain’s 10 year trial in creating green jobs through regressive taxes. For every new “Green” job created they lost 2.2 other jobs. The debate has changed from global warming to climate change, why you ask? Because the temperature hasn’t risen in 10 years, if anything we should be more concerned about global cooling. It has been well documented that the amount of sunlight reaching the planet has diminished in the last few years. It gets hot and it gets cool it get hot again and then again cool. It’s cyclic. There’s a direct correlation between sunspots and total solar output, it is measured in watts per square meter. Right now we are at a historic low in sunspot activity and solar output is down. Should we be concerned about climate change? Yes, but should we spend billions if not trillions on an inexact science, I think not. Plan for yes, but spend this amount of our and our children’s money, NO.
    Should we develop renewables ,yes but I’m more concerned about sustainable development not just the flavor of the month. We only need to look at the ongoing food for fuel debate and the unintended consequences of higher food prices.
    Cap and Trade is nothing but a huge new tax.

  • Bob

    7 Republicans so far are voting for passage and they need to go!

  • Bob

    Well it just passed in the House, welcome to the Vermont Republic of America. The 8 republicans that voted for this need to be voted out of office. Those 8 turncoats are ignorant and lazy and could have stopped this ridiculous piece of legislation.

  • tx2vadem

    Bob, without government intervening through subsidies or changing price competitiveness through taxation, renewables would not have a chance. Coal and oil not priced with externalities are and for the foreseeable future will be cheaper than renewables. The oil industry has proven time and time again ingenuity in extracting the resource. Above $40 a barrel, we can start mining the tar sands of Alberta or Utah. And coal despite how dirty coal combustion is even with scrubbers and chemical catalysts is cheap per megawatt.

    So, if you think we should develop renewables, then you must be expecting government to do something. If we let private enterprise alone, then we would need sustained high gas and coal prices for people to really consider alternatives.

    Purging your party is also not a good idea for what its worth.

  • EJ


    I agree with you and your analysis of price signals. I too would prefer a carbon tax over this cap and trade. The one question; however, is what exactly is the cost of the carbon externality? No one really knows – the estimates are all over the place – and the magnitude of carbon driven global warming is very debatable. So in reality, this entire scheme is more of an excuse to implement a tax rather than deal with carbon. And as more revenues are sought after, just as we continuously increase cigarette taxes and other “sin” taxes, so will this roundabout tax on carbon go up over the years all done in the name of being green, and just creating economic harm instead.