What Is “Cap and Trade”? -By The Reluctant Republican
Whenever President Obama is asked about the environment, his budget, or his economic recovery plan, he always mentions the term “cap and trade” as a vital part of those plans. Consequently, it begs the question; what is he capping and what is he trading and perhaps more importantly, why? While the term has been getting some press, I don’t think most people have a clue what it means or what the implications of it are. So let’s start at the beginning. What does he want to “cap”? In short, greenhouse gas emissions. What does he want to “trade”? In short, the “right” to emit “greenhouse gasses” in the first place.
Now, the more important question; why? Well, for starters Obama has said that the program will raise anywhere from $300 to $650 billion depending on which speech you’re talking about or who you’re reading (Business Week says $646 billion, the Washington Times says $300 billion). This would be accomplished by the government creating a new licensing department in which licenses to emit greenhouse gasses were sold. In theory, by capping the number of licenses (or at least the amount of gasses permitted per license or some similar mechanism) the plan would have an immediate impact on overall emissions by more or less making it illegal to emit more than a given amount of greenhouse gasses. Now, if you A) believe in global warming and B) believe that it is man made (which is not as universally accepted as your liberal friends would have you believe as evidenced by over 700 scientists worldwide dissenting from a recent U.N. published report, authored by only 52 scientists by the way, claiming that global warming is man made), then I’m sure this sounds like a great plan. Especially since the government will be pulling in big bucks from everyone’s favorite villain; big business.
Let me ask some more basic questions here though. Exactly which businesses will be impacted the most, and exactly how are they going to be expected to pony up $300 to $650 billion dollars to purchase a previously unnecessary license just to keep operating? (Licenses which are also likely to reduce their ability to operate as is, as one of the stated goals of the licensing mechanism is to reduce greenhouse gas production from current levels.) It seems to me that the companies most likely to suffer from such a program would be the companies who traditionally emit the most greenhouse gasses; manufacturing and energy production companies.
We’ve already seen what happens to manufacturing companies in America when their costs increase; they leave. So with our unemployment rate skyrocketing why on earth would we pursue a course of action that will increase the basic cost of doing business for companies that provide employment in an economic sector that is already hurting? We cannot behave as if business in the United States exists in a vacuum. We exist in a global economy. If the U.S. government makes it too difficult or cumbersome or costly for companies to operate here at home; make no mistake, they WILL go somewhere more friendly. Businesses MUST earn a profit in order to survive. I’m sorry of that offends you, but its an economic reality. As long as product is moving and they have revenue, the best way to maintain profitability is to control costs. If costs are too high in one geographic area or country, you move. Its that simple.
As for the energy production companies who don’t really have the luxury of moving, does anyone expect them just to eat that cost? Absolutely they will not. They will increase prices like every company since the dawn of man when faced with an unavoidable increased cost of production. And who will be forced to pay those increased costs? That’s right. You and I. You think it was horrific when the price of gas spiked? Wait until your electric bill starts climbing, or your natural gas or heating oil bill. Let me be clear. President Obama’s plan to impose a “cap and trade” emissions plan on business is nothing short of a back door tax on every single American family. The sole purpose of which is to pursue an environmental agenda that lacks even the most basic consensus.
This is the kind of thing that makes me question President Obama’s basic judgment and connection to reality. Is he so tied to and blinded by his environmental agenda that he is incapable of recognizing the real burden that will be imposed on the average American family by implementing it? Or does he just not care?
The President says that this type of program is crucial to the development of new technologies that will make us “energy independent”. However, the cap and trade program can only achieve that goal by making current energy technologies so expensive that otherwise expensive alternatives are suddenly cost competitive. (Much like the enormous subsidies for ethanol). The net result of which is that the average cost for energy is artificially inflated by government intervention and the average consumer gets an instant cost of living increase. Our basic economy has been rocked to the core. The jobless rate is through the roof. Billions of dollars in wealth that was sitting in average Americans’ savings accounts and 401(k)’s has been eviscerated. And still, our President continues to shoehorn his environmental agenda into our faltering economy and force an already financially battered citizenry to pay more for basic necessities like energy. (See a full report from the George C. Marshall Institute here or read a summary from U.S. News and World Report here.) I just don’t get it. Do you?
Conservatism Lives!
