Part 2 in a series
By Katie Kieffer
If you were a politician and you wanted to ensure your political future, you’d need to be careful when you proposed increases in taxes during a recession. But, in order to pay for new or growing government programs, you typically need to raise taxes. So, as a smart politician, you’d only support tax hikes that would secure you votes and a pat on the back, not a pink slip from your constituents on Election Day.
Cap-and-trade is the sexiest new tax proposal in the Senate. Our country is in a recession, but we are also in the middle of a massive green movement. Today, more than ever before, individual Americans and American corporations are trying to do everything they can to either be or appear to be green. For some, being “green” is about doing the right thing. For many others, it’s about doing the right thing, marketing and being fiscally responsible by saving energy costs. For politicians, however, their interest in supporting green taxes cannot be separated from self-preservation and attracting votes.
Cap-and-trade is just the kind of tax to get behind if you’re a politician since it’s trendy to be green in America now. As The Wall Street Journal puts it, ‘Politicians love cap and trade because they can claim to be taxing “polluters,” not workers.’ I think caring for the earth is always the right thing to do. I think it’s wrong for politicians to use the term “green” to push bigger, unnecessary government on their constituents.
What is cap-and-trade? Simply stated, the government sets a “cap” on the total amount of CO2 emissions that can be released by companies in the U.S. and then distributes “rights” or “allowances” based on this cap or limit. The government would allow companies to “trade” their carbon rights with each other. For instance, a high emitter like a coal plant would need to purchase allowances that would give them the “right” to emit CO2. The coal plant could “trade” with a company that doesn’t emit as much CO2 by purchasing their credits or allowances from them. Over time, the “cap” would become stricter – since the EPA would have the authority to increase caps every five years – and companies would need to find ways to reduce overall CO2 emissions – it’s sink or swim.
Cap-and-trade, would increase your cost of living if you are in the bottom 80 percent of the population and put money in your pocket if you’re in the top 20 percent. This is because, it is not an innovative solution to environmental concerns. Rather, it is a sexier way for politicians to describe a regressive tax during a recession that increases energy prices and doesn’t do much for the planet, as Robert Murphy, economist with the Institute of Energy and Research told Fox News in this video:
A Heritage Foundation study of the climate bill before the Senate, Waxman-Markey, that includes the cap-and-trade proposal, found that: “Waxman-Markey would cost the economy $161 billion in 2020, which is $1,870 for a family of four. As the bill’s restrictions kick in, that number rises to $6,800 for a family of four by 2035.”
You might be thinking: Even though cap-and-trade is effectively a huge tax and will increase my cost of living significantly, it’s a worthy investment because it will protect and preserve the earth. This is a valid concern, so I will consider it. In order for cap-and-trade to be determined effective, several things must be true:
First, man-made CO2 emissions must be proven to have a significant, measured and harmful contribution to global warming. This is still an unproven theory, and science is now coming forward with evidence that man-made CO2 emissions may even be beneficial to the environment, as I blogged here.
There is still plenty of research and investigation that needs to be done on carbon emissions before politicians can justify spending billions of dollars trying to lesson the small percentage of emissions attributable to humans when there are other proven and pressing environmental issues that need immediate attention.
Second, since CO2 emissions still need to be proven to be a significant, measured and harmful contribution to global warming and we are in the middle of a massive economic recession, it is imperative that any new tax be a long-term boon to our economy. Cap-and-trade will be a long-term financial burden on our economy, significantly killing job growth.
Any time you push money around through taxation, versus create money through innovation, it is a short-term solution, not a long-term solution. The only way to bring money into this country so that we can afford the new technology that is necessary to create clean energy, and hire entrepreneurs who have discovered less environmentally destructive ways of doing business is by creating an income stream. The government is not creating an income stream by taxing the entrepreneurs who it relies on to innovate and come up with thoughtful solutions.
Entrepreneurs create jobs and new ideas, not politicians. Young entrepreneur, Matt Harrison, author of The American Evolution and founder of the Prometheus Institute, contends that cap and trade will be especially harmful to young people who are trying to build up their careers or start their own business. Ironically, it could also put a damper on green or sustainable entrepreneurs – the industry that the government is supposedly trying to grow and innovate with the Waxman-Markey climate bill.
Harrison tells PR-inside.com: “As TIME Magazine points out, climate change may be the defining issue of my millennial generation, but that doesn’t mean we need our elders to solve it. We are the most entrepreneurial generation in history. We’ll solve it ourselves, and it will be much easier without a needless $6,000 tax dragging us down.”
Harrison pinpoints three primary reasons why cap-and-trade fails young people and its own objectives:
1.) The costs will cripple the economic growth needed to create a clean energy future.
2.) The bureaucratic nightmare created by the bill will drain the resources of existing businesses and be a barrier of entry for new entrepreneurs.
3.) The calculations on climate change are bound to be incorrect but if the earth only warms by one percent in the next 100 years what’s the point in spending $200 billion right now?
Next, I will continue this conversation, specifically addressing more of the economic and environmental impact of cap-and-trade.
Note: Click here to read Part 1 in this series.