Congress Plots to Cap and Spend
Think revenue from the auctioning of carbon allowances would help balance the federal budget? Think again.
Congress is working on a piece of legislation that would increase taxes by almost $750 billion over the next ten years and would then spend virtually all that money, ostensibly in pursuit of a key public policy goal.
You might think I am referring to the health care bills that have been dominating the headlines. Those bills do include substantial tax increases, but not even the House bill gets up to $750 billion. No, the biggest tax-and-spend item on the agenda is the effort to reduce the threat of climate change.
A few months ago, the House of Representatives passed, by a narrow margin, a bill to limit the emissions that cause climate change. The bill’s key feature is a cap-and-trade system for greenhouse gases, such as the carbon dioxide emitted by coal-fired power plants and oil refineries. That system would set a national cap on greenhouse gas emissions and would require emitters to own permits (called allowances) to cover their emissions. Emitters would be free to trade these allowances among themselves, thus encouraging them to pursue the most cost-effective ways of reducing emissions.
The allowances are worth big money. According to the Congressional Budget Office (CBO), the allowances created by the House bill would be worth almost $1 trillion over the next decade, and presumably even more in subsequent decades.
The creation of a cap-and-trade system would thus impose $1 trillion in new taxes on the U.S. economy over the next ten years. And I don’t just mean that rhetorically. The CBO itself characterizes the creation of the allowances as a new source of tax revenue. And it’s right to do so. If Congress created these allowances and then auctioned them off, it would generate $1 trillion in new revenue for the government.
The need to pay for those allowances would, however, put a dent in corporate profits. And some firms would cut back production and either lay off workers or reduce their pay. As a result, the government would receive lower revenues from income taxes (both individual and corporate) and payroll taxes. So the $1 trillion in new allowance revenue would be partly offset by a reduction in other taxes. CBO estimates this effect at about $250 billion over ten years.
The creation of a cap-and-trade system would thus net about $750 billion in additional tax revenues. Not quite a trillion dollars, but still serious money, even in Washington.
I have no objection to the government raising that kind of money through a cap-and-trade system. Climate change is a serious problem and a well-designed system could reduce environmental harm while minimizing costs to our economy.
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Donald B. Marron, a visiting professor at the Georgetown Public Policy Institute, writes about economics and finance at dmarron.com. He previously served as a member of the President’s Council of Economic Advisers and as acting director of the Congressional Budget Office.
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30 Comments
1. Mike:“Climate change is a serious problem “…
… only in the virtual world of PlayStation climatology which ASSUMES an enormous role for CO2 (via an entirely hypothetical and non-observed water vapour feedback) and relies on the enormous warm-bias of the GISTEMP surface record. Tautological models wiggle-fitted to a heavily warm-biased record do not a “serious problem” make in the real world.
Oct 7, 2009 - 3:34 am 2. Cindy Sue Causey:Every time I see this [garbage], can’t help but have my poor Studebaker be the first thing that comes to Mind as being in their ultimate crosshairs..
Forwarding on..
Oct 7, 2009 - 4:21 am 3. Brian:“I have no objection to the government raising that kind of money through a cap-and-trade system. Climate change is a serious problem and a well-designed system could reduce environmental harm while minimizing costs to our economy.”
LMAO! Complete insanity, go ahead and drink the poison… but don’t hand me a cup. Climate change has been happening since there was a climate, now suddenly Al Gore has said it’s a problem and the author jumps on board. More likely its another excuse to implement MORE government controls which the Congress has no Constitutional authority to enact.
Oct 7, 2009 - 4:22 am 4. BackwardsBoy:Mr. Marron, you’ve been brainwashed. There is no such thing as man-made “climate change”. Every variation in the weather is perfectly normal, as mankind does not have the capacity to change it, despite what you’ve been told.
This legislation is an extremely bad idea, but is being vigorously pursued because it gives power-hungry politicians what they crave: more power, only this time, to destroy our economy and force Americans to suffer needlessly.
The fact that you support this bill shows that you are unable to think for yourself.
Oct 7, 2009 - 4:45 am 5. biblio44:1. Mike: “Climate change is a serious problem “…… only in the virtual world of PlayStation climatology
3. Brian: Climate change has been happening since there was a climate….
4. BackwardsBoy: There is no such thing as man-made “climate change”.
And don’t get us started on evolution!
Oct 7, 2009 - 5:47 am 6. Ken Miller:Ah, yes… climate change is a serious problem…
When I read lines like that, I wonder if the Fairness Doctrine is already operating at PJTV.
Oct 7, 2009 - 5:58 am 7. cedarhill:The serious climate change is simply our food supply will be reduced as the Earth goes through another period of cooling down. Wet springs, cool summers and early falls along with harsh winters requires quick growing and quick ripening cereals and vegetables. Oh, and not to forget you can freeze to death when you solar cell is snowed over and your windmill is iced up.
We need two things:
1. embark on developing all our energy resources – oil, natural gas, coal, oil shale and especially nuclear.
2. divert funding from foolish things like embryonic stem cell research into developing new plant strains that are both resistent to things like rust and can produce in the colder climates coming down the pike.
Obtw, for the embryonic crowd, adult stem cells, funded by private firms, are doing just fine and producing new treatments every month. Your choice is to toss money down that rat hole or starve while you’re freezing to death.
And we need more carbon in the atmosphere to help the plants.
Finally, pundits need to do a wee bit of reading and discover the Hockey Stick of Mann,Hansen and Gore is really a Hockey Puck. With Biffra and Yamal data released it’s a proven lie.
Oct 7, 2009 - 6:28 am 8. Trainwreck:If Al Gore, the UN and Hollywood celebutards say climate change is a serious problem, it must be so, who knows better than these geniuses?
Climate change has been with since the Earth was formed. That big yellow hot thing in the sky is the reason for changing climates, but ignoramuses, politicians and science elites with a political agenda think CO2, a natural part of every living process and a part of combustion has a miniscule effect. Every time you breathe, belch or fart, CO2 is produced (it is said that livestock farts produce far more CO2 than human activity, but Gore is not a vegetarian). We can no more control the weather than the dinosaurs could control meteor showers.
But never fear this bill will pass. Stalin also had his Soviet geneticist, Lysenko, whose theories on crop yields caused mass starvation. We have our own PC climatologist, Al Gore. Let’s see where his theories lead.
Just another way for elites to make billions and tax the crap out of us, and allow government to intrude into our lives in ways you could never dream of. Now the government can decide: how many children we have, how we heat/cool our homes, what car we drive, what lightbulb to use, what food to eat, how we travel, how much electricity we can use, etc. I can think of all sorts of fines the government can levy for individual excess carbon emitters.
Don’t believe me? In England, they are already trying to impose a carbon tax and government agents are picking through your trash.
Oct 7, 2009 - 6:32 am 9. Sebastian Shaw:The Democrats have long overplayed their hand; therefore, any further attempt to control the public through legislation will lead to a more intense backlash. Crap & Tax will also lead this current economic climate into a depression. Real smart power hungry incompetent leeches. Obama really does want to lose the House & Senate in 2010.
Oct 7, 2009 - 6:44 am 10. justasimplepatriot:Professor Marron:
Do a search on Hockey Stick Graph Debunked. You will see the kind of junk science behind the AGW scam.
You need to start learning again. Your “cloistered academician” is showing and it is embarrassing – truly embarassing.
Oct 7, 2009 - 6:47 am 11. noreen:Bend over America and get ready for the biggest scam cooked up to date
Oct 7, 2009 - 6:56 am 12. WackyMacky:The truly disturbing thing about the co2 claims is that when carried to it’s ultimate conclusion, it can be used to justify the elimination of people. Especially certain people, say people who don’t agree with them, hmmmmm?
I know. That’ll never happen, it can’t happen here, etc…
Oct 7, 2009 - 7:39 am 13. M. Report:Considering who these people are and the other ideas that they have espoused and represented publicly, I don’t think any assumptions other than the worst can be wisely considered.
Just recently there was another proof
Oct 7, 2009 - 7:48 am 14. keithacita:of the validity of climate change;
Some of the data base input to the
model “accidentally” got lost.
Oops. Never mind. we don’t care,
we don’t have to; We’re from the
government, and we’re here to help.
They mean to do good, and they will
do right well, selling us down the
river.
no more cap and trade. it’s pollution and investment according cosponsers parallel president john fitzgerald kerry-kennedy (httd -heir to the dynasty) and barbara boxer-kennedy (httd – heir to the dynasty)
Oct 7, 2009 - 7:53 am 15. Old Soldier:Can we at least name the bill accurately? I think “Economic Coffin Nail” would be appropriate.
Oct 7, 2009 - 8:12 am 16. MarkD:The economy is only beaten down, but not dead yet. This folly ought to do it.
When you can no longer buy gas for your car at any price, because you don’t have a job, and even if you did, the dollars you were paid are rightly viewed as worthless by the producers of oil, maybe you’ll begin to connect the dots. When I was a kid, poverty was a condition to work one’s way out of, not an ideal to embrace.
I don’t care if you voluntarily choose misery. Leave me alone. Honestly, it’s time for this country to split. Our differences are irreconcileable.
Oct 7, 2009 - 8:19 am 17. Scott:Well there has been climate change since before mankind existed and while mankind had little ability to impact the environment.
What happened to “Global Warming”? Did you figure out that it was easily debunked as the earth has actually cooled in the last decade? Is that why people like you and Al Gore have switched to “Climate change” now? A term that is difficult to refute since the climate is constantly changing as it has in the past and will continue to do in the future.
Without concentrated effort on the part of mankind to destroy our environment (eg Global Thermonuclear War) the Earth can and will handle pretty much anything we can throw at it. The Earth has survived ice ages that have significantly reduced the plant coverage, massive volcanic eruptions that have produced a “nuclear winter” effect, and asteroid/comet impacts that have had the force of high megaton nuclear detonations.
Does that mean we should pollute and use our natural resources foolishly? No, but it doesn’t mean we should enrich a few people, impoverish ourselves, and allow more government intrusions into our lives either.
Oct 7, 2009 - 9:02 am 18. Dr. Bukk:The law of unintended consequences needs to be considered before we jump into this abyss. Oil is to modern man as the buffalo was to Indians. What are we to do without plastic if we end our dependence on oil?
Can every factory, vehicle, home and office be retooled to look like the Flintstone’s home?
Our government should be subsidizing the extraction of our oil, coal and natural gas as well as nuclear energy as a means of defending our nation against enemies. The civilized world hangs on a thread controlled by communists and islamists, so we fiddle with solar and wind??? That’s 2.5% or our energy source despite decades of subsidies.
The simple Scientific Method of “hypothesis – experiment with control – conclusion” cannot even be applied to this arrogant assumption of the scientific community which will plunge us into economic collapse and civil breakdown.
Oct 7, 2009 - 10:20 am 19. Brian:Taxation is Slavery to the government! No other way to view the confistication of the efforts of your life… And Cap and trade is going to add some very serious links to the chain around our necks.
Oct 7, 2009 - 10:20 am 20. Ant:Amazing the Dems demonize corporations, where you have a choice to not buy their products, not be employed by them etc… at least some controls…
But the government is AOK! No way to avoid their form of slavery. TAXATION
So this is the brilliance that is taught in “public policy”. I would of thought promoting free markets, liberty and rule of law were taught. What would I know. I am part of the ‘unwashed masses’.
Oct 7, 2009 - 10:35 am 21. Jeffrey:My wife (graduate of 2 ivy degrees, free thinking person) insists that people on the left have to be smart because many attended fine schools, ipso facto, free thinking individual. No, here Mr. Marron sounds like a nice man. He must believe in AGW, but, can’t possibly think it so based on contrary reasoning. No, just a true believer who can’t believe that congress could be so irresponsible to not spend the windfall Cap and Trade tax properly. Imagine congress not taking the taxpayer into consideration in proposing a such a benevolent albeit expensive bill like this? After all congress has been responsible with the tax money so far, right? I was hoping my PJM brothers and sisters would have taken this guy to task. I now think, that, Mr. Marron in their eyes was not worth serious rebuttal. Mr. Marron, if congress got ALL the monies through taxation, ALL OF IT. I contend it would not be enough, EVER! You, may think they would make the best health care system and pay off the deficit. I don’t, and that is based on watching their behavior, not a heartfelt belief. The gall of elite thinking continues to amaze me. Hey, Mr. Marron, give me one, just one dollar, and I will give you back, twenty-five that’s 25 pennies. and a promise that the climate will change.
Keep this guy away from the purse-strings. What? Too late, … already at the CBO.
Good day.
All this cap and trade crap will only serve to bankrupt America and any other idiot nation that goes along with it. If anybody thinks these people love the Earth and want to save it you are deceived as well.
Oct 7, 2009 - 11:30 am 22. Poor Citizen:Nobody is going to play this game for long. Why? Because it’s fraud and theft.
The American people will find a way to circumvent having to pay for any of this crap. One of the strategies is; don’t buy anything. It’s already working. The government will then be so broke because of low tax revenues that it won’t survive in its current socialistic big brother form.
Right now it might be cool for some elitists to pay for or say they are paying for some carbon offset but soon there will be no extra money to throw around just so you can be cool. Hollywood’s margins are coming down too. It seems the left believes in capitalism more than real capitalists, it seems they think there is magically that much profit left in margins of business. They are so mistaken.
Here is the real problem; how are we going to defend ourselves from the Islamic murderers and other evil nations when we don’t have any money.
We better figure that out and soon because we are not very far away from economic collapse. Don’t bet on the current administration to do anything but weaken our position in the world. They really hate America. We just abandoned our only real ally in the Middle East. The consequences for us will be very negative.
Any policy, and any economic suffering we might face in order to reduce our dependence on foreign oil is worth it and must be supported. It makes sense for our future. The failure of previous administrations to something about our energy independence has already caused tremendous economic and personal tragedies to our country and its citizens. And…to do nothing is the worst thing of all….remember that. So lets hope we do something.
Oct 7, 2009 - 12:36 pm 23. Paul -Indiana:I’ve never gotten an answer to the question; ‘How did the ice ages begin and more importantly, how did they end?’ The greens simply won’t accept that the sun is the driving force.
Oct 7, 2009 - 1:18 pm 24. Charles:The idiot who wrote this piece is just another stupid Academic, though at least he is not a stupid academic Black/Communist liberation rascist like the zerO. However, the real villain of the absurd racket that is Global Warming is Al Gore, or King Canute as I call him. Al is a classic Gulfstream liberal, a stupid Fascist and a lying politician to boot. Because of our great free enterprise system he has had the freedom to make a fortune from lying, cheating and stealing from his countrymen, especially, though not exclusively, from the ultimate con game on hard working people everywhere: the insane madness of human global warming hysteria.
If King Canute were so concerned about global warming, you would think he would do everything he could to stop his own carbon creating activity – like the absurd but at least consistent Ed Begley – not just try to end ours. But that would require he give up his five mansions, his corporate aircraft, his cars, etc., and if he were truly to show his objectivity he would give up his ownership of a carbon credit business, his Dad’s mine and all of his money to fight this dire threat. It would be too much to expect him to give up farting or exhaling because after all we should be the ones to do that for him. All he is asking us to do is give up our future and that of our children for his absurd uptopia where carbon dioxide, part of the very essence of life, is now a killer and where we all must die so that the Earth may live! Al, you idiot, without Carbon Dioxide we are all dead.
Why is Al a Fascist? Let me count the ways. Because he wants to control the main spring of so much of our modern liberty: energy. By dictating huge taxes and limitations on every use of energy in this country and substituting wind mills and woefully inefficient human sun light collectors – the leaf has it all over the solar panel – he is cutting off modern life and liberty in this country and is most assuredly sending all of our jobs and our economic futures to China and India. Even a single cell organism could be expected to understand that the earth has been warming and cooling every day and over time since Genesis and that we ain’t got nothing to do with it. From day to day we called it the weather until we became scared of the ultimate source of physical life on Earth, the Sun! Al, you idiot, without the Sun and Carbon Dioxide we are all dead.
How do we know Al Gore is a lying politician? Because he continues to push a global warming panic when the Earth is actually cooling, (although saying you can take the temperature of the earth is itself a demonstrable absurdity); because there is no scientific proof of human caused global warming that has been validated by data or proven out by predicted results; because even if you believed their ludicrous mathematical models of the Greenhouse effect, reducing Greenhouse gases won’t do anthing to reduce a warming that doesn’t exist; because the clear solution to defunding the terrorists and reduce pollution isn’t being done: using our huge store of natural gas, exploiting our huge shale oil reservues, exploiting our coasts and drilling in Anwar, and most especially, nuclear power – even though we practically created all of these energy sources. This is not to mention the absurd arrogance of us refusing to exploit our land such as Anwar for our fuel needs but demanding that other countries do so and, by the way, keep the costs down.
The man who flunked out of Divinity School and Law School is a politician who thinks he is the God of Gaia and the ultimate lawgiver. Congress is about to give him his Angel Wings if it passes Cap and Trade; here’s praying he ends up more like Icarus.
Oct 7, 2009 - 2:23 pm 25. Ruebacca:The industrial revolution by 2050 will have added 1 CO2 molecule for every 10k dry (water excluded) molecules in the atmosphere. And we are supposed to believe the heat capacity of the atmosphere will go up 7oC.
If you believe that I have some carbon credits to sell you. The Carbon tax should be called the stupid tax. We sure are stupid if we make Gore rich over his lies. Al Gore is the greatest conman the world has ever seen. Global warming is the big lie that makes all the other lies the Democrats tell work.
I am a Chemist in the pharmaceuticals industry. I will be very mad if we have to pay for this con-job. The Democrats are unbelievable lairs in everything they do. DON”T BE FOOLED. It’s BS.
Oct 7, 2009 - 2:26 pm 26. Brian:“Any policy, and any economic suffering we might face in order to reduce our dependence on foreign oil is worth it and must be supported.”
PC, finally we agree on something.. open up ANWR, California and Florida to drilling
Oct 7, 2009 - 2:34 pm 27. Lazar:At least one author on Pajamas Media who isn’t crackpot crazy. But then he’s clearly a highly productive individual, whereas the others tend to be PR hacks whose ‘job’ is to feed the ignorance expressed in the comments here by the clientele.
Oct 7, 2009 - 4:53 pm 28. myth buster:22. No, Poor Citizen, doing nothing is not the worst thing. There are plenty of decisions that we could make that would make things worse. Economics 102 would teach you that ending oil imports at any cost is not a wise proposition; neither are all options superior to the status quo.
Oct 7, 2009 - 6:49 pm 29. MD:Cap & Trade is something I really don’t get at all!! Supposedly, this is to reduce carbon emissions into the atmosphere, right? Well, if “offending” companies purchase carbon credits to allow them to CONTINUE business as usual, just how much are emissions being released – decreased??? NONE!!! And people have the gall to call this “good for the country”??? This is beyond insanity. Actual people, so-called human beings, supposedly our Governmental leaders come up with this stuff?
Oct 7, 2009 - 10:31 pm 30. Brian:“Actual people, so-called human beings, supposedly our Governmental leaders come up with this stuff?”
heh… Al Gore is making MILLIONS off this stuff! So DOn’t be a hater, you got to support Al Gore.
Oct 8, 2009 - 4:01 am