Growls

Last week, the Wall Street Journal reported that: “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.” They then wrote:

“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%. Cap and trade is the ideal policy for every Beltway analyst who thinks the tax code is too progressive (all five of them).

It gets worse, though. The Journal points out, “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.”  See the following chart that accompanied the article:

In a news release today, the Tax Foundation, reported American households would see an annual tax burden of $144.8 billion under a cap-and-trade system. Foundation scholar Andrew Chamberlain “explains that this burden would be disproportionately borne by low-income households, those under age 25 and over 75 years, those in southern states, and single parents with dependent children. The bottom 20 percent of income earners has an annual cap-and-trade burden that is equal to 6.2% of their household cash income.” The compete sttudy can be accessed from the news release.

As the Wall Street Journal concluded:

“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.” (emphasis added)

Also last week, Investor's Business Daily reported that the political elite in Washington and their eco-statist sycophants are in "hot pursuit of CO2," pointing out:

"Washington is about to crack down on carbon dioxide emissions. It had better hurry because it won't have much time before the backlash strikes. The public is losing its faith in the global warming religion."