Monday, March 9, 2009

Who Pays for Cap-and-Trade?

The Wall Street Journal editorial on the subject is a rather enlightening example of how costs work their way through the system. Most important is this passage:
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."
Notice that Mr. Obama's administration quite readily views this as a tax. I wonder if they even view this as a real solution to a "pollution problem" or just a way to generate tax revenue?
We were also pointed to recent comments by Mr. Orszag that he was "sure there will be enough there to finance the things that we have identified" and maybe "additional money" too. In other words, Mr. Obama expects a much larger tax increase than even he is willing to admit.
I guess that means the more revenue side wins... Finally, the editors observe:
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.
Of course, there are arguments for the success of these programs (see another post of mine that outlines these arguments). But, one must be intellectually fair and recognize the potential outcomes of a policy. And, yet again, we will not discuss this for long...only until May of Ms. Pelosi has her way.