Lost Jobs, Big Hikes In Your Bills -- That's Cap-And-Trade
President Obama has repeatedly said he will not raise taxes on low- and middle-income families, yet his policies do not match his rhetoric. Take for instance, a new tax he has proposed on the use of energy. It's called cap-and-trade or, more appropriately, cap-and-tax. The tax would require energy producers and businesses to pay to emit carbon emissions in the hope of reducing greenhouse gases.
The Democrats need the revenue this will generate to pay for their expensive agenda. But getting it this way would be shortsighted because it will cost far more in the long run than it will bring in. While the president originally estimated that implementing this plan would cost $646 billion over eight years, his deputy director for the National Economic Council, Jason Furman, recently stated that it could cost up to three times that -- bringing the cost closer to $2 trillion.
Any way you look at it, it's low- and middle-income Americans who will pay dearly for this. According to an analysis by the Massachusetts Institute of Technology, the average American household could expect its yearly energy bill to increase by $3,128 per year. Using an analysis by Peter Orszag, President Obama's budget director, that number would be closer to $4,000.
In fact, low- and middle-income Americans right here in the Midwest will pay a disproportionately high cost for this policy. A recent analysis by staff at the House Ways and Means Committee found that under a cap-and-trade proposal, the annual increase in electricity costs per capita would be far higher for Midwesterners than in most other regions. Costs would be raised the most for those who get their energy from coal-fired utilities, which are more dominant in the Midwest than in the Northeast or Pacific Northwest, essentially meaning that Minnesotans will be paying for New Yorkers' energy.
And, that's just for energy bills. Cap-and-trade will affect every single American through increased costs for everything from groceries to school supplies. In fact, at a recent Ways and Means hearing, Douglas Elmendorf, director of the Congressional Budget Office, said, "at any point in which we are putting a price on carbon emissions, that would be passed through to the cost that consumers face on energy products but also all other products that are made using fossil fuels." And, he added, "I don't know if there are any goods that use no energy in their production. It seems to me unlikely."
Remember the hit our wallets took last summer with $4 gasoline? The pain was not only at the pump. The high price of gas drove up the cost of everything. If cap-and-trade goes into effect, those days will soon be returning.
But family budgets will not be the only things affected if cap-and-trade becomes law. The overall economy would suffer. The American manufacturing sector would take a direct hit, and output would fall considerably, driving up unemployment. Under cap-and-trade, economic growth and our nation's gross domestic product would be deflated.
Proponents of cap-and-trade say it will result in a boon of unspecified new "green" jobs, but experts have found that any "green" jobs that would be created would not be nearly enough to offset the millions of manufacturing jobs lost to these new taxes. In fact, according to a report by the Heritage Foundation's Center for Data Analysis, Minnesota would have led the country in per-capita job loss under a similar proposal before the Senate last year.
Furthermore, China, the world's largest emitter of greenhouse gases, and India, another substantial contributor, would have no incentive to duplicate our policy. As a result, not only would those countries offer a more attractive manufacturing environment, but the rapid growth of emissions there would simply offset and probably surpass any environmental impact our policies aimed to accomplish.
Our national debt has already surpassed $11 trillion, the largest it has been in our nation's history. Washington's spend-a-thon is irresponsible under any circumstances, but particularly so given this enormous financial burden on the taxpayers' shoulders. To propose this so-called "green" spending initiative on top of it rises to new heights of irresponsibility.