August 24, 2009
Imagine an America where a gallon of gas costs you more than $7.00. An America where your electricity bills have doubled or tripled or worse. An America where our producers of goods and services are punished by crushing new fees, taxes, and regulations, causing prices to rise for everything you buy and costing you your job. And then imagine the rest of the world carrying on business as usual, smugly watching America's decline and fall from economic power.
Now, try to imagine you're happy about all this. Seriously. Imagine this nightmarish new America is the fulfillment of your greatest dreams. To you, this is exactly what success looks like. Having a hard time celebrating? Well, start getting used to it, because this ugly vision is exactly what the cap-and-trade bill, already passed by our House of Representatives and headed for a Senate vote (with strong support from the President), is designed to achieve!
What is cap-and-trade? Cap-and-trade is a fancy name for the simple notion that carbon emissions into our atmosphere should be capped by laws forcing industries to pay for "carbon credits" which can be traded (bought and sold) in a giant new marketplace. For example, a coal-fired power plant emitting carbon dioxide as part of its electricity generation process will need to buy enough carbon credits to authorize the emissions. And, the cap-and-trade theory goes, the high cost of these carbon credits will impose incentives for industries to reduce carbon emissions. When you cut through all the legalese and jargon, cap-and-trade is a heavy new tax penalty specifically targeted against American manufacturers and energy producers.
Those promoting cap-and-trade use feel-good clichés about environmental sustainability, green jobs and green energy, and a prosperously pristine planet. They try to paint an appealing picture. Even the name of their legislation, The American Clean Energy and Security Act of 2009, sounds noble and patriotic. But behind their persuasive imagery is a destructive economic reality.
In fact, one very prominent cap-and-trade advocate did recently go on record describing the pain his plan would inflict on American consumers. His name? Barack Obama, then a U.S. Senator, in January of last year. Listen to the words of his chilling warning: "Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket. Even regardless of what I say about whether coal is good or bad. Because I'm capping greenhouse gases, coal power plants, you know, natural gas, you name it — whatever the plants were, whatever the industry was, they would have to retrofit their operations. That will cost money. They will pass that money on to consumers."
President Obama hasn't dared speak that kind of blunt truth about his energy agenda since entering the White House, but the cap-and-trade law he soon hopes to sign accomplishes exactly what he promised. Your energy bills will skyrocket, along with the prices of everything you buy. And not because of some unexpected mistake or unforeseen consequence, but because that is exactly what cap-and-trade is designed to do.
Cap-and-trade uses the laws of economics, brutish and irresistible, to force us into compliance with the government's idea of how much energy we should use. When the price of something goes up, the quantity demanded goes down. That's Economics 101. Under cap-and-trade, prices of gas and electricity and everything else we make through carbon-emitting industries are pushed up (way up) on purpose, so you will consume less. Under cap-and-trade, you will drive less, use less electricity, and get less of most everything else, all while paying more. In short, you and most other Americans will be poorer.
The impact of cap-and-trade will be devastating for individuals and potentially catastrophic for our nation's already troubled economy. Leading economic number-cruncher William W. Beach, Director of the Heritage Foundation's Center for Data Analysis, foresees grim results. "Inflicting a strong cap-and-trade law on our sickly economy would be like throwing an anemic flu patient into a pool of blood-sucking leeches," warns Beach, "The prognosis for recovery would be dim."
