What is Cap and Trade?

Former NY Wall Street Executive

What is Cap and Trade? (Associated Press)"The complex bill, would require the U.S. to reduce carbon dioxide and other greenhouse gas emissions by 17 percent from 2005 levels by 2020 and by 83 percent by midcentury. The basically the idea is to set a limit on the number of carbon emissions a company can produce. The companies then purchase the permits or rights to emit carbon. If the company typically produces over that limit, they can purchase from companies that typically produce less than the limit. The cost is then passed on to the consumer."

This "amounts to the largest tax increase in American history under the guise of climate change," declared Rep. Mike Pence, R-Ind.

In the Republicans' weekly radio and Internet address, House GOP leader John Boehner of Ohio said, "By imposing a tax on every American who drives a car or flips on a light switch, this plan will drive up the prices for food, gasoline and electricity."

In July of 2003 the Congressional Budget Office released a report titled, "Shifting the Cost Burden of a Carbon Cap-and-Trade Program." The report concluded that a 'Carbon Cap and Trade' scheme would be regressive, imposing a greater burden on the poor and would depress government revenues, exacerbating federal deficits.

The truth about cap and trade: The real costs will be seen in all things that are manufactured, including gas, food, energy, clothing. So once again, it is simple common sense: If people are spending less due to high prices, then companies will be producing less. That leads to cut backs, job loss, and higher unemployment. Who will be hit the hardest? Who usually suffers the most? Low income families, because they already spend the majority of their earnings on energy costs. There will be more job loss because companies will discover how expensive their cost are so they will move to other countries that don't have a tax on emissions. Now we have higher unemployment. We are already over 9%. Did you know that 1.6 million people lost jobs since the stimulus bill was passed? The lies told to get the stimulus bill past was that it would save jobs and keep unemployment below 8%. Truth is now we could see unemployment hit 10%.

To insure that I am as fair and balanced as I can be, I looked at sources who studied the effects from many sources and the amount of increase the average family will pay varies.

1. Environmental Protection Agency had the lowest cost. (It's important to point out that the EPA is part of the Obama administration, which supports a cap-and-trade plan.) It says cap-and-trade will only cost consumers an average of $80-$111 a year -- or about 22 to 30 cents a day -- so long as most program revenue is returned to consumers.

2. The Congressional Budget Office, the independent number-crunching group in Congress, says the net annual economy-wide cost of the cap-and-trade program in 2020 would be $22 billion -- or about $175 per household.

3. Heritage Foundation predicts a much higher pricetag: By 2035, cap-and-trade will increase the average family's annual energy bill by $1,241. They base their figure on the assumption that traditional energy sources will be scaled back to meet new emissions standards, but will not be immediately replaced by new technology or renewable fuels. As a result, energy prices will go up and continue to rise.

4. House Republicans have been citing a 2007 study by the Joint Program on the Science and Policy of Global Climate Change at the Massachusetts Institute for Technology. They say it proves that consumers will pay up to $3,100 annually for cap-and-trade. However, this is a clear out-right lie to be used to scare us off. The Republicans are quoting a lie. See the article below. *Info from Politifact.com (website tracks Obama's political promises)

Reading the Wall Street Journal, I found an interesting slam against the opposition.

"MIT to Republicans: Lay off the Scaremongering on Climate Costs

Not so fast, says John Reilly, an MIT professor and one of the authors of the study. He told Republican leadership they had the numbers wrong even before they published their statement. After it was released, he sent a letter to Rep. Boehner yesterday saying the MIT study had been "misrepresented."

For starters, the figure cited by Republican House leadership is almost ten times higher than the cost estimate provided in the study, Professor Reilly said--and that number wasn't limited to electricity bills, but includes such diffuse impacts as "the higher price of goods that are produced using energy, and impacts on wages and returns on capital."

He ended his letter by basically endorsing the Obama administration's plan stating that it will rebate about 80% of the $646 billion in cap-and-trade revenues via tax breaks. I won't hold my breath!

When Democrats and Republicans talk of pushing renewable energy such as wind farms, solar cells, nuclear power and biofuels, you may think that each side is talking about the same thing. They're not!

Democrats talk about renewable energy as a way to cut greenhouse gases that cause global warming. Republicans talk about renewable energy to reduce the use of foreign oil or, as they call it, to achieve "energy independence." I tend to lean towards the latter since independence is the cornerstone of the patriot's (or RWE) foundation of freedom.

I will end this portion of my research on Cap n Trade with this quote.

"The great difference between Reagan's rhetorical skills and President Obama's rhetorical skills are that Reagan used his rhetorical skills to shine light on truths and fundamental facts. Obama uses his rhetorical skills to hide from fundamental facts." Newt Gingrich