First, the Euphemism of the Day: as quoted in the Washington Post this morning:
Sen. Benjamin L. Cardin (D-Md.) called cap-and-trade “the most significant revenue-generating proposal of our time,” and said it would be difficult to pass without reconciliation because Democrats would be forced to accommodate a handful of Republicans as they did in the debate over the president’s stimulus package.
Translated into English, “the most significant revenue-generating proposal of our time” is, of course, the biggest tax increase of our time. And being “forced to accommodate a” at least some of the opposition is not a bad working description of how a democratic legislative process is supposed to work, a process which our hope-and-change Democrats increasingly resent.
But to return to cap-and-trade, as Robert Zubrin explains so chillingly,
cap-and-trade is not just a tax, as its mechanism contains features not included in a conventional taxation system…. It is worse than a tax. It is a modern version of tax farming.
Tax farming? What’s that, you ask? Here’s Zubrin:
Tax farming was a practice followed by the Persian and various other ancient empires. Here’s how it would work. Let’s say the king needed some money to finance a war, a monument to himself, or similar worthy endeavor. Rather than fuss with the administration needed to collect taxes directly, he would sell the right to tax a given province to some wealthy crony. This public-spirited individual would then deploy his gangs of hired thugs to loot the people of the province in question. The king would get ready cash for his project, while through the exercise of unrestrained rapacity, the tax-farmer crony would generally obtain an excellent return on his investment. Thus, everyone who counted would be happy.
In essence, the cap-and-trade system works the same way. Initially carbon emission permits would be bought by utilities and industries, which need them in order to engage in their business. Such fees paid to the government for carbon permits are simply direct taxation. However, the carbon permits would be sold at auction, and many of them would be bought by financiers, not for their own use, but for the purpose of resale at profit. Provided that the government kept its issuance and sale of new carbon permits limited, which it must and therefore would in order for the system to function as desired, the resale mark up on privately held carbon permits could be very steep, allowing those with the ready cash to buy such permits in advance to tax the real economy at will. The utilities hit by these inflated costs would then pass them on to consumers, while those with the lowest incomes would be hit the hardest….
The Obama administration says that it hopes to raise some $650 billion in revenue for Uncle Sam through the sale of cap- and-trade carbon permits, and there is no reason to doubt this figure. However, that is only the government’s piece of the action. Because of the tax farming feature built into the system, the cost to the public is likely to be far greater.
You’ll have to read Zubrin’s entire (but short) article to see why cap-and-trade a) will do nothing to reduce our dependence on foreign oil; b) will do nothing to reduce global warming but c) will actually lead to an increase in global warming by d) increasing the cost of American manufactured goods, making them less competitive, thus leading to d) increased market share for Chinese goods, so that:
Since an even larger fraction of Chinese electricity and industrial process heat comes from coal than does American, the net effect of the cap-and-trade system will therefore be to increase the total carbon emissions released into the Earth’s atmosphere, not decrease it. However not only will Chinese industrialists obtain a larger market share for their products, they will be able to charge more for them, since their competition will be priced even higher. Thus the big losers overall will not only be American manufacturers and workers, but the world’s poor.
This change you can believe in, even if it’s not what you hoped for.