This isn’t a post about cap and trade and global warming. Not really. I have about a dozen posts on my own site, http://www.mattersofopinion.net/, where I do just that, however as Kevin (or for those of us around the office, Mr. Tracy) noted on his earlier post, I am the Economics guy. Just like Kevin is my foreign policy guy on my own site. And one of the reasons for this is, well, I can’t stand worrying about other countries. Quite frankly, I just don’t care. Callous? Cold hearted? Perhaps. HOWEVER. Economically I look at all of these countries as possible trading partners. I see the household goods such as flat screen TVs that are imported from Japan, I see that great German beer imported from, well, Germany, duh…and I see how the United States puts tariffs on many of these imported goods in order to support American business. The US does this without even considering that some countries rely solely on the US purchasing these goods, not to mention the best way to prevent war is for countries to need each other. But this is just an introduction paragraph, I’ll cover the above in many posts soon to come (unless the boss comes in in one of his “moods”…I swear, he runs the office like a dictator).
But regardless of how you feel about global warming or CO2 levels, the fact is the Waxman-Markey bill (known also as cap and trade) is disguised as a free market approach to solving the worlds problems. The argument for cap and trade goes something like this: companies will start off every year with a certain amount of CO2 that they are allowed to put up into the atmosphere, for statistical reasons I’ll call call the amount a million tons. Once that company has put their allotted amount of CO2 into the atmosphere, they will be allowed to purchase “carbon credits” from their neighboring companies IF that company has extra credits and is willing to sell them to the before mentioned company. Now, lets analyze this step by step. First of all, I’ll assume that larger companies will receive more carbon credits since it wouldn’t make sense to give the Mom and Pop Steel Mill in central Ohio the same amount as, say, US Steel. This is an assumption, since there hasn’t been much said about the divvying up of the credits, but if it is indeed the case this will harm the small business owner tremendously and will not allow Mom and Pop to truly compete with the giant that is US Steel and will impose a governmental monopoly on the corporate giant. IF the credits are not split by the size of the companies, that would be equally detrimental since Mom and Pop could easily bogart the credits and refuse to sell to US Steel, and would eventually either a) push US Steel out of business or b) put the two on a complete and equal playing field (which I personally think is the liberals’ idea in the first place) however it would be a playing field unearned since it is not through good business practices but manipulation of government controls.
Besides the above, most economists will agree that in an economic down turn such as this one you shouldn’t raise taxes because it will actually DECREASE the amount of revenue that the government would be taking in. Estimates show that the budget, because of this bill, will increase roughly between $1.3 trillion and $1.9 trillion between fiscal years 2012 and 2019. That means one of two things: Obama is going to HAVE to raise taxes tremendously OR hes going to have to continue borrowing more and more money. Either way, this (along with universal health care) policy of spend more than you have in your pocket and worry about it later is a huge part of the reason that I think he will only be a one term President.
Lastly, besides the possible increasing of taxes, there is a major reason that everybody reading this and quite frankly anybody that isn’t reading this should be worried about this bill. And it’s a dirty little secret (or, to me, a fun little fact) that a lot of people don’t realize: businesses don’t pay taxes OR eat costs. If businesses have to pay out the nose for carbon credits just to keep running, who is going to suffer? We will, by paying the difference in the cost of whatever good the business is manufacturing, whether its energy or steel or…well, now a days almost EVERYTHING is manufactured. The consumer is the person that ALWAYS suffers because of government meddling in the economic structure. The business is there to make money. Period. If they aren’t making money, they don’t continue to be called A BUSINESS.
But regardless of how you feel about global warming or CO2 levels, the fact is the Waxman-Markey bill (known also as cap and trade) is disguised as a free market approach to solving the worlds problems. The argument for cap and trade goes something like this: companies will start off every year with a certain amount of CO2 that they are allowed to put up into the atmosphere, for statistical reasons I’ll call call the amount a million tons. Once that company has put their allotted amount of CO2 into the atmosphere, they will be allowed to purchase “carbon credits” from their neighboring companies IF that company has extra credits and is willing to sell them to the before mentioned company. Now, lets analyze this step by step. First of all, I’ll assume that larger companies will receive more carbon credits since it wouldn’t make sense to give the Mom and Pop Steel Mill in central Ohio the same amount as, say, US Steel. This is an assumption, since there hasn’t been much said about the divvying up of the credits, but if it is indeed the case this will harm the small business owner tremendously and will not allow Mom and Pop to truly compete with the giant that is US Steel and will impose a governmental monopoly on the corporate giant. IF the credits are not split by the size of the companies, that would be equally detrimental since Mom and Pop could easily bogart the credits and refuse to sell to US Steel, and would eventually either a) push US Steel out of business or b) put the two on a complete and equal playing field (which I personally think is the liberals’ idea in the first place) however it would be a playing field unearned since it is not through good business practices but manipulation of government controls.
Besides the above, most economists will agree that in an economic down turn such as this one you shouldn’t raise taxes because it will actually DECREASE the amount of revenue that the government would be taking in. Estimates show that the budget, because of this bill, will increase roughly between $1.3 trillion and $1.9 trillion between fiscal years 2012 and 2019. That means one of two things: Obama is going to HAVE to raise taxes tremendously OR hes going to have to continue borrowing more and more money. Either way, this (along with universal health care) policy of spend more than you have in your pocket and worry about it later is a huge part of the reason that I think he will only be a one term President.
Lastly, besides the possible increasing of taxes, there is a major reason that everybody reading this and quite frankly anybody that isn’t reading this should be worried about this bill. And it’s a dirty little secret (or, to me, a fun little fact) that a lot of people don’t realize: businesses don’t pay taxes OR eat costs. If businesses have to pay out the nose for carbon credits just to keep running, who is going to suffer? We will, by paying the difference in the cost of whatever good the business is manufacturing, whether its energy or steel or…well, now a days almost EVERYTHING is manufactured. The consumer is the person that ALWAYS suffers because of government meddling in the economic structure. The business is there to make money. Period. If they aren’t making money, they don’t continue to be called A BUSINESS.
Cross posted at www.ktracy.com and linked at www.mattersofopinion.net
