One of Obama’s own advisers admits that the cap-and-trade energy-rationing scheme backed by the “Obama Administration and Congressional Democrats” would “have a trivially small effect on global warming while imposing substantial costs on all American households. And to get political support in key states, the legislation would abandon the auctioning of permits in favor of giving permits to selected corporations.”
Obama adviser Martin Feldstein notes that “the Congressional Budget Office recently estimated that the resulting increases in consumer prices” from capping the amount of carbon dioxide energy users can emit “would raise the cost of living of a typical household by $1,600 a year,” a figure that “would rise significantly” from year to year.
Meanwhile, politically-connected corporations would make a bundle, since the “bill would give away some 85 percent of the permits” to emit carbon dioxide to favored “businesses instead of selling them at auction.”
Feldstein, a Harvard economist who has advised Obama, earlier warned that “the barrage of tax increases proposed in President Barack Obama’s budget could, if enacted by Congress, kill any chance of an early and sustained recovery.” He compared Obama’s tax increases to the ones that contributed to the Great Depression and the “Lost Decade” of economic stagnation and decay in Japan.
Feldstein earlier noted that President “Obama’s biggest proposed tax increase is the cap-and-trade system of requiring businesses to buy carbon dioxide emission permits. . .CBO Director Douglas Elmendorf testified before the Senate Finance Committee on May 7 that the cap-and-trade price increases . . . would cost the average household roughly $1,600 a year, ranging from $700 in the lowest-income quintile to $2,200 in the highest-income quintile.”
That’s a highly regressive tax increase, since lowest-income earners don’t make a third of what highest-income earners make, but they would incur a third as much cost. It’s regressive in the same way as the 1932 excise tax increase by Herbert Hoover that deepened the misery of the Great Depression.
During the Great Depression, Herbert Hoover damaged the economy, and impoverished the American people, with costly, artificial attempts to stimulate the economy through increased government spending, financed by heavy taxes like the Revenue Act of 1932.
Obama earlier admitted that “under my plan of a cap and trade system, electricity rates would necessarily skyrocket.” As Obama admitted, that cost would be directly passed “on to consumers” — just the way Herbert Hoover’s regressive excise taxes were in 1932. Although the tax’s supporters claim it will cut greenhouse gas emissions, it may perversely increase them and also result in dirtier air.
In reality, Obama’s proposed “cap-and-trade” tax is likely to raise $2 trillion over the next decade, far more than even Feldstein anticipates. That’s far more than the $646 billion the Administration earlier estimated — amounting to at least $3,100 per family per year. And that figure may be dwarfed by the amount of money siphoned from consumers to well-connected corporations that have learned how to game “cap-and-trade” schemes.
In the Great Depression, President Herbert Hoover raised marginal tax rates to 63%, and went on a deficit spending binge. Similarly, Obama has proposed higher marginal tax rates, which will produce another $1.9 trillion in tax increases.
In spite of its massive size, Obama’s carbon tax won’t begin to pay for all his spending increases, such as a budget that will generate $4.8 trillion in increased deficits, Obama’s trillion-dollar toxic-asset program, and his $800 billion, economy-shrinking “stimulus” package, all of which contradict Obama’s campaign pledge of a “net spending cut.”
These tax increases are breaches of Obama’s campaign promise not to raise taxes on people making less than $250,000 a year, which he earlier broke by signing into law the regressive SCHIP excise tax increase.
It’s part of a long line of broken promises, such as Obama’s pledge to enact a “net spending cut,” which he discarded by offering mind-bogglingly large budgets that will explode the national debt through $9.3 trillion in massively increased deficit spending.
Obama has spent on an unprecedented scale, such as for a stimulus package that has actually shrunk the economy and destroyed thousands of jobs, and an auto bailout that forces cash-strapped taxpayers to bail out high-paid union auto workers, whose pay remains much higher than that of the typical taxpayer, while saddling the car companies with politically-correct mandates that may kill their chance of survival.