Cap-and-trade is a way to impose a massive energy tax and many people will pretend it is not a tax. They will try and redefine it, rename it, put a spin on it, redirect the topic, but it will still be a tax. Some will even attempt to blame it on the prior Presidential Administration.
Cap-and-trade puts a cap on overall greenhouse gas emissions, and establishes a market for companies to buy and sell the permits. In Obama's version, the permits would all be auctioned off and the hundreds of billions of dollars would be used to fund higher government spending or bring down the federal deficit. The estimated revenues to the government will reach over a trillion dollars by 2020.
Last year, Obama told a reporter of The San Francisco Chronicle, “Under my plan of a cap and trade system, electricity rates would necessarily skyrocket… they would have to retrofit their operations. That will cost money. They will pass that cost on to consumers.
Point Carbon, a research firm on carbon emission trading, estimates gasoline prices will rise 12 cents a gallon in the first year of trading.
Carbon allowances, representing 1 ton of carbon dioxide equivalent, would trade at a price of $13.70 during the first year. With the limit, or cap, on emissions declining about 2 percent per year after 2012, Point Carbon estimates the price of carbon in 2020 would rise to $16.50 per allowance, translating into an additional 15 cents per gallon of gasoline. The annual average cost per family the first year is estimated to be $ 4,000 or more (some estimates are as high as $10,000).
Lower income families, who spend a disproportionate share of their income on energy; will be the hardest hit will be those least able to pay. President Obama proposes a $400 tax credit for a single worker family, and $800 for two worker family.
I believe that Cap-and-Trade will pass as a budget measure, instead of a tax bill. By using the The Budget Reconciliation Process, that was created in 1974, this procedural short cut would allow Cap-and-Trade to pass in the full Senate without proper debate and with just 50 votes needed instead of the usual 60 votes. And looking at the history of our current members of the Congress and Senate, I am sure the Democrats have the votes necessary for this action.
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