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April 23, 2009

Not a Dime More in Taxes: Cap and Trade Would Cost Each Household Average of Almost $4000 Per Year

There is some confusing backstory here: Republicans seized on an MIT study and used simple math (annual taxes raised by cap and trade divided by number of households) to come up with a figure of $3,188 per year.

The author himself then went on a media tour to claim that was a lie, claiming that the cost would be only $215 per year. Olbermann began shrieking about the Republican lie. (Which is about as necessary a sentence as "Water began liquiding.")

The author, Reilly, now says he miscalculated, and that the cost to each household would be $800 per year. I wait with bated breath for Olbermann's correction.

So which is right? $800 per year or $3100 per year? The answer is both, as in "add them both together, because this hack Reilly sets the direct costs of cap and trade at $800 per year, while the indirect, pass-through costs imposed on energy suppliers would, in fact, be $3188 per year, for a grand total of $3988 per year, per household."

These latter costs, Reilly insists, will not be passed through to customers -- but returned, he claims, to the households, via some kind of subsidy new welfare program for energy.

But that makes no sense -- Obama was quite explicit on the reasons for cap and trade: The whole point is to raise energy prices so as to urge people, through economic intervention, to use less energy and to make costly "green" energy more competitive with real energy, now that real energy's prices are inflated by government fiat. He said the whole point was a necessary "skyrocketing" of electricity prices, for example, and the actual bankrupting of coal-burning plants.

But you cannot change people's behavior through government-demanded price increases if you give the money back with the other hand and thus immunize them against your price increases. That defeats the entire behavior-modifying purpose of the price increases.

I don't doubt the very poor will get some vouchers back -- but the middle class won't. Obama's massive spending demands more tax revenues, and he's desperate to find them anywhere he can.

So yes: The Republicans were wrong. Obama's cap and tax scheme would not cost each household just over $3000 per year. It would in fact cost most households just under $4000 per year, with some poorer households seeing all the costs defrayed (or paid more than the actual additional cost, yet another disguised welfare subsidy) while the rest of us would get a token voucher for $200 or $300 so we know "Obama cares about us so much he sends us checks."

And, actually, in an email to the Weekly Standard, Reilly admits that the money won't be returned to households at all, but will be spent on government programs, which he considers the same thing as writing a check to cover the additional costs. It "doesn't matter," he says, which way the money is "returned," whether through an actual cost-defraying check or in the form of bigger, better government programs; either way, as far as he's concerned, that's "returning" the money to households:

It is not really a matter of returning it or not, no matter what happens this revenue gets recycled into the economy some way. In that regard, whether the money is specifically returned to households with a check that says "your share of GHG auction revenue", used to cut someone's taxes, used to pay for some government services that provide benefit to the public, or simply used to offset the deficit (therefore meaning lower Government debt and lower taxes sometime in the future when that debt comes due) is largely irrelevant in the calculation of the "average" household. Each of those ways of using the revenue has different implications for specific households but the "average" affect is still the same. [...] The only way that money does not get recycled to the "average" household is if it is spent on something that provides no useful service for anyone--that it is true government waste.

Note that last sentence -- as far as he's concerned, so long as the money is used on something that benefits someone, that's precisely the same as actually writing a check to the person actually saddled with the increased costs of energy. Either way, he says, that money is being "returned" to them, whether really returned, or returned in an even more wonderful way, i.e., not returned at all but rather given to someone else.

But the left is still whoopin' it up over the "lie" they discovered.

If the government takes money to you, and then gives it to someone else, Reilly claims it's "returned" it to you, albeit indirectly...

I think we see there intellectual foundation of Obama's claims of giving tax cuts to 95% of the public. If the government taxes you more and writes a welfare check to someone else -- hey, that's just an indirect way of giving you a tax cut!

Bonus: Energy Secretary Chu was once enthusiastic about eight dollar per gallon gasoline, on the theory, of course, that if such costs "skyrocket" people will buy less and we'll save the world.

He claims, under questioning before a House committee, he now finds that statement "silly."

Believe him? Because I don't.

REP. CLIFF STEARNS, R-Fla.: Last September you made a statement that somehow we have to figure out how to boost the price of gasoline to the levels in Europe, which at the time exceeded $8 a gallon. As Secretary of Energy, will you speak for or against any measures that would raise the price of gasoline?

SEC. CHU: As Secretary of Energy, I think especially now in today’s economic climate it would be completely unwise to want to increase the price of gasoline. And so we are looking forward to reducing the price of transportation in the American family. And this is done by encouraging fuel-efficient cars; this is done by developing alternative forms of fuel like biofuels that can lead to a separate source, an independent source of transportation fuel.

REP. STEARNS: But you can’t honestly believe that you want the American people to pay for gasoline at the prices, the level in Europe?

SEC. CHU: No, we don’t.

REP. STEARNS: No. But somehow, your statement, “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe,” doesn’t that sound a little bit silly in retrospect for you to say that?

SEC. CHU: Yes.

He offered the statement by his own volition, and only calls it silly now that he's being publicly called on it by a hostile interrogator.

And note the ever-present caveat -- it's unwise to drastically inflate the cost of gasoline now, in the current economic downturn.

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posted by Ace at 01:55 PM

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