Tax Me, Cap Me, Make Me Go Out of Business

To go along with Woody’s post on WMC&T (Waxman-Markey Cap and Trade), here’s a new WSJ article from David Wessel.  Thanks to Pirate’s Cove for pointing it out.

The point of climate-change legislation is to raise the price of activities that emit carbon so consumers and businesses engage in fewer of them, and favor alternatives that contribute less to climate change. Taxing carbon is one way to do that, but it’s unpopular.

Cap-and-trade became the politicians’ favorite alternative because it accomplished what a carbon tax would, without an explicit tax.

So let’s not call it a tax, but tax business nonetheless… Only 15% of the permits to start will be auctioned.  Here’s the breakdown:

Oh, but there’s a catch:

Giving away allowances yields windfall profits [to the businesses] — unless the government controls prices, as it does with electric utilities. The bill gives 30% of the permits to utilities that buy electricity from power plants and then sell that power to consumers. Congress is counting on state regulators to make utilities pass the benefits of free emission permits along to consumers.

So pass regulations that require more regulations.  It’s a self-perpetuating legislative bonanza!  These people must figure they’re getting paid per bill submitted or something.

Remember, if electricity prices don’t rise, households won’t conserve and carbon emissions won’t be reduced. So emissions elsewhere in the economy will have to be reduced to meet the national cap on carbon. How? By boosting prices for carbon-heavy activities besides electricity production. Can you say “gasoline”?

Wow, so regulated coming, and taxed going.  I’m feeling even better and better about this debacle.  But what I still don’t get is why they’d auction any of them?

Without the auctions, there isn’t any revenue. Mr. Obama’s budget proposal projected more than $75 billion a year from the auction, much of which was supposed to go to his “making work pay” tax break.

Ah, so this way they can claim that the government is generating revenue.  Kind of like they claim nationalized healthcare will pay for itself.  It’s magic!

I’m tired, of being snarky.  Teach, you take over:

On the flip side, how one gives them away can determine which companies and economic sectors thrive, and which ones suffer and potentially die.

Thanks.  So we can decide where to give them away to benefit businesses friendly to the admin, then raise taxes to pay for giving them away, then regulate what we give away anyway, then claim it’s paying for itself because we auctioned some of them off… apparently having run out of favorites.

Wessel finishes off by saying we’ll eventually have to auction them all off because we’ll be out of money, like our leader said today.  Me?  I’m all for just scrapping the whole thing and letting business generate its own revenue, hire employees, and then grow the economy that way.  Can we try that one?