Understanding the Context of this Discussion
A good friend of mine made a good point that complicated and technical phrases in current discourse are being made, but that those things aren’t always being explained. So I decided to write a simple but not simplistic overview of the current “Cap and Trade” discussion going on in American Government.
In the following video, President Barack Obama says that he is in favor of a Cap and Trade system but that such a policy “will necessarily cause energy prices to skyrocket.” Listen to him, then read what “Cap and Trade” is in Plain English.
In an earlier blog post (http://freddycardoza.wordpress.com/2010/03/04/cardoza-on-civics-understanding-whats-going-on-in-america-and-why/) I discussed the background to understanding how politics and economics relate—and I’d encourage you to read that post first. With that as an introduction, let me get into how Cap and Trade works.
I’ve described earlier the fact that “Big Government” proponents (i.e., Democrats-Socialists-Liberals) have an agenda to use the government as a means to minimize the freedom and responsibility of individuals and privatized corporations (private industry or “businesses”). That is because the government needs money to pay for entitlement programs to “take care of people” in the Nanny State that it has become. This is no exaggeration, as over ½ of the US budget is now spent on entitlements (http://www.usgovernmentspending.com/us_budget_pie_chart).
As money comes into the US Treasury, it feeds its ever-larger bureaucratic self and it takes care of those who do not want the responsibility of taking care of themselves or who have an entitlement mentality. Such people are willing to trade their own freedoms away in exchange for the government taking their personal responsibility. In this way, the government becomes a safety net and, as I’ve said, a ‘nanny.’
In a “Progressive” government like the one Mr. Obama is attempting to build, the government penalizes companies and the people who built them through years, decades, and generations of hard work by forcing them to support all government programs in ways that are grossly disproportionate than other people who have not earned as much income. For example, in the upcoming budget plan, it is estimated by some that the upper-level earners in the US will pay up to 42 cents of every dollar (42%) of their income to taxes, while some US Citizens who can (but refuse to) work, pay no taxes or even receive refunds from the government, even though they have not paid any taxes.
The strategy of Progressivism being espoused by Barack Obama and many Democrats today is to identify (a) individuals who have or make significantly more than others and (b) the companies they have built by creating laws and regulations (imposed by government agencies like OSHA) that are designed to take the money people have earned (through fines, fees, tariffs, corporate taxes, personal taxes, sales taxes, property taxes, consumption taxes, payroll taxes, capital gains taxes, penalties, and other red tape) in order to forcibly redistribute that wealth to those who did not earn it in ways consistent with Socialism-Marxism described in an earlier post.
What is Cap and Trade (also called “Cap and Tax”)?
Cap and Trade is one type of (many different) government-imposed wealth-transfer plans.
To Understand Cap and Trade, You Must Understand the Basics of Economics and Politics
Cap and Trade (like all other such wealth-transfer plans related to Green Economics-Environmentalism, Government Health Care, etc.) is designed to forcibly redistribute money more evenly throughout society, and especially lower income people, in order to eliminate classism (the economic differences between upper/lower classes) and to usher in an ideal society (i.e., “social utopia”). In such a society, most people would comprise a very large lower-middle class, and virtually all authority would rest within those who run the government, since it would have eliminated the power of all other persons and entities. This, in a nutshell, is the agenda of Socialism (a political philosophy) and it uses Marxism (an economic philosophy) to do it.
Cap and Trade Basics
The basic argument of Cap and Trade goes this way.
The developed world (the U.S. and other countries) is better off than the rest of the world. It has more money and more things and a higher standard of living. Other people in the world have less and a lower standard of living. Much of this is because of our consumption of stuff from money that we have that some countries don’t have.
As a result, extreme liberals and even the US President, believe that two things are wrong with this: (1) We need to redistribute wealth to those without it and (2) the way that should be done is by giving them money from U.S. tax payers and businesses. So, Cap and Trade is actually a wealth transfer (Marxist) idea cloaked in Environmentalism.
Point By Point Through Cap and Trade
The logic is that the things Americans enjoy aren’t enjoyed by many other people in our world and while they do without, we have these things and, in doing so, we pollute the planet more than they do. Examples: Our cars, boats, trains, buses, motorcycles, air conditioning, heat, hot stoves, etc. are things that give us a higher standard of living than everyone else—and this creates us, Americans, as a higher socioeconomic class of people. The argument then goes that we should be ashamed for having a great society and for being blessed by God and through the industry of the American people, since it is those very things that are causing the world to hate Americans in their arrogance.
Blame America First. So the “blame America” group wants to PENALIZE us for what we have and enjoy because, in doing so (they argue), we pollute the planet through our extra energy use—and our greed causes the rest of the world to live in pollution and climate change (global warming). Subsequently, if we were to be more concerned with others who “don’t have what we have,” then we would be more generous to them rather than spending our money on things for ourselves and our own consumption. So America “owes” the world. And we should (as we saw in the recent Copenhagen Summit) give the poor nations of the world our money from the US Government’s taxpayers as a sort of payback for our excesses and to provide their governments money to enact the same Cap and Tax policies so that they can also redistribute the wealth of their countries, leading to a Socialist (utopian) world.
Think I’m Crazy? People who are unfamiliar with the Climate Change discussion and extreme Environmentalism and Cap and Trade probably read what I’m writing and think “He can’t be serious.” But, in fact, this is the main thrust behind much of the Cap and Trade controversy. The government sells the problem as an Environmental one, but it’s actually all about “Green ECONOMICS” and the redistribution of wealth, using environmentalism as the reasoning behind it. Carefully researching these issues will clearly show what I have written to be true. But let’s continue.
More Cap and Trade Basics.
So Americans are obsessed with stuff (materialism increases carbon footprints). Our materialism and consumption cause us to trash the planet, and this hurting of the environment—leads to global warming, etc. They then argue that, if it isn’t stopped something catastrophic will happen—because the future of the planet is stake.
What “Cap” Means.
The government is telling people that we must reduce carbon in the atmosphere in order to avoid climate disaster. That means we should reduce our carbon (like burning or using fossil fuels like gas, petroleum products, coal, and using products that require energy), by more than 80%. THAT IS THE “CAP.” Certain types of ENERGY USAGE IS CAPPED. It begins with setting limits on our use of energy. The recent Copenhagen summit was an attempt to do that—Obama wanted to get the world to agree on the top limits of ‘unclean energy’ they would allow, so we could “CAP” the carbon and energy usage.
What “Trade” Means.
The problem is that everything uses energy to run (cars, businesses, ships, semi-trucks, transport trucks, trains, etc.) and all of these things emit carbon. In addition, nearly everything we do in life is a release of energy this is largely powered by those sources of energy (like to heat homes, cool homes, cook food, eat out, take the car to the mall, using energy for lights, the energy for lighting a movie theater, etc.). So how are we going to reduce carbon? By starting a carbon stock market (“trading”), so companies can “buy and sell” the ability to use energy that pollutes the environment. And as they do this, government can then control and monitor energy consumption by government policies/restrictions and taxes.
The problem? Most countries use it like we do and don’t have money to do research and development to develop other forms of environmentally friendly or “clean” energy.
To keep carbon and emissions to a minimum, the government would begin (over a period of years) to set these goals for reduced emissions of carbon from all these energy sources—and then SELL PERMITS to companies who would pay taxes for the ability to “pollute the atmosphere” (use energy). Each year, less and less energy would be used and ‘unclean energy’ (oil, coal, gas, etc.) would be paying very high taxes and could get fewer and fewer permits to use their energy (“to pollute”).
Enter Clean Energy and Government Contracts. Meanwhile, the government would choose winners and losers again, but paying companies money to do research on ‘clean’ energy and by giving grants and government contracts for more energy-efficient windows, weather stripping, energy sources, wind power, solar power, etc.
Over time, because taxes would crush other energy companies and because they could buy fewer and fewer permits to use their sources of energy, the ‘clean’ energy companies would flourish because they advanced their businesses on the government dime. So traditional businesses (the energy companies mentioned earlier, and companies who didn’t get government money and contracts to produce these ‘green’ technologies would also be taxed because their products ‘hurt the environment.’ In addition, standards would continue to tighten, driving many out of business since they couldn’t compete any longer with government funded businesses.
“Trade” One More Time. So, another way of describing it, is that the “Trade” idea is that those companies who become ‘greener’ would be able to take their pollution permits and ‘trade’ them on the energy stockmarket—to companies who couldn’t become greener—and with each ‘trade’ the government would get a cut of that tax revenue AND the green companies and their employees would get more money (WATCH THIS: creating “new money”) while the “OLD MONEY” groups like Coal Company Owners and Oil Men and Gas Company Executives were taxed and legislated out of business—leading to massive reallocation and redistribution of wealth away from those who traditionally had money—into the hands of new people awarded government contracts, all in the name of the “environment” and to stop “global warming” and “save the planet.”
SummarySo then, anyone that PRODUCES OR USES energy would be taxed and prices would rise—significantly. Consumers of these things would be penalized—by paying higher prices and taxes on energy and things that used energy. Note—everything uses energy!! So every use of energy or emission of energy would cost you (gas for car, carbon emissions of your car, energy for home or business, restaurants who produced your hot food, appliances that you use to cook or cool food), and the government would regulate all of those things through regulation—hence CAP (energy limits) and Tax companies/people using energy.