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Cap and Tax Will Force You to Make Budget Cuts: Part 2 in a 10-Part Series

Posted By Nicolas Loris On May 1, 2009 @ 3:00 pm In Energy | Comments Disabled

On April 20, President Obama called for $100 million in budget cuts after announcing spending increases of $4 trillion. Heritage Senior Policy Analyst Brian Riedl breaks it down nicely [1]:

• It is 1/40,000 of the federal budget;

• It is 1/7,830 the size of the recent “stimulus” bill;

• It would close 1/1,845 of this year’s budget deficit;

• It is the amount the federal government spends every 13 minutes; and

• For a family earning $40,000 annually, it is the equivalent of cutting $1 from their family budget.

But if President Obama were to sign a cap and trade bill into law, he would have to call for familial budget cuts much greater than one dollar. (For a brief explanation of how cap and trade works, go here [2].) As recently acknowledged [3] by a top White House official, a global warming tax could generate as much as $1.9 trillion in tax revenue over eight years, which amounts to a nearly $2,000 tax every year for every American household.* Add this up over the period of a few years and we’re talking about trillions of dollars in lost income for the entire U.S. economy.

The current recession is causing Americans to take a second look at their household budget. A cap and trade plan would make them look even harder.

*The Heritage Foundation’s Center for Data Analysis (CDA) calculations confirmed this. CDA took the CO2 allowance limits from the Lieberman-Warner cap and trade bill [4], which was more lax than the Waxman-Markey bill [5]. CDA then multiplied the CO2 allowance for each year times our estimates for the allowance price for each year. The summation of these products for 8 years (2012-2019), divided by eight to get the average per year and divided that by the number of households (about 110-120 million households) gave us an average per household tax per year of nearly $2,000.


Part 1: Cap-and-Tax is a Jobs Destroyer [2]

Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2009/05/01/cap-and-tax-will-force-you-to-make-budget-cuts-part-2-in-a-10-part-series/

URLs in this post:

[1] breaks it down nicely: http://corner.nationalreview.com/post/?q=NDVmMjA3OTU3NmNhYzk1Nzc1Zjc5ODhmNWEyNDIyZDY=

[2] here: http://www.foundry.org/2009/04/30/cap-and-tax-is-a-jobs-destroyer-part-1-in-a-10-part-series/

[3] acknowledged: http://online.wsj.com/article/SB123733423766063691.html

[4] from the Lieberman-Warner cap and trade bill: http://www.heritage.org/research/EnergyandEnvironment/cda08-02.cfm

[5] Waxman-Markey bill: http://www.heritage.org/Research/EnergyandEnvironment/wm2378.cfm

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