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  • Cap & Trade Bill: Special Interest Bonanza That Adds to Deficit

    In his original budget proposal, President Obama envisioned a cap-and-trade program that would raise hundreds of billions of dollars by selling emissions credits to businesses. He then proposed spending $504 billion of these revenues on a making-work-pay tax credit, and $120 billion on new energy research spending. However, the House has since passed a cap-and-trade bill that would give away most if not all of the emissions credits, leaving no more than $165 billion for other spending (most of which the bill allocates to low-income energy rebates).

    It is also worth noting that these giveaways to utilities, manufacturers and others were necessary for the bill to pass (by a narrow margin) the House. Even more will likely have to be promised for this measure to garner a filibuster proof majority in the Senate.

    Yet despite Congress’ signal that these excess revenues will not materialize, the President’s mid-session budget update has once again proposed to spend over $620 billion on the make-work pay credit and new energy spending. The White House has not clarified whether these expensive policies are contingent on these enormous cap-and-trade revenues somehow materializing, or whether the President is willing to simply add $620 billion to the budget deficit for these proposals.

    If these proposals are not contingent on cap-and-trade revenues, then they represent yet another attempt to expand government at budget deficits even beyond the staggering $9 trillion in new debt that the White House has forecast over the next decade. Washington will spend a peacetime-record 26 percent of GDP this year, and President Obama has proposed a budget that would permanently spend between $5,000 and $8,000 per household more than under President Bush. By refusing to set priorities and streamline spending, President Obama is setting the stage for historic tax increases that would devastate families, businesses and the economy. At the same time, the cap-and-trade bill would add significantly to energy costs, whether or not the emissions credits are given away or sold.

    Brian Riedl contributed to this post

    Posted in Economics [slideshow_deploy]

    18 Responses to Cap & Trade Bill: Special Interest Bonanza That Adds to Deficit

    1. peter c bissell says:

      The presdent HAS to be STOPED his vision for our country is at best miss guided at worst dangerious cap and tax is going to be a nitemare for my family and I please america WAKE UP , GET INVOLVED AND STOP THIS MADNESS BEFORE ITS TO LATE PLEASE !!!!!!!!!

    2. Roger S., Ma. says:

      Good points, all. If this bill cannot generate genuine savings or a real return on investment greater than its costs, it's not cap&trade but "slap&tax" or "crap&fade". Since not even 165 Billion, let alone 620 Billion, ROI are due or foreseeable any time soon, these sums can only be "present" in this program if they first went AWOL elsewhere in the economy. Even borrowing will do little more than to ensure their AWOL status in the future! Either way it is more likely to "crap out" and "fade out" our economy than anything else, including the unsavory HR3200. Even more so than the latter, it has nothing at all to do with "improving" anything, least of all "the planet". It is a pure instrument of government control over all private enterprise, and was never meant to be anything else. Even its "do-gooder" provisions are there only to ensure that the gov. has ultimate control over the "doers" as well as the "doees". There is no other way to explain this particularly mad combination of Junk-Science coupled to Junk-Economics engaged to Junk-Politics, except for maybe invoking Freudian psychology.

    3. Terry Adams, Georgia says:

      And when the taxes are increased; inflation rises — more and more businesses will cash-in and take cover.

      The downfall of the financial market that was fretted about almost a year ago…would have been a bump in the road compared to what we're now headed for.

      This Administration either knows what it is doing or it doesn't. Either way the result will be the same.

      One other note. All the talk about "our children and our grandchildren…" — this calamity ain't waiting that long to hit.

    4. Bill San Antonio TX says:

      Although my point may not seem germaine to this article, that perception could not be further from the truth.

      My point is simply, "Why is cap n' trade and all of this spending taking place?" I would love to say it was only because the "POTUS" and the left has to use their political capital as quickly as possible and to save the world' climate, education, health care, and everything else one can think of.

      My view is that all of this chaos, confusion, and unsustainable spending is either intentional (ominous) or misguided (incompetent). The reason ultimately won't matter.

      It is like being attacked from multiple directions. It keeps us off balance and the irony is that it is with OUR money which we have no control over. Keeping it chaotic and complex ensures the possibility that much of this madness will be passed into law. But it is deeper than this.

      We, not I, have finally elected a radical liberal and government who has surrounded himself with left-wing idealogues and Czars. They will never investigate and bring to justice one of their own – even if the evidence is overwhelming. By the way, who are these Czars and who is paying them?

      Simply put, they don't care what anyone thinks. They will use whatever means is necessary. From lack of transparency (what a joke), to no tax increases on 95% of Americans (what is cap & trade), to hiring lobbyists (what happened to the self-imposed time limit on lobbyists serving), to bait and switch on positions on universal (government health care), to going it alone on climate control while the Chinese and Indians laugh at us and we waste trillions, to shutting down a perfectly safe, clean, prison to appease our left citizens and the rest of the world (while they won't take any of the prisoners, even from their own country), to prosecuting CIA operatives who unlike our enemies (do not saw off heads with a dull knife, kill, maim, mutilate, and REALLY tortue), blaming law-abiding citizens as Un-American, and the list goes on.

      This is intentional. The very, very rich and influential people who kowtow will survive (health care options and all). They will make billions from this Chaos. The rest of us will be stymied in our ability to reach the American dream of creating wealth.

      Meanwhile, the middle class and small business are the main target. Why? Because it is small business who creates jobs and wealth. The intent is to overload our system to such an extent that central government will be the only option left – for everything -for the middle class – for everybody – but, a relative few. There is no other explanation.

      Do not take my word for it. If you read Saul Alinsky's Rules for Radicals everything becomes clear on the tactics being employed and what the "end game" is.

      Why are they so upset about average Joes "organizing"? Because, their dream of power will never materialize if the middle class (called DO NOTHINGS in Alisnky's book)decide to DO SOMETHING and stand up, because the largest segment of the population is the middle class.

      Sound too incredible? Than why are we spending ourselves into a deficit hole we will never recover from? Why is the CENSUS (for all purposes) under White House control? Why put CIA Interrogations under White House control (this one will certainly make us stronger and prevent future attack, right)? Spam? How can we pay for this spending? Perhaps an 80% tax rate? I'm certain this will lead investors to take risks. Don't laugh, just check out the 1950s.

      There is way too much for coincidence.

      When you wakeup in 15 years you will find an America that "You Can Believe In" and it will be too late.

      Reading, Learning, and Voting has never been more important. Our fellow Americans who made all this possible need to see this for what it is – POWER – and, that does not mean trickling down to you.

    5. Tom, Foster, RI says:

      Excellent information, as usual. Heritage's work has been invaluable in helping to discover the costly, fetid economic swamp on the other side of the environmentalists' Elysian fields.

    6. Linda Carlsbad, CA says:

      Nobody wants any of this! It's not that Americans haven't been awake. They are not listening to us. We are the same people that tried to stop the stimulus. This is why the people are at the town hall meeting. It is the first time they have a chance to stand up with numbers, to a real person, that has to listen!

    7. Bob, Portland, OR says:

      You all are absolutely right. This cap and trade is a hustle to take down small business. Why? because they can't control us. In the last 40 years, every economic recovery has come from small business.

      For a second though, let's stay focused on the fact that Obama is intentionally supressing the economy. Why? To weaken the economy to a point that if an "event" happens, small business will be the hardest hit.

      All this health care and cap and trade stuff is important to pay attention to, but the fact is for some reason, they are intentionally supressing the economy. The top economists are saying the cash for clunkers and now cash for appliances do nothing to stimulate an economic recovery. These are artificial to the free market and build no long term consumer confidence.

      With Obama, we have to always look at his other hand. Pay attention to what they are building in Washington. Everything they are doing is designed to incrementally take individual freedoms from us.

      The team he has in place to do this are thugs, admitted communists, and America haters.

      We need to "organize" our families, close friends, former high school and college classmates, church members, everyone you know.

      By the way, to "organize" is Obama's plan.

      Let's do this ourselves. We are collectively bigger than they are.

      This is the most important time in our lives, our freedoms are at stake and quite possibly our lives.

    8. Bob, Portland, OR says:

      Linda, there has to be a cleansing in 2010 at the voting booths.

      It is interesting though, the level of apparant self confidence our representatives have and the public disdain they show for those who stand up to them.

      They know something.

    9. Lynn B. DeSpain says:

      Cap and Trade is a Tax. Once realized, it is seen as an illegal tax and therefore idiots came up with it. Are you going to allow idiots to enforce it?

      hozro

    10. Bill Runyan, Bradfor says:

      I spent three years as an environmental engineer for a gas utility doing Title V air permits. At the time cost-benefit analysis was a consideration in RACT (Reasonably Attainaible Control Technology) vs BACT (Best Attainable Control Technoligy) for NOx and SOx permits. With the difficulty of attainment and relative harmlessness of CO2, I can't believe that industry got this shoved down their throats.

      Our CEOs and senior management appear to be too timid to get involved.

    11. Bill San Antonio TX says:

      Linda, don't despair because that is their goal – for you to give up.

      As for the stimulus, remember it took 3 republican senators to get it passed (one of which will hopefully get his just deserts and not be elected as a Democrat in Pennsylvania).

      As for the other 2 from Maine. Just because they are not YOUR senator does not mean you cannot send them emails, etc. Let them know how you feel as an "American" since these issues affect the "ENTIRE" country. And, since the stimulus is an abject failure laden with pork projects, ask the Maine senators if they plan on "trusting" this admin and congress again.

      Bob, good points on small business.

      It is interesting (but not by accident) that no one mentions the fact that on top of 35% (soon to go up to 39%+ without Bush tax cut) PLUS self-employent tax 15.2% PLUS State, city, county taxes, PLUS "mention" of eliminating WRITEOFFS, that there will be no incentive to take RISKS and coupled with small business being unable to get loans (since the government is taking it all as fast as they can print it) – how small business friendly is this admin?

      This is why we cannot give up and need to use our time to keep informed and continue complaining before it is too late. Watch your political "leaders" and let them know. If enough people do this they will have to listen.

      By the way, why is 10 Bil bailing out auto union? The economy has been devasting to me, as well.

    12. Pingback: » Financial News Update - 08/27/09 NoisyRoom.net: Where liberty dwells, there is my country…

    13. Jerry from Chicago says:

      I'm 65 years old and other than the public reaction to 9/11, I can say this is the first time I have seen the general public get really angry. Angry to the point of getting up off their rear-ends, going to public meetings and giving their politicians an ear full.

      I am proud of every single American that got up off the couch and went to a Tea Party to protest government spending and taxes. I am proud of every person who went to a Townhall meeting to let their "representative" know what was on their mind.

      Townhall audiences have been roundly criticized by Democrat Senators and Congressmen who held these meetings, not to listen to their constituents, but to 'set them straight'. These politicians failed to realize that unrest of the audience wasn't strictly due to the government health care plan, but was due to a compilation of other events, including:

      1. The $800 billion Stimulus legislation, full of earmarks, that no one bothered to read, including the President.

      2. Cap & Trade legislation that would skyrocket energy costs for the American public.

      3. Bailouts for the banks, for Wall Street brokerage firms, for AIG Insurance company and for GM and Chrysler.

      4. "Cash for Clunkers".

      5. Quadrupling of the national deficit during Obama's 1st months in office.

      6. The federal government's intrusion into the banking industry, the auto industry, the energy producing industry and attempts to takeover the health insurance industry.

      7. The government's attempt to get citizens to turn in their neighbors who spread "misinformation" critical of the government health plan.

      8. The overt contempt, criticism and scorn shown by Democrat Congressmen and Senators to the Tea Party and Townhall participants.

      These audiences were angry and wanted to be heard. They wanted to vent their frustrations and displeasure with all of the above. Attempts by the sponsoring politicians to talk the audience out of their anger were met with loud rejections.

      For the first time in my memory, those in the Congress, the Senate and the White House showed their true and naked arrogance. How dare the peasants critize us? Who do they think they are? It couldn't be more clear what they think of us. Senate leader Harry Reid probably said it best, "I can always tell when it's July in Washington by the smell. That's when the tourists start arriving." To them, we stink. We clog up 'their' streets, clutter up 'their' restaurants and ride on 'their'. Who do mwe think we are, indeed?

    14. Bill, Fresno says:

      It's been way too long but we need to reinstate an institution from way back and I am refering to the tradition of tar and feathering. That's what Americans did to corrupt government officials. Ah, those were the good old days when we had freedom and liberty in this country. Now all we get are taxes and regulations.

    15. Ben C, Ann Arbor says:

      It is clear to me that Congress is merely using the hypothetical (it still is NOT fact)"climate change" problem as a tool for tax revenue enhancement. If Congress accepted honest and open debate by legitimate scientists they would risk losing the potential tax revenue when the conclusion that climate change is caused by humans is bogus. Thus, the hardline stone wall statements as written by Senator Car Levin to me stating it is "cause and effect" is easily understood. The risk is too great to face the facts. For Congress, case closed.

    16. Brenda - Texas says:

      The Texas Medical Association had a Town Hall meeting Tuesday 25th. Congressman Ted Poe & doctors were there to listen to our concerns about health reform bill. Let me say 90% of the people there are not for this health bill. We have got to get this administration out of the White House! Please attend Town Hall meetings, send a message to your U.S. senators and representatives, or state legisiator. My husband writes letters to the editor of our local paper.This administration is moving to fast and keeping us distracted from the truth of what is really going down. I didn't vote for him, one reason because of his so called friends. My blood pressure is going up, better stop. Vote in 2010, let's make a stand. God Bless America!

    17. Thomas, Utah says:

      To bill in Texas-run for office you nailed it on the head-

      To Jenny from Chicago-I am so glad to fianlly hear from someon in your states that is so awesome. Thanks for the call to action-this is what we need. People like you fighting for America

    18. peter c bissell, wes says:

      The one thing that is NOT part of anything comeing out of washington is commen sence , like red is red blue is blue ect ,we need basic talk so all can understand and talk about it all with understanding my GOD yes GOD !!!!!!!! PEOPLE we are going the way of rome in so meney ways there is commen sence awancers to EVERYTHING,a bill needs to be 100 pages or so not 1500 thats just wrong ,let alone understandable. when obama was elected I hoped the feeling in the country would change but it did not happen, according to the leftwing main streem media IM a racest and I cling to my gun and my god. god yes but i like most of the country just want things to get better ,all thay/we have to do is be cool and do the rite thing not to hard in my opion, god bless us,a

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