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  • Today’s Calamity: Cap and Trade Destroys Jobs and Destroys Wealth

    Cap and Trade Calamities

    When it comes to cap and trade, Secretary of Energy Steven Chu says it’s an economic stimulus. President Obama says it’s a jobs bill. Is it either?

    Reporters asked Chu if he though the green movement would generate the townhall pushback the health care debate and he responded, “I don’t think so…maybe I’m optimistic, but there’s very little debate” that a new green energy economy will bring economic prosperity.

    George Mason economist Russ Roberts offers his own facetious response to Chu:

    “That’s right. It’s a free lunch! There’s no trade-off between cleaner air and economic growth.”

    Unfortunately for Americans, as taxpayers and energy consumers, the trade-off is rather large:

    Cumulative gross domestic product (GDP) losses are $9.4 trillion between 2012 and 2035;
    A typical family of four will pay, on average, an additional $829 each year for energy-based utility costs; and
    Gasoline prices will rise by 58 percent ($1.38 more per gallon) and average household electric rates will increase by 90 percent by 2035.
    Net job losses approach 1.9 million in 2012 and could approach 2.5 million by 2035. Manufacturing loses 1.4 million jobs in 2035;

    But President Obama said the opposite was true in an endorsement of the Waxman-Markey cap and trade bill in June:

    “The energy bill that passed the House will finally create a set of incentives that will spark a clean energy transformation in our economy. It will spur the development of low carbon sources of energy – everything from wind, solar, and geothermal power to safer nuclear energy and cleaner coal. It will spur new energy savings, like the efficient windows and other materials that reduce heating costs in the winter and cooling costs in the summer. And most importantly, it will make possible the creation of millions of new jobs. Make no mistake: this is a jobs bill.”

    Those “incentives” are subsidies and tax credits complements of the taxpayer. And the jobs President Obama speaks of are in fact real. He gave a few examples in his speech: “In California, 3000 people will be employed to build a new solar plant that will create 1000 permanent jobs. In Michigan, investment in wind turbines and wind technology is expected to create over 2,600 jobs. In Florida, three new solar projects are expected to employ 1400 people.”

    There’s that free lunch concept again. The subsidies and government handouts for renewable projects means diverts those workers away from more productive use. Moreover, a cap and trade policy will destroy more jobs than it creates. Because cap and trade is a tax on energy, the cost of producing goods for businesses increases, and consumer demand falls for two reasons; price hikes on goods reduce demand and people have less disposable income due to higher energy prices.

    Higher energy prices force businesses to make production cuts and reduce labor. Furthermore, as we see in the current recession, reduced consumer spending only exacerbates this. The overall result is increased unemployment and slow economic growth.

    And we’re not the only ones projecting such losses. In fact, at a recent Heritage event on the costs of cap and trade, not one of the 6 speakers representing groups who modeled the bill discussed economic benefits from cap and trade – it was all about the magnitude of the losses.

    Posted in Energy [slideshow_deploy]

    11 Responses to Today’s Calamity: Cap and Trade Destroys Jobs and Destroys Wealth

    1. Bill San Antonio TX says:

      The Founding Fathers never imagined the abuse when they wrote,without limitation that, Congress "has the power of the purse".

      I am not one for tinkering with the Constitution BUT there is one amendment that is critical and needs to be passed.

      The only way to even make it difficult for legislators to stop abusing taxpayer money is, A CONSTITUTIONAL AMENDMENT REQUIRING A BALANCED BUDGET AND A LIMIT ON TAXATION.

      Since our fearless leaders have no shame and no morality, we need to protect them from themselves, as well as, from us.

      If Obama continues, even that possibility will be gone forever.

    2. Don't Cap & says:

      Sign our Petition to Oppose Cap & Trade: http://tinyurl.com/y8hdgct

    3. John, Toledo OH says:

      Losing the number of jobs that your findings indicate is staggering. Sign the petition to tell Congress to support American jobs. Follow Link Here: http://tinyurl.com/y9p2ms9

    4. Janice A Robinson says:

      If I recall, Bush was for clean air. It's a joint global issue. It seems to me that Republicans are against everything that is for the poor. Small business is hurting now because of the Bush administration's spending. Nobody wants to see that tax cuts are what hurts the economy. Money has a way of finding the deep pockets of the rich. Now with the Tea Party on the rise, talk about war spending has been forgotten. Wake up and smell the roses.

    5. Donna, TN says:

      This bill does not help the poor or small business. It hurts every in higher taxes we cannot afford at this time. Going to war was a decision made by both parties not just Bush. Also missing from the news since Bush left is the daily death count of our soldiers protecting this country. Those soldiers who, at this time, are receiving no support from our President who is all of a sudden not sure what to do. He was pretty clear and what needed to be done during the campaign. We have all learned, he said whatever he needed to win. One final note, in all that Bush spent our deficit was 500 million. In 8 months, Obama has managed to create a deficit of 2 trillon yet you still continue to blame the last administration. Wake up and smell the roses.

    6. Suzanne, Jackson, MS says:

      I agree with Bill from San Antonio–we need a Constitutional amendment preventing Congress from having free reign with our tax dollars!

    7. Brett, Albany, NY says:

      Unbelieveble. The more I learn about Cap and Trade the more it looks like something right out of Atlas Shrugged.

      Remember all the railroad company execs with the best Washington connections getting more than their "fair share" of steel? The rules only applied to those without DC connections.

      Kinda like all the Washington-connected Utility execs now–supposedly the ones getting hurt by tougher CO2 standards — getting their allowances for free?

      Yup, what were supposed to be doled out via auction(the whole point of cap and trade), are freely handed out…as long as you have your–as Rand would say–"man in Washington".

      The should have called "Weatherby-Mouch".

    8. Brett, Albany, NY says:

      Unbelieveble. The more I learn about Cap and Trade the more it looks like something right out of Atlas Shrugged.

      Remember all the railroad company execs with the best Washington connections getting more than their "fair share" of steel? The rules only applied to those without DC connections.

      Kinda like all the Washington-connected Utility execs now–supposedly the ones getting hurt by tougher CO2 standards — getting their allowances for free?

      Yup, what were supposed to be doled out via auction(the whole point of cap and trade), are freely handed out…as long as you have your–as Rand would say–"man in Washington".

      They should have called it "Weatherby-Mouch".

    9. Bill, San Antonio TX says:

      Dear Janice,

      Tax cuts always result in increased revenues, thus more money for the government and thus more money for funding numerous programs that help the poor.

      Moreover, American charity is the highest in the world.

      The Bush administration, whether you like him or not, spent nowhere near the money Obama has already printed, borrowed, allocated, and spent.

      Small business is not hurting because of Bush. Small business is hurting because Obama has not spent enough "stimulating" it.

      Every time any increased regulation was brought up about Fannie Mae and Freddie Mac, people such as Barney Frank said there was no need for it. Meanwhile, these institutions backed loans (thanks ACORN) to people who would never stand a chance of obtaining a loan by regular bank requirements. When the "bubble burst" there was plenty of blame to go around but it was not because of Bush's "spending".

      You have fallen into the brainwashed trap of the left. Do you realize that Bush's tax cuts, in fact, cut tax rates for EVERY American. The Obama admin is going to let them expire which will result in the largest tax increase in US History. Further, don't think you are safe. Cap n' Trade, if passed, is a permanent huge energy tax – for all (do you have gas or electricity)? More jobs will go overseas as companies move to stay profitable.

      As for clean air, none of our cities look like the ones in China and elsewhere. There is no comparison compared to even 20 years ago. Yes, it can be better.

      The President's multiple agendas will not help the economy for the middle class, let alone the poor. You can only take so much cash from the "rich" who pay most of the taxes right now. There will be a steady decline of the "rich" to get tax from, as small businesses go under (and take jobs with them).

      The middle class will shrink and the poor will increase. The very rich (not $250,000) will be ok and Obama and all the "leftist leaders who are lobbyist, attorneys, and democratic consultants will be ok.

      You need to open YOUR eyes and research these issues so you can see how all this fits together. You will not benefit – nor will I.

    10. Walnut Creek, CA says:

      Since 85% of our energy comes from oil and gas sources, and since an energy tax will increase the cost of nearly everything we produce, transport, or our utilities. The cost of our goods and services will increase along with the cost of living. This will decrease employment in the USA and cost us jobs.

      Countries who do not increase their energy taxes will enjoy a cost advantage when selling their products in international markets. This will also cost us jobs.

      If subsidies and mandates cause artificial increases in uneconomic "green" energy sources, resources will be misallocated. Those jobs should be thought of as the cost of any incremental reduction in CO2–not a benefit. We will be producing energy using many more resources than needed to produce energy using existing oil, gas, hydro, or nuclear resources.

      For example, we could produce electricity using hand-cranked generators. To produce 100 watts of continuous energy, it might require 10 laborers per 8 hours times 3 shifts equals 30 units/day of labor. The cost of 30 units of labor per day cannot be considered a benefit. Rather this unproductive use of labor is a real cost. Those units of labor could be employed in producing more energy in productive ways, so there is a foregone loss of output. Society has a lower standard of living as a result.

      Don't be mislead by the argument that energy taxes on oil and gas will produce green jobs that are a benefit to society. Those green jobs are a real cost to society of using resources in uneconomic ways.

    11. dfry pittsburgh pa says:

      Janis you better look a little further your so called president Obama has put this country so far in debt that we will never get out. Bush protected your butt for 8 years and I think we should all prepare our selves because our government is worried more about your healthcare which is none of their business anyways, instead of watching out for the people in this country that are probably just waiting to attach. Better get ready because we are going to have to protect ourselves.

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