Get ready, America, meddlers in Washington are once again trying to bring the U.S. economy to its knees. A wise pundit is fond of saying, "The most expensive thing we pay for is our ignorance!" The area of greatest area of ignorance, including all three remaining presidential candidates, is a basic understanding of economics. John McCain has made a major policy speech concerning global warming. Aside from the ridiculous assertion that this is a looming problem (e.g. the average temperature of the Earth has cooled slightly over the last 10 years, and we just had the coldest April worldwide in over 100 years), his proposed solution of a "cap and trade" program will be an economic disaster.
Cap and trade, for those unfamiliar with the term, is a system where the government will assign a maximum amount of greenhouse gas emissions for every business each year. If they exceed that amount, they will either pay additional taxes or buy energy credits from another business that has used less than their allotment.
While at first glimpse this might sound like a positive program, there will be a steep price to pay for each one of us. First, it gives the federal government the power to grow, limit or shut down every business. Second, it creates another large government bureaucracy to create, implement and oversee this program. Third, it creates another new source of income for the government without any increase in productivity and, finally, it creates another possible source of abuse and corruption between lobbyists and politicians over setting the emission levels for their company or industry.
It definitely will result in higher costs for businesses, which means higher costs for consumers. All you really need to know about this program is that its biggest proponent was Enron. Their sole purpose was to position themselves to take advantage of this type of program by creating a sham energy company that would be in a position to "steal" profits from real energy producers by selling the energy credits that they were planning to stockpile.
While companies that have little choice in where their business is located (e.g. power plants) will have to abide by the demands of the government, others, such as companies that Al Gore has created, will take advantage by becoming sellers of energy credits. But most will look for their best opportunities to move to other countries that are less restrictive. The number-one reason companies give for moving out of the United States is the cost of doing business. (We already have the highest corporate tax rate in the world.) Those same owners say they would prefer to remain in the U.S., but they can't afford to for competitive reasons and cap and trade will only exacerbate the problem.
McCain claims that the costs of this system will be paid for by the creation of "green jobs." With Washington's past track record on "unintended consequences," it is more likely that companies will choose to move. The result will be a net loss of jobs, and, as usual, lower-income families will get hit the hardest.
The European example
We need look no further than Europe to see what McCain's plan holds for our future. When they signed the Kyoto Treaty in 1998, they agreed to reduce greenhouse gas emissions to their 1990 levels by 2010. Despite heavy investment in "green" technology, not only are they well above 1990 levels, but each year, they get further away from their goal with recent annual increases of 60 percent. Meanwhile, America, which is criticized as the world's biggest polluter, is also the most energy-efficient country in the world. We use our energy more productively than anyone else; there isn't even a close second, and our efficiency improves every year.
The wage and price controls of the 1970s, the last government economic bombshell to hit this country, were easily rescinded, but it took the Reagan tax cuts 10 years later for the economy to recover. The cap and trade program, which will drive many businesses out of this country, will be harder to dismantle because Al Gore wont permit it. Not because of "saving the planet," but because he stands to make billions from it. And we all thought he was such a nice guy!
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