Tuesday, March 17th 2009 Americans for Prosperity
The White House budget estimate of $646 billion in higher energy taxes under the guise of cap-and-trade always looked like a lowball. Now the deputy director of the White House National Economic Council, Jason Furman, is giving us a glimpse at the real number, telling Senate staff the energy tax scheme would actually raise "two-to-three times" the budget's official $646 billion revenue estimate. Dow Jones reports that 5 people at the meeting confirmed the statement.
That would mean the actual tax hike would run well into the trillions, roughly between $1.3 trillion and $1.9 trillion between fiscal years 2012 and 2019 by Furman's own estimate.
Remember that these are just the costs for the first 8 years of a 40 year program that gets much more expensive over time. This is the final knock-out blow for a wobbly U.S. economy, and the more people learn the facts the more strongly they'll oppose it.
RELATED: Obama's Energy Tax
Friday, February 27th 2009
The 2010 Obama budget reveals the major tax hike that Pelosi, Reid, and Obama are counting on to fund the outrageous bailout and stimulus spending that is propelling federal spending to record levels-27.7 percent of GDP in 2009, an all-time record other than the four peak years of World War II.
The tax hike is a broad-based energy tax that will wallop every American who fills a gas tank, pays an electric bill, or buys any product that has to be grown, shipped, or manufactured.
The mechanism is cap-and-trade, which is like a tax on coal, oil, and natural gas but instead of being set at a specific amount, the total level of use is capped and companies are forced to pay the government for emissions permits-which Wall Street wizards at companies like AIG and Goldman Sachs can in turn trade on sophisticated exchanges and derivative markets.
White House Budget Director Peter Orzcag admitted that decreasing carbon emissions imposes costs on the economy, and "much of those costs will be passed along to consumers in the form of higher prices for energy and energy-intensive goods."
Page 21 of the Obama budget proposal highlights his cap-and-trade proposal:
After enactment of the Budget, the Administration will work expeditiously with key stakeholders and the Congress to develop an economy-wide emissions reduction program to reduce greenhouse gas emissions approximately 14 percent below 2005 levels by 2020, and approximately 83 percent below 2005 levels by 2050.
The economic impact of such a policy would be devastating. Even using the Obama administration's own official numbers, it would amount to a tax hike of $645 billion over the first 8 years, about $80 billion per year--and the White House has since admitted the real tax hike could be two or three times as much. That's just the first 8 years of a program that runs through 2050. As the cap becomes more and more strict over time, those costs would skyrocket into many trillions of dollars.
Obama's proposed 83 percent reduction below 2005 levels by 2050 dwarfs the proposal from last year's Lieberman-Warner bill, which included a 63 percent reduction.
While we don't have numbers yet on the new proposal, the cost of last year's bill is instructive. A study conducted by SAIC (the same modeling firm the Energy Department uses for its own projections) for the American Council on Capital Formation, found that electricity prices would be expected to increase under anywhere between 101 percent and 129 percent by the year 2030. Prices at the pump would jump 77 percent to 145 percent-bringing not just $4 gasoline, but very possibly $8 gasoline or higher.
The estimated impact on disposable household income due to rising energy prices would then reach anywhere between $4,022 and $6,752. And because an energy tax is regressive, it will fall heaviest on poor and lower middle class folks who spend more of their income on energy.
President Obama himself described his plan in an interview with the San Francisco Chronicle last year this way:
Under my plan of a cap and trade system, electricity rates would necessarily skyrocket... whatever the industry was, uh, they would have to retrofit their operations. That will cost money. They will pass that money on to consumers.
The new version of the plan in the Obama budget is much more aggressive, and reducing emissions another 20 percent will be dramatically more costly-possibly as much as double the cost since the additional cuts will come in the most difficult and expensive areas, like transportation and agriculture.
While the lost purchasing power for a typical household will decline by many thousands of dollars, the administration promises the plan will be "offset" by the $400 per worker rebate checks that were passed as part of the stimulus bill. Paying thousands and getting back hundreds is a bad deal for American families.
This is not a side-effect of his plan--it's the intended goal, which was clear when Obama said in his address to Congress that he wants to give so-called renewable energies a market advantage, which can only be done by imposing a tax that dramatically increases the cost of natural gas, oil, and coal.
This policy would destroy the only bright spot in the current economic environment, low energy prices, and cause severe economic pain. It should not even be contemplated if we are serious about addressing the country's economic crisis.