Cap-and-trade or smoke and mirrors?

Inter Lake editorial

As the Washington machinery churns out stimulus spending, toxic asset plans, bailouts and bloated budgets, it's darned hard to keep an eye on other important developments, things like an emerging carbon cap-and-trade scheme.

That's right, the wheels are already moving to establish a system that basically taxes energy producers and consumers. Last week, the Environmental Protection Agency sent the White House a proposed finding declaring carbon dioxide (what humans exhale) a pollutant. If approved, the EPA would have the authority to use the Clean Air Act to control carbon emissions. Simultaneously, President Barack Obama's budget has built-in expectations for a tsunami of carbon-tax revenues.

The formal establishment of such a program will, of course, depend on a Congress that briefly pitched cap-and-trade last summer, when the country was coping with record fuel prices. That legislation was quickly withdrawn before any real debate or scrutiny into the true costs of cap-and-trade could get under way.

And the costs of this program are immense, disproportionate and completely out of line with the supposed benefits to be gained from reducing the influence of the United States on climate change.

The Congressional Budget Office and a raft of economic think tanks have generated cost estimates with a common denominator: carbon emission controls will be costly, and those costs will be passed along to consumers, with low-income households bearing a disproportionate share of the burden.

The Tax Foundation calculates that the bottom 20 percent of income earners will carry an energy cost burden equal to 6.2 percent of household cash incomes. In a lower estimate, the CBO puts the cost at 3.2 percent for the bottom 20 percent, but even that translates to about $680 per household.

That should pretty much erase tax breaks which those households might be expecting.

Cap-and-trade costs would also be disproportionately carried by states with manufacturing or other carbon-producing industries, such as coal. According to the Wall Street Journal, Wyoming tops the list of per capita carbon-producing states and Montana is ranked fifth.

There are other costs, with some analysts predicting that cap-and-trade will necessarily lead to protectionist tariffs aimed at "leveling the playing field" with other countries that don't have to abide by carbon constraints. And there are predictions that American wealth and jobs will transfer to those countries precisely because they don't have carbon constraints.

Never mind that the debate over climate change is far from over, with hundreds of scientists organizing against the so-called "consensus' that is driving Washington's cap-and-trade pursuits.

This scheme will present the worst possible type of government arrangement: It will establish a regulatory program that won't even have to demonstrate it is accomplishing its assigned mission.

After all, measuring any actual benefits from reducing greenhouse emissions will be impossible, because curbing alleged human influence on the climate is something that's supposed to develop over a period of decades.

Cap-and-trade will be a wasteful economic disaster. Can we really afford any more of that?