Cap and Tax Collapse

Discussion in 'Economics' started by Lightningdog, Apr 3, 2009.

  1. Al Gore is going to blow a gasket.

    Cap and Tax Collapse
    Congress balks at one more bad Obama idea.

    Please pass Al Gore a Valium -- and better make it a double -- because his cap-and-trade dreams just took a dive in the U.S. Senate. In a vote late Wednesday, no fewer than 26 Democrats joined all 41 Republicans to insist that any new cap and tax on carbon energy would require at least 60 votes.

    Tennessee Republican Lamar Alexander called it "the biggest vote of the year" so far, and he's right. This means Majority Leader Harry Reid can't jam cap and tax through as part of this year's budget resolution with a bare majority of 50 Senators. More broadly, it's a signal that California and East Coast Democrats won't be able to sock it to coal and manufacturing-heavy Midwestern states without a fight. Senators voting in favor of the 60-vote rule included liberals from Wisconsin, Michigan and West Virginia. Now look for Team Obama to attempt to impose cap and tax the non-democratic way, via regulation that hits business and local governments with such heavy costs that they beg Congress for a less-harmful version.

    Though the press corps has barely noticed, this means that two of President Obama's most economically destructive priorities have taken major hits in the last two weeks. The cap-and-tax collapse follows Pennsylvania Republican Arlen Specter's decision to oppose Big Labor's attempt to eliminate secret ballots in union organizing elections. If Mr. Specter holds firm, and as swing state Democrats also look for cover, Republicans will be able to prevail on a filibuster.

    Opponents can't get complacent because the left will regroup, and the media-liberal activist consortium will start to get nasty with dissenters. But for now these are major victories for the U.S. economy, and we suspect they are also helping the stock market rally.

    The most important remaining fight this year is over health care. Democrats seem intent on trying to plow that monumental change through with only 50 votes, even as they negotiate to bring along some Republicans. We hope these Republicans understand that a new health-care "public option" -- a form of Medicare for all Americans -- guarantees that the 17% of GDP represented by the health-care industry will be entirely government-run within a few years. This is precisely Mr. Obama's long-term goal, though he doesn't want to say it publicly.

    If Republicans acquiesce, they will spend the rest of their days in public life raising taxes to pay for liabilities that will grow into the trillions of dollars. GOP leaders need to get out of the backrooms and start the same kind of public-education campaign on state-run health care that has helped to stall cap and tax and coercive unionization.
  2. Obama's Cap-and-Trade Plan Goes Cold
    April 03, 2009 08:08 AM ET | James Pethokoukis | Permanent Link | Print

    Obama's cap-and-trade plan may become for Democrats what Social Security reform is for Republicans: a handy policy cudgel for the other side even if it never happens. Even though cap-and-trade is supposed to be a more politically viable method for dealing with carbon emissions than a straight carbon tax (because it's more opaque), it took the GOP about a picosecond to start calling cap-and-trade an "energy tax." And Team Obama seems aware of this problem since it lowballed revenue projections for the plan. Here is how Ed Garlich of the Washington Research Group at Concept Capital sees things:

    It is now likely that the Obama administration’s campaign pledge to reduce greenhouse gas emissions by 14% below 2005 levels by 2020 won’t take legislative form until later this year. Without significant compromise on a number of aspects the debate could well linger into 2010, an election year, when the political will to resolve controversial issues may fade. The White House was already on alert as bi-partisan opposition to a carbon tax was beginning to build among coal and oil producing state congressional delegations. ... Notwithstanding a proposed $65 billion in tax rebates to low-and middle-income-households, there is enormous uncertainty with respect to the impact an $80-$200 billion per-year energy consumption tax might have on an already fragile economic recovery. Coupled with the effect on the domestic economy is concern that without comparable international policies, U.S. goods would be at a considerable price disadvantage on the global market. Presidential advisors have talked about the possible need for a carbon tariff on imports.