That’s the thing with illusionists; you have to keep an eye on both of their hands when they preform their magical feats. In this case, one has to watch what Obama plans to do with the cost of energy. Namely, cap and trade.
We find that a mitigation path consistent with Lieberman-Warner’s provisions is equivalent to a permanent tax increase for the average American household. This increase is projected to amount to an additional $1100 in taxes in 2008. Moreover, this cap-and-trade “tax” increases over time in real terms from about $1400 to $2000 during 2015-2030 and approximately $2000 to $3000 in 2030-2050. The de facto tax increase becomes quite significant when one considers the average American household spends about $2500 on food annually, or approximately $208 monthly. The decrease in consumption per capita of $277 annually is equivalent to more than one month’s food budget for the average American household, keeping other consumption levels constant.
Another way to gauge this cap-and-trade tax impact is comparing it to auto-loan payments. For example, a new 2009 C-Class Mercedes can be leased for around $429 per month. A decrease in consumption by $1110 amounts is equivalent to 2.5 monthly payments on this luxury car. This tax amounts to aboutlmost three and a half monthly payments in 2015 and almost seven payments in 2050.
That sure sounds like fun doesn’t it? Another fun side effect of cap and trade is that it will depress growth in the energy sector, which will result in a GDP loss. Because that’s just what this economy needs right now. All to prevent that pesky global warming that seems to cause it to snow every time a global warming protest/lecture/summit is taking place.
Better stock up on cardigans.
