Obama bails on ‘cap-and-trade thing’

February 3, 2010

President Barack Obama is now calling the carbon trading scheme that is supposed to heal the planet a “cap-and trade-thing.” That can’t be a good sign for the concept.

Here is the president in New Hampshire yesterday: “”The most controversial aspects of the energy debate that we’ve been having — the House passed an energy bill and people complained about, well, there’s this cap and trade thing. And you just mentioned, let’s do the fun stuff before we do the hard stuff. The only thing I would say about it is this: We may be able to separate these things out. And it’s conceivable that that’s where the Senate ends up.”

Whatever the impact on the environment, the probable demise of President Barack Obama’s cap-and-trade carbon plan would be a much bigger fiscal failure for the White House than the implosion of healthcare reform, at least over the near term. Taxing carbon was the hidden key to funding his administration’s policy agenda while limiting budget deficits. Now the White House is scrambling for a realistic Plan B.

For months, the Capitol Hill consensus has been that a legislative limit on carbon emissions isn’t going anywhere in 2010 or beyond. New job-killing regulations and taxes just aren’t popular when unemployment is in double digits. Now the White House seems to agree on the plan’s political prospects. But there already were hints of this in the new Obama budget proposal. Now Obama’s budget last year assumed auctioning emissions permits would generate $646 billion in revenue over 10 years. Of that amount, a fifth would have gone toward funding clean energy research, and four fifths to funding a worker income tax credit.

The administration’s new budget proposal simply contains an accounting line labeled “allowance for climate policy” followed by, well, nothing. Not a single dime of revenue is assumed for the years 2011 through 2020. The line item looks to be nothing more than a placeholder to keep hope alive for greener Democratic voters.

The near-term impact is that the worker tax credit won’t be renewed after 2011. But longer-term, the proposal’s failure would stymie administration efforts to get closer to balancing the federal budget.

Internal White House estimates predicted cap-and-trade auctions might generate two or three times as much revenue as forecast in last year’s budget, or up to $1.9 trillion. By contrast, proposed tax hikes on upper-income Americans would raise $678 billion. The extra money from cap-and-trade could have taken a big bite out of the $8.5 trillion 10-year deficit projected in the latest budget — just the kind of broad-based, if politically stealthy, tax that Obama’s economic advisers think is necessary to balance the books.

The administration’s healthcare plan was supposed to knock another $132 billion off the 10-year deficit, according to the Congressional Budget Office. With that on the back burner too, Democrat deficit hawks are left hoping Obama’s proposed fiscal commission can somehow create a menu of spending cuts and tax increases that could actually win congressional approval in 2011. Sadly for Obama, that’s about as likely as that “cap-and-trade thing” passing.

9 comments

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Where these propeller-heads get these ten year revenue stream numbers is beyond me. What rubbish. I know all politicians do this sort of thing but really, this seems particularly egregious. Certainly in the case of cap ‘n’ trade it appears delirium set in at some point. Vote these clowns out, please!

Posted by gotthardbahn | Report as abusive

If Cap & Trade passes God help us! It will hurt us all and give Obama more money to spready around to his friends. Meanwhile, jobs will be lost and we will all be hurt by the increased cost of heating and cooling our houses. But it won’t affect his family will it? I wonder how many old people will die of hypothermia because they can’t afford to have their heat on in the cold weather. It’s no wonder he’s pushing the global warming myth so much – it plays right into his Cap and Trade plan.

Posted by Pat L | Report as abusive

Cap & Trade is nothing but a green pretext for a massive tax hike…money to be used to pay for Obamacare (not to be used, as one would assume, for investment in clean energy). The Left hates it because it does virtually nothing to reduce CO2 emissions, the Right hates it because it increases regulation and will hurt growth, and the Independents hate it becasue the KNOW perfectly well that increased energy costs will fall directly on their backs. Sound anything like the health care bill? When will the Left learn that to govern in a Right-of-Center nation, you must propose legislation that most voters actually…you know…LIKE!!

Posted by JohnR | Report as abusive

Good. So let’s not reform health care, abandone cap and trade and bring back GW Bush so we can fix our problems by doing a shopping spree. Hooray!!!

Posted by Lou | Report as abusive

Hey Lou,
Sounds good, except don’t bring back anybody and stop spending so much money.
I know, won’t happen.

Posted by kitty | Report as abusive

[...] and Trade: Is Obama bailing? No, not [...]

Cap and trade doesnt work, Europe has proved that. European and Canadian healthcare doesnt make better healthcare thats already proven, so why in the heck does Obamam want to follow other countries failed policies. Is this the change you wanted? If so you could had just moved. Cap and trade does not work its a scam. It lets the big polluters still pollute while paying a smaller polluter who hasnt reached their quota of pollution to buy the large companies pollution over pollution quotas, which is TAXED and the government makes money, see its all double talk just like the politicians and what I just wrote, bottom line is its a scam. Ask Al Gore where he invested his money? in cap in trade companies which will make him very rich, now thats a inconveniant truth but the real truth.

Posted by bob | Report as abusive

The French wanted Copenhagen and are praying for cap ‘n trade because they think they’ll get business through their Areva, whose shares are owned in the majority by the government. Sorry, Sarko, you’ll get stiffed by those Chicago boys.
This administration is delusional – just because the AP and Reuters plus NYT aren’t covering the IPCC meltdown doesn’t mean Americans aren’t reading every single British newspaper on the subject.

Posted by BHG | Report as abusive

Everyone needs to understand that under Obama’s plan “electrical bills will necessarily skyrocket”, meaning a 96% increase & natural gas will go up in price 46% these price increases will be born by the 55% of us that pay federal tax. The 45% who don’t pay federal tax won’t see any increase. Cap & trade is simply another scheme to redistribute wealth.

He is right, it is the latest ‘thing’ in hats, i.e. “de Bono hats”, and the speech writer better look for another job.

Posted by Gandhiolfini | Report as abusive

[...] Cap and Trade arm-waving, to hide amnesty? [...]