Wednesday, February 25, 2009

Cap, Trade, Bait, and Switch

Mrs. Fundman and I bought a new car last year, and while we love it, I wish we had waited until the financial armagedon of the past year to get a really awesome deal.

We hit a couple of local dealerships including one in which the fastest talking, most unscrupulous, slimiest car sales manager I have ever encountered tried to talk us into leasing, not buying, our car. This despite the fact that on about 35 separate occasions I told him we weren't leasing.

He was trying to get us confused with the numbers. He kept pulling out alleged dealer cost sheets, depreciation charts, showing us different discount offers, all the time pushing the leases. I felt like Homer Simpson with Cowboy Bob selling me an RV. I started to find it really entertaining when he begin telling us how proudly his dealership supported NPR, which meant he read us as leftie greenies. Then he told us the lease would be really great when electric cars came out in a few years and we could give him back the leased one for a new plug-in.

I suspect his schtick has changed some since gas is now $1.68 a gallon. However, entertainment value aside, I think our President may have trained with this sales manager because last night he tried, and may have succeeded, in pulling off an awesome "bait and switch." Folks, if there was one thing to take away from that speech last night it was this - get ready for much higher utility bills, food prices, and prices on manufactured goods. Why? We are going to get a "cap and trade" scheme in this country.

You cannot pay for all of the goodies he wants, balance the budget, and give out ponies unless you are going to generate revenue. Raising taxes on the richest 2% of people, who are now not very rich, won't raise much cash. Electronic medical records is going to save billions and pay for this? If you believe that, buy yourself a beer tree and plant it in your back yard.

So then how is he going to pay for the Christmas list we got last night? Hell even the NYT called his plan to pay for health care reform "vague." The same way that state governments are coming up with increasingly "creative" ways, like casinos, to pay for things. Obama is going to give us all a hidden tax - cap and trade. In fact he's counting on 300 billion bucks in new revenue to come into federal coffers through this program.

So what exactly is "cap and trade?" As the Oracle of Internet information tells it, it's a way that polluters pay the government for permits that provide a "right to pollute." If the right number of permits are issued for the right price (and yes, the government is supposed to do that pricing) it should help to put a premium on pollution and limit emissions to the most valuable polluters. In theory it decreases marginal pollution and improves environmental quality. And it provides the government with a new source of cash.

BUT it also inevitably raises prices - that's a given because it imposes costs on businesses that they will pass onto consumers. So imagine inflation that's government mandated. And as the government tries to limit the issuance of more permits (to lower carbon emissions) the demand for permits raises the prices and increases costs even more.

In theory, the upward pressure on prices should promote innovation to develop new cleaner technologies. In practice when the Europeans did it, they issued too many permits and carbon output friggin increased in some countries. But, good news, the EU got a nice wad of cash from the companies for the permits and consumers paid higher prices.

Now we are being asked to pay what amounts to a tax during a bad recession, a banking crisis even the left sees as bad, with lots of future inflation coming from printing trillions in new money. All of this to save us from global warming, opps climate change, during one of the coldest winters in recent years.


You can make a case that better health care coverage and lower costs would be beneficial to the economy. But as I noted earlier today, this is about trade-offs. Are 218,000 Iraqi widows worth a democratic system? Is a very costly cap and trade system with undetermined effects, worth increased accessibility to health care for people who are currently uninsured or under-insured?

I can't really answer that question because I'm neither a climate scientist nor a doctor. However it would really be decent of the President to be honest to people and pose the question, and the trade-off involved, properly. Otherwise he's no better than a car salesman pushing leases on people who want to buy.

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