House Minority Leader John Boehner (R-OH) stated on March 3 that “‘Cap-and-trade’ is code for increasing taxes, killing American jobs, and raising energy costs for consumers.” His claim is based on the fact that carbon-intensive energy sources such as coal, natural gas, and petroleum supposedly provide 85% of the energy consumed in the United States. And if energy prices go up as a result of a cap-and-trade market on carbon emissions, then that means the increase is a tax.
Let’s put aside for a moment the audacious claim made by the Heritage Institute (source of the 85% number mentioned at Boehner’s website) that nuclear power is renewable – it’s lower carbon, but it’s hardly renewable in the same sense as solar, wind, tidal, or geothermal. No, let’s focus instead on Boehner’s intentional blurring of the definitions of “capitalism” and “taxation.”
Cap-and-trade systems are fundamentally a market scheme whereby the government creates a market for carbon emissions by fiat. This has the effect of using price pressure on the highest carbon emitters to lower their emissions through the application of private capital. And because it’s based on a market system, the costs aren’t fixed and will fluctuate quickly with the introduction of new technologies, energy consumption forecasts, and so on. In addition, the lower someone’s (or a company’s) carbon emissions are, the less they pay. In other words, a cap-and-trade system makes carbon a tradeable commodity like pork bellies or oil, and it’s fundamentally a capitalist approach to reducing carbon emissions.
Taxation, on the other hand, is a government levy on personal property or income for public use or to defray expenses. It doesn’t adjust to new technologies or changing economic conditions without legislative intervention like a market does.
In both cases, however, prices for energy will increase. That’s pretty much inevitable. But just because they both raise prices doesn’t mean that they’re both a tax. We don’t call it a tax when prices for oil increase because rebels shut down production in the Niger delta. We don’t call it a tax when food prices rise because corn ethanol production is increasing the price per bushel of corn. We don’t call it a tax increase when a storm shuts down a liquefied natural gas terminal and the price of electricity rises. Similarly, we don’t call it a tax decrease when we can buy a new SUV for less than the manufacturer’s cost because no-one wants to buy one. We call that “the risks of doing business” and, as consumers, we’re just as subject to those risks as any corporation – or any utility.
Or, put another way:
When the price of gasoline goes up in the winter due to heating oil demand and up in the summer due to the summer vacation driving season, those are tax increases as well, right? Great! That means I get a twice-yearly tax cut when the price of oil drops in the spring and autumn as a result of lower demand for heating oil and fewer people driving long distances. Whew, I was all worried there for a second that it was all tax increases, no tax cuts.
Boehner is relying on the public’s irrational dislike of taxation to abort cap-and-trade system before it can see the light of day. And in the process he’s trying to pull a fast one and trick people into believing that the very capitalist system he supposedly believes in is a tax.
I guess it’s only a market-based capitalist system when it supports deregulation of the financial markets (something that Boehner supported). And we all know how well that turned out….
Don’t buy John Boehner’s lies and hypocrisy.