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Why Republicans oppose cap and trade

Cap and trade is the short name given to legislation being pushed by the Democrats and the president that would create "carbon credits" to be issued to companies for pollution they create. The real name of the bill is the "Clean Energy Jobs and American Power Act" introduced by Kerry and Lieberman.

The sweet idea behind it is that companies will work to come in under the credits they have been issued so that they can trade or sell their extra credits. The government will decide how much pollution a company can make, issue the credits, and then measure the output.

To start out, the legislation would apply to utility companies that produce our energy. That's a critical problem--everybody knows, or should realize by now, that utility companies don't pay taxes. They collect them from those of us who use the energy. With that in mind, then, it is clear that if a company exceeds its credits, then you and I will be paying for it.

Which amounts to higher utility bills for essentially all of us. Since energy bills can be considered a regressive tax since there is no floor to it--we all use energy--this is a de facto new tax on the ordinary citizen. Only the wealthy really don't care about their utility bills.

That explains part of the Republican opposition. The other part is the impact it has on businesses, and not just utility companies. Businesses of every kind use energy, and if the cost to produce whatever it is they produce goes up, the cost of goods and services goes up. In a recession, passing on higher costs may not be an option, which threatens the survival of the business. That then leads to more unemployment.

The bill also claims that such a strategy will lead to "smart growth" wherein people will live closer to work in order to use less gas or take advantage of public transportation. In an editorial in the Wall Street Journal, Wendell Cox and Ronald Utt pointed out that that would actually raise the price of housing as people all try to buy in a concentrated area.

And that brings us back to the housing bubble that caused our current housing crisis. So all in all, the cap and trade legislation offers many reasons why we should oppose it.

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