PrintMarch 20, 2009
Capping & Trading on Obama's $250,000 Lie
In explaining their tax plan, the President and his minions continue to repeat two crucial figures: 95 and 250,000. The first is the percentage of Americans the Obudget purportedly provides tax relief to and the second is supposedly the minimum annual income of families who’ll be forced to pick up the tab for the benefits bestowed upon the first. But just as are those the administration proposes for carbon, these caps are easily worked around – for a price.
By now you’ve probably heard these campaign words repeated in one form or another at least a hundred times: “We are going to cut taxes for 95 percent of Americans.” As well as the standard double-talk response when someone points out that nearly 40 percent of Americans don’t actually earn enough to pay federal income tax. That “they do pay other taxes” and the “cut” they’ll receive will be in the form of a “credit” paid for by those who earn enough to pay the taxes that must be hiked to cover those credits. While Karl Marx certainly would have applauded the idea as “from each according to his abilities, to each according to his needs,” we’ll just call it what it is -- plain old fashioned redistribution of wealth at a time we can least afford it.
But while the 95% promise leaves room for endless semantic swordplay, this one, originally declared by candidate Obama last September, does not:
"I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes."
And yet it was just days after dancing at his inaugural ball that President Obama waltzed around that pledge by signing a $33 billion State Children's Health Insurance Program (SCHIP) expansion bill. For in order to pay for his campaign promise, which broadened health insurance subsidies for children and qualifying adults in “lower-income” families, he increased the federal excise tax on tobacco by a massive 156 percent. Despite the fact that no one will be harmed more by the regressive 61.6 cents per pack hike than the “lower-income” families Obama has always promised to protect.
But the price of Obama’s healthcare behavior modification experiment was but a drop in the cooling ocean compared to that certain to be wrought by his similarly politically-driven plan to curb our energy consumption. Particularly as less than one American in five smokes cigarettes, yet virtually every man, woman, and child bears the label of energy consumer.
The president’s proposed national carbon sales tax – complexly disguised as a cap-and-trade auction program -- anticipates revenues from energy providers to exceed $645 billion over 8 years, beginning in 2012. These come in the form of monies paid by companies unable to meet (supposedly) gradually declining emissions goals or “caps” to purchase or “trade” so-called “allowances.” And even the plan’s architects and proponents clearly foresee the inevitability of the crippling expenses it imposes being passed down to the consumer, as they’ve installed a pressure relief valve. You see, while $120 billion is slated to subsidize “clean-energy technologies,” the administration has promised to use the remainder to fund energy tax credits for households making less than $140,000 a year.
The president’s proposed national carbon sales tax – complexly disguised as a cap-and-trade auction program -- anticipates revenues from energy providers to exceed $645 billion over 8 years, beginning in 2012. These come in the form of monies paid by companies unable to meet (supposedly) gradually declining emissions goals or “caps” to purchase or “trade” so-called “allowances.” And even the plan’s architects and proponents clearly foresee the inevitability of the crippling expenses it imposes being passed down to the consumer, as they’ve installed a pressure relief valve. You see, while $120 billion is slated to subsidize “clean-energy technologies,” the administration has promised to use the remainder to fund energy tax credits for households making less than $140,000 a year.
For the moment, we’ll set aside that such allowance trading schemes have failed miserably overseas -- raising gasoline and electricity costs to sometimes prohibitive levels while having no impact whatsoever on escalating atmospheric CO2 levels. And we’ll resist the urge to recall last summer’s abrupt domestic lesson that higher energy costs slam you not only at home and at the gas pump, but also at the grocery store, the movie theater and eventually -- anywhere else you need pull out your wallet.
We’ll even ignore the Heritage Foundation’s study predicting “cumulative gross domestic product (GDP) losses of at least $1.7 trillion that could reach $4.8 trillion by 2030 (in inflation-adjusted 2006 dollars).” Not to mention the nearly 3 million (up to 7 million by some estimates) manufacturing jobs either driven overseas or lost entirely. And American Council for Capital Formation chief economist Margo Thorning’s warning to the House Energy and Commerce subcommittee on Wednesday that emitters might actually be forced to pay as much as $3 trillion during the proposed period, catapulting unemployment and consumer costs even higher. In fact, I’m not even going to add my usual reminder that it’s all for naught as warming stopped in 1998 and there’s absolutely no proof at all that any actions of mankind might influence global temperatures 1°C -- in either direction.
No – we’ll just stick to Obama’s promise of “not any of your taxes” increasing if you’re a “family making less than $250,000 a year.”
To be sure, if the administration doubted for a second that their ruinous plan would significantly increase consumer costs in every aspect of life, they wouldn’t have agreed to kickback over 80% of revenues as tax credits. But to whom will such desperately needed relief from government folly actually be going, those 97% of families earning less than $250,000 a year, and individuals earning less than $125,000, as insistently promised? Nope. At $140,000, they cut that threshold nearly in half, didn’t they?
So, using the administration’s own 95% figure and available 2005-2006 IRS figures, let’s estimate the number of Americans who have been outright lied to this time -- shall we? The 2% difference in 53 million joint returns represents over a million families. Applying the 2005-2007 US Census Bureau report of a 3.19 average family size, that’s over 3.25 million people double-crossed. Now add another 1.25 million-plus to cover 2% of the 64 million individual filers, and you have over four and a half million Americans facing hugely inflated-for-nothing energy and energy-related bills due to tax increases they were promised would never harm them. And odds are, that estimate is enormously understated as 10M families and nearly 2M singles earned between 100K and 200K and between 75K and 100K, respectively.
Okay, so most Americans struggling to make ends meet aren’t wasting any tears over taxing the so-called “upper middle-class” that earn between $140,000 and $250,000. But don’t fall into that dusty old Liberal class-warfare trap. Obama promised a $250,000 cap for a reason – In many regions of the country such earnings support basic family needs, not improvident lifestyles. Particularly in areas similar to parts of the northeast, where state and local taxes continue to skyrocket and the cost of living is almost 50% and home energy costs are over 37% above national averages.
And even if he keeps his promise as to federal income taxes (which itself remains doubtful), by elsewhere ignoring or gradually lowering that $250,000 bar, Obama moves ever closer to scoring his true goal. Handlers and love-struck media hacks were quick to insist we misunderstood Obama’s meaning last October when he told Joe Wurzelbacher (a.k.a Joe the Plumber) that when you “spread the wealth around, it’s good for everybody." But his intent was unmistakably clear when addressing the subject during a January 18, 2001 Chicago public radio appearance [audio]. Indeed, then-state Senator Obama said that one of the “failures of the civil rights movement” was that “the Supreme Court never ventured into the issues of redistribution of wealth,” adding that such “redistributive change” would be better pursued legislatively.
And keep this in mind – Obama first broke his $250,000 pledge just days into his administration and answered critics by pointing out the “special” circumstance of expanding child healthcare. Now he’s countering warnings that his carbon taxation scheme will also hurt lower income families disproportionately by promising them payoffs. It seems that to Liberals, excess is always excusable, if you’re willing to pay for “allowances.” But notice how the financial support will be provided only to those earning little more than half his pledged pain ceiling? So he’s not only traded, he’s also lowered the cap, a luxury explicitly denied to constrained carbon traders.
But perchance nothing betrays the inanity of crafting science and economic policy in casts of ideology more than the recent talk of forcing international trading partners to also purchase these wretched allowances. Earlier this week, Energy Secretary Steven Chu answered shouts of an unfair disadvantage carbon taxation would impose on American industry by threatening to establish a “carbon tariff” on “countries [that] don't impose a cost on carbon.” Not only does this absurd idea risk a mutually-destructive trade war with China, but it intentionally forces higher the price of imported Chinese goods. And which demographic do you suppose is the top consumer of the less expensive computers, flat-panel televisions, household appliances, clothing and children’s toys from our top import source? Or, for that matter, from the American manufacturers whose obligatory inflated prices Chu is trying to protect?
Like the stealth carbon tax program which underscores the point, Obama’s $250,000 “no tax increase” cap is little more than a hustle.
Fraudulent in purpose and perpetrated by the consummate con man.
Marc Sheppard is the editor of AT’s forthcoming Environment Thinker.
