Tuesday, September 11, 2012

A Dangerous Delusion Is Back In The Form Of Carbon Tax

by KATHLEEN HARTNETT WHITE

After hovering in the shadows for several years, calls for a carbon tax have re-emerged from diverse quarters including the Brookings Institution, MIT, the International Monetary Fund, self-professed conservatives, supply-side economists and the usual left-of-center suspects.

On Aug. 2, Congressman Jim McDermott introduced H.R. 6338, "The Managed Carbon Price Act." There is even hope of a grand tax compromise in the coming lame duck session of Congress: swapping the looming massive income-tax hike for a carbon tax as part of a proposed tax system overhaul.

Unless there is a cabal of renewable energy investors and select natural-gas interests desperate to increase the cost of their competitors' fuels (oil or coal), what could be motivating these ill-timed initiatives to tax fossil fuel-based energy — what is now the most productive sector of the U.S. economy?

Whether proffered as revenue-neutral tax swaps, a source of new revenue to reduce the deficit or the market-friendly method to avert catastrophic global warming, the benefits attributed to these carbon tax schemes are as lofty as they are implausible and irrelevant to the exigencies of the day.

What a whoppingly inopportune time to resuscitate a politically defeated, publicly unpopular, economically damaging policy with no measurable benefits! With 85% of our energy derived from carbon-rich fossil fuels, a carbon tax is simply a tax on energy not unlike the BTU tax summarily squelched during the Clinton administration.

Energy's role in the economy remains remarkably misunderstood. Energy — aptly called the "master resource" by economist Julian Simon — drives modern industrial economies. The cost of energy is imbedded in the price of all goods and services. There are no near- or medium-term alternatives to the abundance, affordability and efficiency of fossil fuels.

Renewables, such as wind and solar, are not on the cusp of some game-changing deployment at scale. After an increase of some 500-fold in the last few years — driven by lavish government subsidies and mandates — renewable energy still provides only a sliver of U.S. demand at a much higher cost than fossil fuels.

The U.S. has long claimed to offer the highest standard of living in the world. Since the 1950s, the comparatively lower costs of food, energy and housing in the U.S. left families with disposable income unmatched elsewhere. Increasing energy prices, however, presage real poverty.

According to the U.S. Census Bureau, slightly more than one-half of U.S. households (with a median income of $50,000) spent an average of 21% of average after-tax income on energy in 2012. These same households, in 2001, spent an average of 12% on energy.

IBD

1 comment:

Anonymous said...

The Bilderberg Boys are stirring up things again and Obama is playing right along with them. These financial fanatics will bring down the economy of the US again and then divide up the QE3 funds just as they divided up the prior ones. If we could get rid of the Federal Reserve then we (the people) might have a chance.
Obama will prove himself a weenie by his response to the killing of a US diplomat. It is an Act of War!