Every time Republicans insisted during the campaign that Barack Obama was going to have to raise taxes in order to pay for his absurd spending proposals, Obama scoffed. Obama would go back to his still baffling campaign promise that he was going to cut taxes for, ’95 percent of all working families.’

Well here we are in March, and Obama is already violating that promise. He is now going to raise $600 billion in higher energy taxes that he is going to impose through a cap-and-trade system on carbon emissions. What this essentially means is that every single person who drives a car or flips a light switch is going to be hit with higher taxes.

A cap-and-trade system on carbon emissions is being implemented in an attempt to reduce the carbon emissions that are allegedly causing harm to the environment and allegedly contributing to global warming. Basically how the system works is, the government sets a limit on the amount of carbon emissions companies are allowed to produce. As companies adjust to operating under the set limit, the limit shrinks periodically. Under Obama’s plan, the goal is to have the emission of greenhouse gases reduced by 80 percent by 2050, when ideally, the goal set for reduced emissions will be reached.

The other half of the cap-and-trade system is the trading portion. The trade portion refers to the fact that companies have to buy permits for each ton of carbon they are emitting. The cost of each of these permits has yet to be set but is going to range from between $13 to $20. If companies are unable to remain under the cap for the given time period, they have to buy more of these permits from other companies that are under the cap in order to compensate. That way, the level of carbon emissions permitted by the government will never be exceeded and there is incentive for companies to go under the cap so they can sell their extra permits to other companies that need them.

There are, of course, many problems with this system. The biggest problem is what I alluded to already, the fact that the system is going to lead to higher taxes on nearly every single American.

Energy companies that are being hit with these fees for permits are going to pass the costs along to the consumer. It’s already been projected ‘- conservatively estimated at $13 per ton of carbon ‘- that the price of gasoline would go up about 12 cents per gallon and the average electricity bill will rise by about seven percent nationally. And that is the conservative estimation.

Essentially Obama was flat out lying when he said he was going to cut taxes for 95 percent of working Americans because with this system alone he is raising taxes, however indirectly, on 100 percent of working Americans.

Another problem with this system is that it will not accomplish anything at all in terms of benefitting the environment, unless countries around the world like China and India also agree to apply and enforce a cap-and-trade system.

As of the summer 2008, China produced 24 percent of the world’s carbon dioxide emissions and India was responsible for eight percent. By the way, both countries’ emissions are growing rapidly. For example, China‘s emissions rose by 8 percent in 2007.

What difference will it make to the world’s environment if the U.S. and European Union (EU) are the only two places enforcing carbon emission reductions while China and India are rapidly producing more and more? China and India are unwilling to join with the EU and Obama because they know what will happen if they don’t. American companies will be put at yet another disadvantage because of the price being put on them due to this outrageous system. This on top of the fact that American companies already face the highest corporate tax rates in the world will undoubtedly lead to outsourcing.

The last thing that needs to be mentioned is a change Obama has made in the cap-and-trade system that proved successful in the early ’90s in reducing sulfur dioxide, a component in acid rain. In that system, as I mentioned earlier, companies were allowed to sell the permits they were not using in order to increase profits. As aforementioned, the incentive for a company to be under the cap is the opportunity to sell the permits for profits.

But under Obama’s plan, according to his website, the excess permits under his system will, ‘require all pollution credits to be auctioned, and proceeds will go to investments in a clean energy future, habitat protections, and rebates and other transition relief for families.’ By doing this, Obama is essentially eliminating the incentive for companies to be under the cap as they aren’t the ones who benefit from selling the extra permits ‘- the government is.

This policy
will hurt American workers and employers and will do nothing to solve the world’s environmental ‘problems.’ But hey, at least it’s a change from Bush.

Alex Perry is a Collegian columnist. He can be reached at [email protected].