What 'cap and trade' means

What 'cap and trade' means

September 8th, 2009 in Opinion Free Press

To most of us who hear political talk about proposed "cap-and-trade" legislation, the comments might as well be in a foreign language.

What, really, is "cap and trade" all about -- and what does it mean to "me"?

Cap and trade refers to the legislative proposals in Congress to put a "cap" on manmade carbon emissions, supposedly to curb "global warming." The "trade" part is that those who must emit carbon dioxide in manufacturing processes could "trade" (at a price) for the right to do so with others who do not have problems with objectionable emissions.

What's that to "me," most of us may ask?

For one thing, "cap and trade" regulations would drive some American jobs overseas.

Another problem for "us" is that "cap-and-trade" legislation would not be without costs to us ordinary folks. According to the Congressional Budget Office, the costs involved in "cap and trade" would average $175 a year per household by 2020.

But the highly respected Heritage Foundation has made its own calculations of what a carbon tax would be. It concluded it would cost the U.S. economy $161 billion in 2020. That figures out to about $1,870 a year for a family of four -- and would rise to $6,800 by 2035.

How could that be? Corporations buying "rights" to emit carbon dioxide would have to pay for permits, and would have to pass along their costs to all of us in the prices of their products and services. The cost may be "hidden," but it would have to be paid ultimately in consumer prices.

Actually, the negative effect of "cap and trade" on our economy -- and thus on our costs and our jobs -- is not calculable with any degree of accuracy.

But even if "cap-and-trade" standards were enforced, would they really have any or much effect on "global warming"?

There are lots of arguments about that. Some say "yes," some say "no." Some say that human effects are negligible and that the "jolly old sun keeps on rolling along," having the major effect, no matter what we do.

The fact is that nobody really knows what "cap or trade" would mean, what the costs to all of us in many hidden and direct ways would be -- or even if human activity is a major factor in so-called "global warming."

In fact, there are some scientific studies that suggest we may be experiencing "global cooling."

But one thing is sure: If "cap-and-trade" laws are passed by Congress, everybody's costs will go up, whether there is any "good effect" or not.

You've heard the old saying, "Fools rush in where wise men fear to tread." And you also have heard the good advice, "Look before you leap."