Cap and Trade: The Carbon Credit Plan; A New Name for Taxes

by **watcher** on 06/09/08, 6:50 pm

Cap and Trade: The Carbon Credit Plan; A New Name for Taxes This program is based on the entire premise that Man Made Global Warming does exist.
I have read quite a few explanations of just how this cap and trade system that is all the rage is suppose to work. The problem with all the explanations that I found is they talk about it in the industry sense and for most people they don’t see how it will affect them. So I applied the same system to the homes that neighbors and myself live in to see how it would work.   All facts and figures are just made up for examples and do not exsist in any documents.
There are 17 homes on my street.  They were all built between 1870 and 1900. Homes #1 and #2 are connected. They are some of the oldest homes on the street and both quite small.  They had been owned by members of the same family for the last 70 years and have been updated and modified numerous times over the years. There was no mortgage to be paid so all of the income of the latest family living there could be spent on taxes, electric, heat, groceries car payments, improvements and the rest of what is considered normal living expenses.
Home # 3 is a single and although not as old quite a bit larger than both Home #1 and #2 combined.  The elderly woman and her sister-in-law that lives with her are both on Social Security. They also do not have a mortgage, or a car but have the other living costs and higher than normal medical costs.
A newly married couple owns home #4, both previously divorced with children from both and their home is attached to several others in what is commonly called a townhouse. The home was quite rundown and needs a lot of work including a new heating plant but they have a new mortgage with no available equity, taxes, car payments and college tuition, along with the rest of the usual expenses and planned on replacing it after the kids get older and they have less expenses.
Home # 5 is one of the homes attached to # 4 and is empty. The owners do not live around here and have tried to sell it but have not found a buyer as of yet. It is not heated or cooled.

Carbon points are allocated by the government and are determined to be worth $10.00 each. The ‘government’ gives each of these homes 100 free points on April 15 of each year for the 2009 and 2010. In the year 2011 they will only allocate 80 points each year over the next 5 years before the point number goes down again. What you don’t use you get to keep or sell.
Homes #1 & 2 have a brand new heating plant, new windows, new roof and so when it comes to heating and cooling this home they have the advantage of the newest technology and cost efficient systems. They receive a carbon point kitty of 100. It will cost them about 20 points to heat this house in the winter and about 20 points to cool this house in the summer. Leaving them 60 extra points at the end of the year.
Home # 3 is using the heating plant that was installed in 2000, the last major improvement before the husband passed away and the sister-in-law moved in.  They receive a carbon point kitty of 100. It will cost them about 40 points to heat the home in the winter and about 40 points in the summer to cool the home leaving them 20 points at the end of the year. Home #4 has a heating plant that is so old that it doesn’t even have a safety switch on it but the cost of replacing it is more than the family has. It is very inefficient but until college is paid for there is nothing than can do about it. They receive a carbon point kitty of 100 points. It will cost them the whole 100 points to heat their home in the winter and at least 50 points to cool it in the summer. They have an empty home #5 next to them that makes it even more difficult to heat and cool their house. They are short 40 points.

Where do they get the missing 40 points? They can buy them from Home #1 & 2 or Home #3. 1st  problem is they don’t have the money to replace the heating plant to reduce the amount of points they need every year. 2nd  problem is what do they not pay to come up with the money to buy the points from someone who has extra. 3rd  problem is whom do they buy those points from.

Now Homeowners of #1 & 2 offers to sell them their carbon points for $15.00 each. They can turn a profit and they have plenty to spare. Homeowner # 3 offers to sell them their carbon points for $12.00 each. They figure they will need the extra money to pay for their rising medical costs in the coming years. They make arrangements to buy the needed points through the mandatory carbon point’s office. The exchange costs them $480.00 for the points plus the paperwork fee of $100.00 plus a 5% tax of $24.00. Homeowner of house #3 pays a paperwork fee of $20.00 and a 5% tax of $24.00.
The next year the same thing happens but now the best rate for unused carbon points is around $15.00 per.  They still don’t have the funds to put a new heating plant in the home and if they go over the allotted amount of carbon points the following year the government will impose an addition cost by fining them $200.00. Plus the allocation of points goes down to only 80 making them short by even more. They have spent $1080.00 in points, $200.00 in exchange fees and $54.00 in taxes in the last two years to be able to purchase carbon points to by fuel to heat and cool their home and are now facing an additional cost in fines of $200.00 and even greater deficit of points but are not any closer to having the money to replace their ageing furnace and this furnace is still putting pollutants in the air as it did when this program was put in place.

Now the government program is a bit more complicated because they advocate giving some points away free of cost to select groups of ‘neighborhoods’ that meet government ‘criteria’, which is not clearly stated and auctioning other points off to raise money for ‘ certain government programs’ that are not clearly stated to the highest bidders who then call offer them up for sale to those who are short, as long as they go through the mandatory carbon point’s office and the levels of caps are spread out over more time than that but you can see just one aspect of the problem with the plan.

Solution for the family in Home #4.
Pull their children out of college so they can buy the new furnace and stop the endless cycle of paying more and more to heat the home.
Sell the home for less than they owe and move into an apartment that includes heat in the rent so they don’t have to worry about it anymore even though the rent price is almost twice as much as their mortgage leaving another empty home on the street and ending their dream of home ownership.
Continue to keep paying ever higher and higher costs leaving them each year less and less financially able to survive a medical emergency or a downturn in employment.
Needing government to assist them with money to offset costs of groceries and clothing because they have spent everything on carbon points.
Possibility of the family breaking apart under extreme stress.

Now, when you substitute an industry is place of the home.
Can’t afford college = cutting jobs,
Sell the home = cutting planned expansion at best or going completely out of business leaving areas with empty buildings and more unemployment.
Paying ever higher and higher costs = not investing in research and development, expanding business creating more jobs.
Government assistance = higher costs passed on to whomever they sell a product or service to in the market place; you and me.
Family breaking apart= Possible illegal activity to avoid penalties and fines.

Now multiply this out over the entire country not just one street. You can see how business and industry can be affected. Struggle and failure in once sector of the economy affects everyone.
Case in point. Sub-prime mortgage failures even though the overall percentage was very, very small compared to overall number of mortgages that are being paid on time.

The mandatory carbon point’s office will be raking in the fees and the government will collect tax money and auctioned points money, not only from the original seller and buyer but the carbon point office as well. Pollutants will go down somewhat but not enough to make any significant impact.  The negative impact on this countries economy is substantial and will have a domino effect that is far reaching into the rest of the world.

A better way is needed. Mandatory government programs and the regulatory offices always cost the American taxpayer way more in real dollars than the estimates ever state and the possible consequences that can result are hardly, if ever, truly considered.  A small group of people will benefit from this plan and government will grow in size but the vast majority of US American Citizens will be paying a lot more money for very little gain.

The Lieberman-Warner Climate Change Act by Ben Lieberman
June 2, 2008 The Heritage Foundation on Line

Cap and Trade SystemsThe Union of Concerned Scientists Catalyst Magazine Volume 4 Spring 2005

Wikipedia The Free Encyclopedia; Emissions Trading Page has a lot of links that I checked on this subject.

by **Eyas** on 06/10/08, 12:06 am

Well, this is one reason why big business loves this regulation (at the moment).  In your example, large businesses are Homes #1 and #2 in your example.  Presumably, they've got the resources and technology to meet the Cap; so when points/credits are doled out, it is essentially free money to these businesses, because they'll immediately sell their credits to smaller companies without the resources to meet the Cap.

As the smaller companies are forced to buy carbon credits, they have less money to actually improve their processes to meet the Cap.  Thus, seemingly, good for large businesses; bad for small businesses and entrepreneurs.

Of course, all of this presumes that the Cap will be technologically and economically feasible -- even for large businesses.  These larger businesses, I think, are shooting themselves in the foot by backing this legislation.  I think that they CANNOT meet the Cap -- wherever it is set.  Energy is used at every phase of production.  There is no business which has such a good handle on all of their processes from cradle to grave that they will be able to afford the cost of ANY Carbon Cap.

In short, the real problem is not the "Cap and Trade" system.  The real problem is the "CAP".  Even assuming that Global Warming is real, and assuming that capping CO2 will be effective; ANY legislation designed to "cap" CO2 emissions WILL absolutely cripple the American economy as a whole.  I said it before, but if any regulation like this is passed -- whether it includes a credit-trading system or not -- The Great Depression of the 1930's will look like a minor market correction in comparison.

If passed, implemented, and enforced; any such legislation WILL spell THE END of the American Economy.

(Perhaps providing an excuse for the Government to Nationalize all industry and make the final shift to Communism in America)

by **paleocon** on 06/10/08, 12:01 pm

Eyas wrote:Well, this is one reason why big business loves this regulation (at the moment). In your example, large businesses are Homes #1 and #2 in your example. Presumably, they've got the resources and technology to meet the Cap; so when points/credits are doled out, it is essentially free money to these businesses, because they'll immediately sell their credits to smaller companies without the resources to meet the Cap.

This is curious because everybody knows the Socialist HATE big business. It is short sighted to assume Cap and Trade will not eventually be used against big business. But, of course, they are only worried about the next quarter so why look at anything five years down the road.

Eyas wrote:Of course, all of this presumes that the Cap will be technologically and economically feasible -- even for large businesses. These larger businesses, I think, are shooting themselves in the foot by backing this legislation. I think that they CANNOT meet the Cap -- wherever it is set. Energy is used at every phase of production. There is no business which has such a good handle on all of their processes from cradle to grave that they will be able to afford the cost of ANY Carbon Cap.

Nobody in Congress is concerned about facts and feasibility. They can legislate "reality." After all, they regulated CO2 to be a pollutant on a whim. The cap will be determined by the same government idiots who decided that unemployment jumped 1/2% in a week. Government statistics are largely meaningless but the markets act like they have some value. Hence, the Department of Labor says unemployment went up by 1/2% and the markets tumble. Regulators declare CO2 is a pollutant. Regulators will tell you you have exceeded your cap....

Eyas wrote:If passed, implemented, and enforced; any such legislation WILL spell THE END of the American Economy.

(Perhaps providing an excuse for the Government to Nationalize all industry and make the final shift to Communism in America)

It is a matter of power and control.  The people who run the government will always be rich.  Look at how many government officials buy multi-million dollar homes after serving in Congress for 8 or 10 years.  They make $169K a year but in a few years can buy 5 or 10 million dollar homes?  Clinton made 100 million in 8 years.  algore made 200 or 300 million in 8 years.  Please explain how that works?  Tell me these people weren't bought and paid for while they were in office?  And they have the audacity to turn around and complain about "rich" business executives with "outrageous salaries!"

Government officials know that a depression won't lower their living standard.  (Marie Antoinette comes to mind.  Miki Obama will be eating arugula while we are scrounging for moldy bread.)  They are parasites who live off the labor of "the peasants."  It doesn't matter that we have less as long as they have enough!

For the first time in my life I believe the probability of violent revolution in this country in my lifetime is greater than zero.  If you had asked me 6 years ago, I would have said it couldn't happen.  I now submit I was previously too optimistic.  The Dems and GOP are going into overdrive to destroy this nation and when enough people realize it and realize they cannot change through the ballot they have few other choices.

Mind you I am not saying it must happen nor am I advocating it.  I only believe that it could happen in my lifetime.  Idiotic legislation like cap and trade based on idiotic theories like MMGW and arrogant legislation like "comprehensive immigration reform" will lead more and more people to realize the government no longer represents us.  If they don't represent us (in fact they go out of their way to ignore our plainly stated will) and we can't vote them out of office more people will begin to seek other means to change an utterly corrupt system.

by **Eyas** on 06/10/08, 3:46 pm

paleocon wrote:Government officials know that a depression won't lower their living standard. (Marie Antoinette comes to mind. Miki Obama will be eating arugula while we are scrounging for moldy bread.) They are parasites who live off the labor of "the peasants." It doesn't matter that we have less as long as they have enough!

This may not be the cause of most revolutions; but I don't think I know of a case in which a revolution occured where those in power did not have a standard of living which was untouched by the oppression which those in power inflicted upon The People.

Not a cause, perhaps. But a pretty good indicator, nonetheless.

paleocon wrote:For the first time in my life I believe the probability of violent revolution in this country in my lifetime is greater than zero. If you had asked me 6 years ago, I would have said it couldn't happen. I now submit I was previously too optimistic. The Dems and GOP are going into overdrive to destroy this nation and when enough people realize it and realize they cannot change through the ballot they have few other choices.

Mind you I am not saying it must happen nor am I advocating it. I only believe that it could happen in my lifetime. Idiotic legislation like cap and trade based on idiotic theories like MMGW and arrogant legislation like "comprehensive immigration reform" will lead more and more people to realize the government no longer represents us. If they don't represent us (in fact they go out of their way to ignore our plainly stated will) and we can't vote them out of office more people will begin to seek other means to change an utterly corrupt system.

Violent revolution in this country is inevitable (within the century). The only questions that remain are these:

-- When? How bad must things get first?

-- Who? Who will lead it?

-- How? How will it start?

I, myself, have just been waiting for the word "Go" for several years now.

I left out "Why?". I think that's self-evident.

Cap and Trade: The Carbon Credit Plan; A New Name for Taxes

Cap and Trade: The Carbon Credit Plan; A New Name for Taxes

Re: Cap and Trade: The Carbon Credit Plan; A New Name for Taxes

Re: Cap and Trade: The Carbon Credit Plan; A New Name for Taxes

Re: Cap and Trade: The Carbon Credit Plan; A New Name for Taxes

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