On Earth Day, you say VAT, I say Cap-and-Trade: Obama’s Other Source of Tax Billions
As we celebrate the 40th anniversary of calling Lenin’s birthday “Earth Day” — true story — the increasingly fashionable talking point in Washington is that a European-style “value added tax” or VAT is coming because, if you install European-style entitlements, you have to have a gusher of revenue, and the VAT is the only option to raise that sort of haul.
Thanks to the Freedom of Information Act, I obtained internal Treasury Department memos drafted mere days after Obama’s election by staffers in a new “green” office established by Henry Paulson to administer his (and his Goldman Sachs friends’) pet program of “carbon cap-and-trade.” The documents tell a different tale.
According to the memos, cap-and-trade is a revenue cash cow worthy of the promise by Barack Obama that, in addition to making electricity rates “necessarily skyrocket,” it “will also generate billions of dollars.”
Re-read that. Also, remember it next week when the talking point resumes that this energy rationing scheme won’t cost anything. Apparently, Senate Democrats (joined by Lindsey Graham and longtime global warming enthusiast Joe Lieberman) think Obama was lying when he said those things in San Francisco. Or, in the face of reason, tradition and the laws of probability they have decided to draft a bill, intended by its champion to raise billions, instead so as to forgo such a bounty.
If the latter is the case, just how many billions would the biggest-spending, most radical Congress in history be, by some miracle, passing up? As I detail in my new book out this week, “Power Grab: How Obama’s Green Policies Will Steal Your Freedom and Bankrupt America” — arguing that “climate” isn’t the issue, this is about power — the Treasury Department projected that cap-and-trade would yield revenues equaling “possibly up to several percentage points of GDP (i.e. equal in size to the corporate income tax).”
Yes, you read that correctly. Our corporate income tax, among the highest in the world, generates about $400 billion in revenues to the state. That is huge. Cap-and-trade isn’t the new VAT. It’s the forerunner.
Like a VAT, cap-and-trade would impose cost increases at every step of a product’s or service’s passage through commerce. It would, also like the VAT, be hidden. Even more so than a VAT, in fact, as the cost of cap-and-trade would appear nowhere on your utility bills or receipts (VAT would show on receipts, even if only the specific VAT amount imposed at that stage and not at the others).
Obama and his team have long sought to impose the energy-rationing agenda, whose marquee item is the “cap-and-trade” scheme which would not, according to anyone, detectably impact the climate. It isn’t about the climate. The climate is the latest excuse, or vehicle, for the Left’s agenda.
Cap-and-trade would, however, give the state the power to decide how much of something that the current political class disfavors — our most abundant and reliable energy sources — the private sector could have. That is the issue. As is that it would “generate billions of dollars.” Obama’s plan all along has been to use these revenues to underwrite his social engineering.
Incredibly, and as noted above, beginning next week this plan will receive yet another push in the Senate. This will be its fifth iteration and fourth vote in that body since 2003, only this time with Harry Reid having just vowed to circumvent the committee process to avoid transparency and scrutiny. Open deliberation could only lead to public rebellion, and wavering among Reid’s troops.
Reid now says that he will draft the bill in the back room. Last week the meetings commenced with Reid marching in different constituencies asking what they need to support the scheme and, if history is any guide, also threatening them if they do not. For example, with EPA doing even worse things to them.
This should sound familiar, it is the script played out during the health-care takeover. For that project, Reid and Obama could not risk letting senators go home for a recess to face their constituents without having first committed their vote. Here, with what would be by far the biggest tax increase in American history in constant dollars and in the name of averting warming that stopped — surely in fear of or deference to the (failed) Kyoto Protocol — Reid and Obama have seemingly made the calculation that the public beast cannot be stirred to any more anger or resistance than is already the case.
The accuracy of that remains to be seen. But regardless, do not be fooled. Cap-and-trade is not a low-cost proposal no matter how it is sliced, and it is intended to raise billions of dollars.