Who Makes The Money?
by James Glaser
June 30, 2009

Congress just passed a bill some call "Cap and Trade." It is reported to be 1,300 pages long and wasn't even totally written when it was voted on. President Obama, the man who ran on the promise that if elected, the middle class Americans would see no tax increase, said this: "Electric rates will skyrocket" with the passage of this bill. This is Obama's bill. Here is a you tube clip and you can hear him talk about it.

Direct link: http://www.youtube.com/watch?v=BqHL404zhcU

As you heard the President say, the bill is called Cap and Trade, but what does that mean? Here is the best definition I could find, and it was on "ecomii.com."

Cap-and-trade is one method that can be used to regulate the amount of pollution emitted into the atmosphere. The government sets a cap on pollution, limiting the amount that companies or other groups are allowed to release. The government then issues credits, which allow companies to each pollute a certain amount as long as the aggregate pollution equals less than the set cap. Since some companies can reduce pollution more cheaply than others, the group engages in trading these permits. Companies that can cheaply reduce pollution sell permits to companies that cannot easily afford to reduce pollution. The companies that sell the permits are rewarded while those that purchase permits must pay for their negative impact. Applied to climate change, this system would theoretically reduce carbon emissions at the lowest total cost.

That seems pretty easy to understand, so why 1,300 pages in the bill. Well, the "Cap" part is easy. The government is going to come up with a number, in this case a carbon number that companies will have to stay under. The trade part is the hard part. Well you just know Wall Street is going to be involved, and these Carbon Credits will be traded, and they will go up and down in value.

If they go up, the cost will be passed on to you and me, and our electric bills will increase. In fact, the President says they will "skyrocket." Since the government is the place that issues these credits, their cost is a tax, and like any tax, the cost of that tax will be passed down to the consumer.

If the Federal government raises the tax on corporations, the stockholders don't get a smaller dividend, profits don't go down. No, the price of whatever is sold goes up to cover the tax increase. Sometimes that tax increase is used to raise the price higher than what is required to cover the tax, and profits increase, too.

So, we have a new law passed by the House, and if the Senate follows suit, we will have 1,300 pages of legal mumbo jumbo that lawyers will make a fortune off of as will accountants, stock traders, bankers, and the corporations who raise their prices.

You and I however will be where the money for these added costs and profits come from. This is a bill that will help the "Haves." You and I will just be more entrenched into the sector called "The Have Nots."

Post Script:

Now, I don't want all you Republicans to get upset because the Democrats had a vote on a bill that nobody read. Although I remember something about President Obama saying we would all have five days to look at any bill he wanted passed, and that the bill would be posted on the Internet for us to read.

All we have to do is think back to when the PATRIOT ACT was passed. Nobody got to read that before voting either, and that was a Republican bill.

It just goes to show how much each Party is like the other.

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