Thursday, May 03, 2012

Obama Delivers On Energy Promises NOT. Cap and Trade Scam

Obama Delivers On Energy Promises NOT
(okay, it's a Romney campaign ad)

This is what one person thought of Obama's vision back then:

Obama Math: New Math for Those Who Can’t Count

Last night, Obama promised to invest 150 billion over 10 years into renewable energy resources, an investment that he says will create 5 million good paying jobs.

The quote:
And I'll invest 150 billion dollars over the next decade in affordable, renewable sources of energy; wind power and solar power and the next generation of biofuels; an investment that will lead to new industries and 5 million new jobs that pay well and can't ever be outsourced.

Now the math. 150 billion divided by 10 is 15 billion dollars a year. Divide that by 5 million jobs and you get $3000 per job per year.

Woo hoo! Sign me up!

Now, let's just say that a good job pays $30k per year and to keep things simple, we'll ignore all the other employment costs like insurance, workers comp, and Social Security payments. We're now talking about a return on our investment of 10 dollars in private capital for every dollar invested in just 10 years. Folks, even Microsoft doesn't coin moneylike that.

And we haven't even considered a little thing like the cost of actually doing the research yet!

It's all pie in the sky folks. The numbers don't work.

He also neglected to say that the 150 billion is coming from a new emissions tax on corporations. In his energy paper, Obama says that he will put into place a cap and trade emissions policy with a 100% auction of emissions credits. What this means is that companies will have to buy emissions credits at a governmental auction in order to continue to do business. So at one stroke, Obama will add a new burden to the cost of doing business. Of course, it goes without saying that manufacturers will pass that cost onto the consumer.

The interesting thing is that in a standard cap and trade deal, companies are assigned credits based on past emissions, and they can swap these credits back and forth for expansion or other uses. If company A can reduce its emissions cheaply, it can turn around and sell credits to company B. This creates an economic incentive for reducing emissions since you can then sell your excess credits to other companies. From Obama's point of view, this is unsatisfactory because the government will only see a small cut of the savings, based on transaction fees and the like. Instead, he wants to take all of the money to fund his grandiose schemes, by auctioning off the credits. The unfortunate effect of this greed is to remove the economic incentive of the swap portion of the plan. Companies will simply purchase the amount of credit they need and pass the cost along to the consumer. Obama has crippled his own program before it ever gets started.

Reading the energy paper is very interesting. In fact, I'll be doing a full post on it shortly. But for now, as you read through it, think about the regulations that will be needed, as well as the regulatory agencies that will be needed to implement all of his plans. Think about the economic costs and burdens he is imposing on the manufacturing capacity of this country. Take careful note of every time the words mandate or requirement are used.

Then ask yourself a simple question: What happened to freedom?
Posted by Rich
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