As Nancy Pelosi, Henry Waxman, et.al. ramrod their energy taxation bill (HF 2454) through the House of Representatives, they are, as the Wall Street Journal puts it, “simply claim[ing] the bill defies the laws of economics.”
The Journal points out that the Congressional Budget Office’s analysis claiming a $175/year cost per household by 2020 is flawed because, as “[t]he CBO acknowledges this in a footnote: \”The resource cost does not indicate the potential decrease in gross domestic product (GDP) that could result from the cap.\”
The Journal continues:
The hit to GDP is the real threat in this bill. The whole point of cap and trade is to hike the price of electricity and gas so that Americans will use less. These higher prices will show up not just in electricity bills or at the gas station but in every manufactured good, from food to cars. Consumers will cut back on spending, which in turn will cut back on production, which results in fewer jobs created or higher unemployment. Some companies will instead move their operations overseas, with the same result.
The Journal concludes “Americans should know that those Members who vote for this climate bill are voting for what is likely to be the biggest tax in American history.”
So we have increases in regulation that make consumers not consume and producers not produce, PLUS, effectively the largest tax increase in history. Both will tamp down the economy. That’s probably good enough for a prolonged economic funk, but it lacks the secret sauce to make it a REAL DEPRESSION.
However, Daniella Markheim at the Heritage Foundation seems to be on to exactly the sort of secret sauce needed to spur the selling-apples-on-the-corner economy (emphasis mine) :
Of singular concern is ensuring that U.S. firms hurt by the higher energy costs that Congress itself mandates will face minimal competition from foreign companies not hamstrung by similar domestic policy constraints. Knowing that the costs associated with cap and trade will send hard-pressed U.S. consumers and producers to lower-priced imports, some legislators seem keen on trade barriers as the easy solution–thereby raising the costs of foreign products and making them less competitive in the U.S. marketplace.
Big tax increases, productivity crushing regulation, and impending trade barriers. NOW THAT sounds like the economic policies that led the Great Depression to be great: The hostility to business and regulations of the New Deal “Alphabet Soup” programs, the massive tax increases passed in 1932, and the crushing impact of the Smoot-Hawley tariffs.
The supporters of this bill either don’t understand the lessons of history, or don’t care.