June 29, 2009

Simple Cap and Trade Analysis

Stephen Spruiell translates Cap and Trade analysis by Paul Krugman

The goal of Waxman-Markey is to make the cheapest form of energy we have [coal/oil] more expensive, consequently making everything produced in this country more expensive. It would defeat the purpose of this legislation to allow U.S. consumers to evade this energy tax by purchasing products from countries like China that choose not to adopt a similar tax. Therefore, it makes perfect sense to restrict Americans' access to products from these countries, and the president is wrong to oppose such restrictions.

If Cap and Trade is ever signed into law, the Democrats who wrote the bill put in a provision to protect US markets because all of our products would suddenly become more expensive on the global market and those who don't tax their coal and oil will easily under sell us.   The President is against that provision, saying it's protectionist.  So, the Administration is for raising the prices of American goods through an energy tax, but against tarriffs on foreign goods. 

So what would be the result on American jobs if all our goods suddenly increase in price while all Chinese and Korean and Indian goods do not?

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