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Exchequer

NRO’s eye on debt and deficits . . . by Kevin D. Williamson.

John Kerry, the Boston Globe, and Economic Illiteracy



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There are many reasons to be grateful that John F. Kerry never was elected president of the United States of America. One of them is his unkeen financial acumen, which is so backward and strange and perplexing that I never can tell whether it is the work of some sort of mad genius or cribbed from one of those guys who hangs around public places with an apocalyptic message on a sandwich board. Matt Viser, writing in the Kerry campaign’s house organ, the Boston Globe, reports:

Senator John F. Kerry’s signature energy and climate change legislation would cut the deficit by $19 billion, according to an estimate released yesterday by the Congressional Budget Office.

The legislation faces strong opposition from Republicans and some Democrats from energy-producing states, but the report gives the Massachusetts Democrat and his allies a compelling financial argument amid concerns about the implications of a burgeoning deficit.

… The cost of the legislation, which includes various tax credits, would be more than offset by revenues collected through a cap-and-trade system, according to the report. The bill would put a price on carbon emissions, a measurement that opponents have attacked as a carbon tax.

More than offset! Ah, this is a hoot. Is Matt Viser putting us on? Is John Kerry?

That piffling $19 billion deficit reduction is achieved by imposing a tax hike of three-quarters of a trillion dollars — the CBO puts the number at $751 billion — on the American people, and then spending all but the last $19 billion of the revenue generated. Here’s a radical idea: If you want to reduce the deficit by a (paltry, embarrassingly tiny, too slightly to really seriously mention it) $19 billion, how about you just pass a $19 billion tax hike and skip the part where you spend more than the cost of the Iraq War creating a new politically driven securities market to chase marginal atmospheric benefits related to the emission of carbon dioxide, which is not even the most important greenhouse gas? For perspective, you could just cancel the Depression-era farm-income stabilization program and save a nice round $20 billion.

That $19 billion in savings is great — if you only look at the balance sheet at Treasury and ignore cap-and-trade’s effects on the economy, the actual economy that exists out there in the real world. The Obama administration estimates the cost of cap-and-trade at 1 percent of GDP per year ($146 billion dollars), scholars at the Heritage Foundation put it at $393 billion per year, and others have estimated even higher costs. You know what the Obama administration’s numbers and the Heritage Foundation’s numbers have in common? They’re all a heck of a lot more than $19 billion — orders of magnitude bigger.

And the estimated impact of cap-and-trade on global warming trends over the next century? Approximately zilch. Great deal, geniuses!

There are lots of legitimate reasons to support cap-and-trade. One is that you are too cowardly to just straight up impose a carbon tax. The other is that you don’t think Al Gore is rich enough yet, and that his green-investment portfolio could use some political help. But supporting cap-and-trade because you think it is going to save the nation money? I’ll believe that when I see John Kerry’s pictures from his Christmas in Cambodia.



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