Around the turn of the 17th century, tulips arrived in Holland and very quickly a single, rare bulb of Semper Augustus became a luxury good, trading for as much as the price of a fashionable home on a picturesque canal. Unfortunately, for the tulip hoarders, they eventually diminished into a worthless, false commodity, having been traded with hasty abandon based upon no real intrinsic value.
And so it will likely be with carbon emissions. If John McCain has his way under his “cap-and-trade” proposal, an arbitrary cap would be set on emissions for entire sectors of the economy. And then, if a business produced less than the emissions allowed under the cap, it could sell its additional energy stipend to other businesses that wished to exceed their own stipends. In this manner, so concludes McCain, carbon emissions could be reduced because the cap will not be allowed to be exceeded.
In other words, once the cap is reached, in theory, carbon-emitting energy would just have to stop being used until the next year. The costs to the economy and the lives of millions of Americans be damned.
The emissions cap would simply add significant costs to using energy, since a business which must exceed the cap would have to not only pay for that energy, but also pay for the “right” to use it from another company. Carbon emissions would most certainly become a false commodity, with the right to use energy being traded on markets at ever-exceeding values based on how close to the cap the economy was reaching.
And that price would never come down. It would rise systematically on an annual basis as the economy would seek – and probably fail – to grow. Set too low and the cost of exceeding the cap would rapidly outpace the actual costs of energy. The result? Additional energy output would be punished as the cap was reached, and economic production would grind to a halt.
That is, assuming that such a cap was not immediately repealed based upon the outright horror caused to the public because of what they had unwittingly signed up for. Or more likely, the emissions standards were simply subverted by black market energy sales. And that’s just the beginning of the problems Mr. McCain’s ill-conceived scheme would create.
McCain’s cap on carbon emissions, no matter where he decides to set it, and no matter how much he denies it, would be akin to the proposed “nuclear freeze” of the 1980’s. The U.S. would basically set up its own limits on carbon emissions, regardless of how the rest of the world decided to go on limiting carbon emissions, because as McCain stated in his speech:
“If the efforts to negotiate an international solution that includes China and India do not succeed, we still have an obligation to act [emphasis added].”
Yes, you read that right. John McCain is in essence proposing a unilateral energy freeze. This is tantamount to an economic suicide pledge. By uttering that one sentence, McCain has removed any incentive whatsoever for other countries to coordinate such efforts in some international group hug.
Imagine if President Reagan had gone along the Democrats’ proposed “nuclear freeze” back in the 1980’s, and then approached the Soviets to negotiate the Strategic Arms Reductions Treaty. Why in the world would the Soviets have agreed to any of his proposals? In other words, by arbitrarily placing a cap on U.S. energy emissions, McCain will assure that the rest of the global economy will cackle as it continues to grow and utilize energy, eventually outpacing the U.S. in every conceivable sector of production.
And, believe it or not, it gets worse. There’s very little doubt that the fraud and abuse Mr. McCain’s “carbon stamps” program would inherently incentivize would make today’s food stamp fraud scandals look like mere charity gone awry. Today, one out of every 12 food stamp dollars is fraudulently spent. The linked headlines give you just a small indication of the extent of food stamp abuse. Now imagine what will happen when much more valuable – in fact, critical – carbon stamps hit the black market!
A cap on emissions is really a Big Government cap on demand, which Senator McCain is now seeking to regulate. In truth, sky-high prices for energy and other commodities is already starting to have an effect on demand, with many Americans simply driving to work, home, the grocery store, and of course, the gas station. But that does not mean that is a good thing. And the crisis is also having a laudable effect on demand, with the number of applications for new nuclear energy facilities at an all-time high.
America is not facing an Earth crisis. It is facing an energy crisis – which the government is in large part responsible for with its caps on oil, natural gas, and coal exploration, gasoline refinement, and the production of renewable, nuclear energy based on its ban of nuclear reprocessing.
America essentially has a supply problem. And thus it has a price problem. Not an emissions problem. McCain must be getting what David Gergen, White House Communications Director under President Reagan, routinely called “daily guidance” from the New York Times. Because one after another, Mr. McCain’s distorted policies he has introduced over the years as a “maverick” in the Senate have been nothing more than kowtowing to the Hard Left. And this time, it could not just be dangerous, but deadly.
Carbon emissions trading will simply become a worthless and yet exceedingly costly commodity. As the global economy continues to grow, and energy supplies are directed elsewhere worldwide because of the American cap on demand, any Americans left with their “carbon stamps” will soon realize that they are actually as intrinsically worthless as tulips in Holland once the bloom was off the blossom.
At that point, the people and businesses would be left with a choice: repeal cap-and-trade, or buy energy on the black market. Senator, please keep those carbon tulips in the garden of your own fertile, if flawed, imagination.
ALG CTA: We call upon journalists across the nation to urge their audiences to contact Mr. McCain’s campaign to tell him that a unilateral energy freeze is bad economics, and it is bad for America.
