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President Obama,

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February 27, 2009 – Comments (8) | RELATED TICKERS: ACI , KWT , FAN

President Obama

 

Got a minute?

I know you are very busy these days but some things have come to my attention that I would like to bring to yours. First I would like to commend you for the nice job you did negotiating the stimulus package.

It was nice to see the nuclear loan guarantees removed from the package. There was no need or benefit to risk that money, so that was a nice job. I hope you find funding for research on 4th generation nuclear if it can be done, but the idea of carbon sequestration strikes me as a really bad idea. The plan to lock oxygen below ground does not strike me as a smart idea at all.

You also kept a lot of idiots (congressmen, NAR, NAHB, homedebtors, homeowners, homebuyers, ACORN) happy by increasing the Federal Housing Tax Credit from $7500 to $8000 dollars. I know you had originally suggested $15000 for something that will not affect housing prices at all, and you must feel awful having given it up. Those congressmen are sure tough negotiators.  As TMFBent says, housing prices will fall until houses become affordable. If the average home price falls to $50,000 your $500 change will affect prices by 1%.

Whoopity f’n Doo.

And as with anything else of value negotiated between a buyer and a seller, that $500 value will be negotiated too. Granted that tax credit will never benefit that group of citizens who never buy or sell a house, but with 19 million homes waiting sitting empty, and a lot more coming onto the market most of us will be getting homes pretty cheaply in  a few years. Creating jobs and collecting taxes to do it really is the only long term solution. I am pretty impressed that you got the most important things into the stimulus package and gave up the crap that matters less.

For the time being we have plenty of houses and plenty of cars, so building some windmills is a good way to spend money as energy is our next move toward self sufficiency, or as I like to think of it, vacation time. It also helps to address the Global warming issue that we are facing. Using less oil is also a help, so the money for efficiency is also a plus.

Now let’s talk “Cap and Trade” for a minute. And let’s talk skimming. Someone (probably the World Bank or the IMF) will have to manage “Cap and Trade”. Managing “Cap and Trade” will require funding and a market. A market will require market makers, who will require a spread (skimming). Market makers will fast become market manipulators. Then there will be a disaster. Then we will need a “Cap and Trade” SEC. Then the C&T SEC will need laws to follow. Then Congresscritters will be susceptible to lobbyist pressures.

 Let me know how you think such a plan will work out. I think this is the most expensive and least likely solution to global warming possible. There is no need to create a market for carbon trading in order make carbon expensive to emit.

I would like to offer a solution. It is not mine, but it is a good one.

Brace yourself for it. I am about to type the word that all Politicians fear the most. I am going to combine it with other words that cause weasels to squeal and elephants to bellow.

Refundable Carbon Tax Plan!

That’s right; I want to pay a carbon tax. I want it without a bigger Government so I want it administered by the IRS. And I do not want Congresscritters to decide how to spend this tax money, so I want you to give it back to me and every citizen of the USA and we will decide how to spend it ourselves.

For instance each KWH of electricity produced from coal also produces 2.1lbs of CO2. Each KWH of wind or solar produces 0 lbs of CO2.

Electricity produced by coal cost $.04 cents per kwh. Electricity produced by Concentrated Solar Power costs $.10 cents per kwh.

If each lb of CO2 was taxed at $.03 cents then “grid parity” would be achieved. Of course a sudden tripling of energy costs would be very painful as the Free Marketeers recently taught us with $4.50 gasoline. A gradual change of taxing $.01 cents/lbs the first year, $.015 the second year until parity was reached between oil produced kwh’s and CSP which is approximately $.04/lbs of CO2. New generation capacity should be taxed at the full amount from day one.

Now we move to the good part; the refund. Rather than let the Gov’t spend this windfall, it is returned to us through a refund. The sum total of the tax collected will be divided by the entire population and returned an equal dollar amount to each person, none more deserving than the next. The most Conservative people who cause less CO2 to be produced could potentially profit from the most reckless who waste energy. At the very least, each of us would have some control over how we are impacted, through our own consumption habits.

We could also let the Free Marketeers handle this. They handled the oil bubble, the housing bubble, and the commodities bubble. Their way is to continue producing CO2 until the problems of Global warming become expensive. Then, when our money is diverted to solving those problems we will have less to spend on CO2 producing energy, thereby tackling Global warming right after it is too late. Exactly the way the housing bubble was handled and increasing something called poverty.

I would also like to point out that some of the Bush/Paulson/Cheney team has moved on from the Federal Gov’t to the IMF and World Bank. “Cap and Trade” puts them back in charge of manipulating energy policy and skimming the spread, something they did with disastrous results in our banking system. I recommend against rewarding them with another income opportunity.

Let’s just keep it simple and get it right and not let these knuckleheads muck things up.

In fact I think I know just the two people to discuss this with. They already work for you, and they do not have a financial interest in the success of one industry over another.

Their names are Laurie Williams and Allan Zabel.

Thank you for listening,

Devoish

8 Comments – Post Your Own

#1) On February 27, 2009 at 1:58 PM, chk2595 (57.24) wrote:

Take the mask off of these proposals and they are anti-public, anti-business, anti-capitalism, and pro big socialist government.Our President, his minions, and the media are hiding the full truth from us.

 

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#2) On February 27, 2009 at 2:43 PM, devoish (98.65) wrote:

chk2595

Nice job. All the right rhetoric and in just two sentences. 

Thanks for the in depth analysis.

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#3) On February 27, 2009 at 7:36 PM, streetflame (29.88) wrote:

Devoish - Some good points.  However, the EPA's SO2 and NOX cap and trade program beginning in 1990 has been a success by most accounts.  Why wouldn't it work for CO2? Also your claim that the World Bank or IMF would need to administrate the market doesn't make sense.  The EPA would regulate it, either making the market itself like it does now or letting the CCX, CME or others in on the action.  The US is not going to sign any international treaty which gives away control of the US emissions market to the Europeans.

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#4) On February 27, 2009 at 8:08 PM, devoish (98.65) wrote:

Streetflame, 

My concern with the world bank stems from  the potential for world wide carbon trading and they already have their hands in that.

The issue of SO2  and NOX is discussed in the last link. Basically SO2 reductions were easy because low sulfer coal was readily available.

Ozone limits are discussed as a more appropriate model for CO2 reduction.

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#5) On March 02, 2009 at 1:43 AM, Carbonomics (< 20) wrote:

Devoish,

Thanks for introducing me to my neighbor! I've recently published a book on the untax (etc.) which is exactly the system you suggest. It turns out Lauri and Allan, who you recommend at the end, live less than half a mile from me -- and I didn't know.

You might also note that this is James Hansen's proposal as well -- he's Al Gore's climate advisor. My book is Carbonomics, and if you want a copy (just Devoish) write to me. (Also, it's on Amazon with a good discount if you read the fine print.)

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#6) On March 02, 2009 at 7:31 AM, climatetaskforce (< 20) wrote:

Couldn't agree more--a revenue-neutral carbon tax would avoid the evasion and market manipulation inherent to a cap and trade scheme.  In addition, a carbon tax would incentivize the creation of new, climate-friendly technologies.

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#7) On March 03, 2009 at 10:53 PM, devoish (98.65) wrote:

Carbo,

I credited Laurie and Allan because it was their idea, or at least they brought it to my attention via Common Dreams. I am guessing you favor the idea of tax and refund also? It seems so beautifully simple to me. I am sure it might require hardship adjustments for specific situations. A injured vet on fixed income, living in an apartment with coal powered electric heat for instance. Or just a fund to help him switch to something less impacted.

How badly did I do with the numbers?

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#8) On April 14, 2009 at 1:02 PM, devoish (98.65) wrote:

Added Note: In 2006 the US emitted 5,877,000,000 tons of co2 into the atmosphere, 80% of it energy related. http://thefraserdomain.typepad.com/energy/2007/05/us_carbon_...
Each ton contains 2205 lbs of co2.
We emitt a total 12,958,785,000,000 lbs of co2 into the atmosphere. If each lb was taxed at $.01 a total of $1,295,877,850,000 would be collected. If divided equally between 300,000,000 American citizens each would get a refund of $431.95 to offset their increased expenses.
A recently unemployed family of four would collect $1727 to help offset their reduced consumption. If they are living in a tent they could benefit even more. The permanently homeless who no longer participate in society could have their $431.95 sent to shelters and soup kitchens.
Those who complain that China is not cutting back and doing their share will still benefit personally from conserving.
And because the money collected is refunded, the Gov't does not get bigger.

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