Thursday, March 25, 2010

Au Revoir, Carbon Tax!

As the Obama administration is ramping up efforts to ram cap and trade legislation through the Senate, the French are throwing similar legislation overboard.  From The Wall Street Journal:
Only two days after a crushing defeat in regional elections, France's center-right government regained common sense and scrapped its carbon tax plans. Burdening already overtaxed households and businesses with yet another levy in the midst of an economic crisis is one reason why the ruling UMP lost all but three of 26 regions to the Socialists and Greens.

"We have to amplify measures that help reinforce the competitiveness of our economy," Prime Minister Fran├žois Fillon told parliament Tuesday, as if he had alighted upon some previously hidden truth. Paris now insists on a European Union-wide tax to reduce CO2 emission because a unilateral move would "widen our gap in competitiveness with our neighbor Germany." Luckily, there is little appetite in the rest of the EU for this sort of economic masochism.

Originally, the carbon tax was supposed to have come into force in January to raise €3.5 billion by collecting €17 per ton of CO2 emitted. Because of the many loopholes for big industry, France's highest court struck down the legislation as unconstitutional. President Nicolas Sarkozy, however, pledged a reworked law by July. In a speech last year, he said no less than the "survival of the human race" was at stake.

Perhaps such hyperbole was designed to stoke existing French anxiety about global warming, which Mr. Sarkozy apparently misread as a mandate to reach into taxpayers' pockets. But turning into an eco-warrior was simply not quite the "rupture" with the political past that the president had promised, nor, apparently, the sort of change voters could believe in.
Investor's Business Daily notes that the French government is heeding the forecasts of leading American research institutions and the dire warnings from experience of Spain:
Nick Loris at the Heritage Foundation reports that a Center for Data Analysis study on the Waxman-Markey cap-and-trade bill found that net job losses (after green-job creation) would approach 1.9 million in 2012 and could reach 2.5 million by 2035, with manufacturing accounting for 1.4 million of them.

Loris notes that Spain spends about $8 billion a year on green energy subsidies, which Kerry and the Obama administration would call "investments." Spain's experience is that 2.2 jobs are lost for every green job created because the push for green energy siphons off resources and commitment from genuinely productive sectors of the economy. The French noticed. Will we learn from the mistakes of others?
If my calculations are correct, and assuming the economy continues to stagnate, the dire job loss projections cited above would raise unemployment to 11% in 2012 and 11.3% by 2035.  And for what?  The reduction in a ubiquitous atmospheric gas with debatable effects on climate change, that will have negligible effect on global temperatures.
When the U.S. Congress is tacking to the left of France, it's time for a new Congress.  Wake up and smell the cafe', people!

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