Monday, June 29, 2009

Obama's Cap and Trade Dilemma

Barrack Obama has complained that the House of Representatives version of his "cap and trade" program, passed last Friday by a very narrow margin, has a feature that he disagrees with. The bill will be voted on by the US Senate in a few days. On this one, Obama is correct.

The feature that disturbs Obama is the provision that any country that does not enact a program similar to "cap and trade" will be subject to trade sanctions. In simplest terms, the House voted not to trade with countries who don't want to follow the US down the suicide path of "cap and trade." Since that includes most of the known world, excepting Western Europe, this means that the House vote, if it passes the Senate, will eliminate vast amounts of international trade, millions of jobs and dramatically increase world poverty.

Obama is right to object to this job-killing, trade-killing legislation. But, Congress is right to see that the "going it alone" Obama strategy implicit in the "cap and trade" legislation will have virtually no effect on world wide global carbon emissions. As long as the BRIC countries (Brazil, Russia, China and India) refuse to adopt some form of self-inflicted wound like "cap and trade" on themselves, global emissions will continue to rise, regardless of what the US does. Congress sees rightly the futility of the Obama plan. It only hurts us and has no impact on global carbon emissions or global warming.

Most of the Democrats in Congress would prefer not to trade with other countries anyway, so prohibiting trade with countries who don't want to follow us down the absurd path of "cap and trade" fits their agenda.

Regardless of his protestations, Obama will sign this bill once it passes the Senate. Before Obama is done, world trade will decline dramatically and the losers will be everyone. When economic recovery begins in Asia, the decline in world trade will keep that recovery from helping the US recover. This is just one more step in the Obama program of bringing permanent stagnation to the US economy.

Obama should veto the "cap and trade" legislation, if he wishes to combat world poverty. But, that really isn't his agenda. They didn't talk about that problem in the coffee houses at Harvard. Instead it was the coffee housers' great dream to reduce carbon emissions. Too bad, this program won't even accomplish that limited objective, while doing immense harm to people worldwide.