Eighteen months after the stimulus package that was supposed to prevent a deep recession, here we are. Unemployment is still close to 10%, government budgets are at their worst state in decades, and the stock market one bad day away from another meltdown.
Naturally, that means its time for the Senate to introduce a bill that will kill even more American jobs, and for the liberals in the media to do everything they can to hide its impact.
Cue the New York Times. According to them, the Kerry-Lieberman climate change bill will “prompt a decade of job growth.” That story comes from their affiliate, Greenwire, and references a supposedly nonpartisan Peterson Institute for International Economics study.
If you’re wondering how a tax creates jobs, here’s how it works. The cost to emit a ton of CO2 will be set through auction, but they forecast $16.47 in 2013 with lots of exceptions for favored industries.
Then the legislation is a runaway train. By 2020, few permits are given away — most are auctioned off for higher and higher prices. One CNBC report puts the annual global market for carbon credits at $2 trillion a year. American companies would be paying tens or more likely hundreds of billions of dollars a year to the federal government for the right to emit carbon.
If companies don’t want to pay those fees, they can instead spend money on energy efficient technologies, which creates jobs in those sectors. These are real jobs — but like those in Spain, they’re not economically productive ones. In the absence of taxes and regulation, they wouldn’t exist.
But will companies pay the fees or create the jobs? The study makes assumptions, but as is the case with most economic policies that try to profit by punishing certain behavior, nobody really knows. Maybe everyone just pays the tax and no new alternative energy jobs are created. That’s good for tax revenue but bad for those expecting to get back to work.
Or maybe the entire economy goes green. That’s good for the planet maybe, but not for the budget. Kerry-Lieberman has already promised billions in subsidies to favored industries and is counting on the carbon auction revenues to pay for them.
But what if American industry decides it doesn’t want to go green or pay the tax? Maybe it just decides to go elsewhere.
Where could it go? The well-known consulting firm McKinsey has one suggestion. In 2006 and 2007, as energy prices were skyrocketing, the firm published a report on the economic potential of Gulf Cooperation Council countries as energy hubs.
Their view was that countries like Saudi Arabia, the UAE, Kuwait, Oman, and Qatar could, by promoting their cheap energy (both oil and natural gas), become the leading destinations for energy-intensive industries. These include aluminum, steel, paper, chemicals, and refining.