Cap and Trade: Why Spend A Lot, When Economic Projections Look Grim

Many analyses have indicated that the economic implications of cap and trade would be detrimental to our domestic economy. Cap and trade consists of mandates, subsidies, and efficiency standards, among other provisions, which would ultimately increase production costs for businesses and therefore increase energy costs for families and households. According to a study conducted by The Heritage Foundation, enactment of cap and trade legislation would produce the following economic consequences;



Inflation-adjusted losses to gross domestic product (GDP) of $9.9 trillion;
More than $4.6 trillion in higher energy taxes;
Job losses exceeding 2.5 million for some years;
Annual family-of-four energy costs rising by $1,000, including a gasoline price increase of more than $1.20 per gallon;
Annual family-of-four energy costs plus increased cost of goods and services totaling more than $3,000;
Average GDP loss per family of four above $4,500 per year;
Family-of-four net worth dropping by more than $40,000; and
The family of four’s share of the national debt rising by an additional $27,000.


The costs of cap and trade would inevitably put a strain on our already recession stricken economy. Why would politicians push for a bill that is expected to stifle economic growth and worsen unemployment levels? More importantly, why would politicians rush to pass a bill that requires exorbitant spending when serious, legitimate questions have been raised about the underlying scientific analysis?


Cap and trade is a legislative measure that, over time, would inhibit the growth of our domestic economy. It’s simply too expensive, which therefore makes it economically irrational. The Heartland Institute comments on the financial burden that cap and trade would impose;



It will indeed increase costs significantly, but inefficiently. Constraints on fossil energy use force businesses to substitute more expensive fuels. Thousands of firms will incur costs to monitor and report emissions, and to acquire offsets or additional allowances if they need to exceed their emissions limit. The federal government will have to create a new administrative mechanism for monitoring, auditing, revising regulations, and controlling allowance volatility.


The price tag of cap and trade is intrusive, overbearing, and one that American taxpayers can’t afford. As studies indicate, the economic suffering far outweighs the environmental gain that would result from an enactment of cap and trade.