Cap-and-trade: Imperialism of the populous states?

posted at 12:55 pm on May 15, 2009 by Ed Morrissey

We’ve reviewed Barack Obama’s cap-and-trade policies from a number of angles, but Governor Mitch Daniels of Indiana has a unique analysis that bears consideration.  He sees cap-and-trade not just as an overall tax burden on the energy consumer, although he certainly agrees that it is, nor as a penalty for fossil-fuel producers, which Daniels also sees.  Daniels suggests that the real reason for cap-and-trade is for liberal, coastal states to suck tax dollars out of the Rust Belt in a case of interstate imperialism:

Quite simply, it looks like imperialism. This bill would impose enormous taxes and restrictions on free commerce by wealthy but faltering powers — California, Massachusetts and New York — seeking to exploit politically weaker colonies in order to prop up their own decaying economies. Because proceeds from their new taxes, levied mostly on us, will be spent on their social programs while negatively impacting our economy, we Hoosiers decline to submit meekly.

The Waxman-Markey legislation would more than double electricity bills in Indiana. Years of reform in taxation, regulation and infrastructure-building would be largely erased at a stroke. In recent years, Indiana has led the nation in capturing international investment, repatriating dollars spent on foreign goods or oil and employing Americans with them. Waxman-Markey seems designed to reverse that flow. “Closed: Gone to China” signs would cover Indiana’s stores and factories.

Our state’s share of national income has been slipping for decades, but it is offset in part by living costs some 8% lower than the national average. Doubled utility bills for low-income Hoosiers would be an especially cruel consequence of the Waxman bill. Forgive us for not being impressed at danglings of welfare-like repayments to some of those still employed, with some fraction of the dollars extracted from our state.

And for what? No honest estimate pretends to suggest that a U.S. cap-and-trade regime will move the world’s thermometer by so much as a tenth of a degree a half century from now. My fellow citizens are being ordered to accept impoverishment for a policy that won’t save a single polar bear.

Some Republicans have suggested Daniels as a potential presidential candidate in 2012, when his current term will expire.  Daniels throws a little bit of cold water on that notion in the lead, saying that “I’m not a candidate for any office — now or ever again,” but this may build some momentum for a Draft Daniels movement.  If nothing else, it demonstrates a willingness to fight back that has sometimes eluded other Republicans.

The big secret of this is that Indiana will get bankrupted more by the cap-and-trade system forcing producers out of the state, which will mean that the government won’t get those revenues anyway.  This is yet another demonstration of the administration’s reliance on static analysis for tax policy.  Daniels correctly notes that the policy will hammer Indiana’s economy, which means that tax revenues will fall in general, but also that less energy will get used — which means less revenue from cap-and-trade.  The rise of unemployment in the state will eventually require more federal dollars flowing into Indiana than flowing out of it, and the coastal states will eventually have to subsidize Hoosiers instead of the opposite.


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Comment pages: 1 2

Sehkmet, I think you are right. I would add large military bases, and interstate highways that cross long stretches of rural land, which makes cross-country travel possible. Plus, Border Patrol personnel in the border states, the number of which has been greatly enlarged. Dams maintained for urban water and electricity users.

It’s not mostly welfare.

juliesa on May 15, 2009 at 4:16 PM

I vote anti-climate-fraud. Simple as that.

I don’t vote abortion one way or the other, I don’t lose any sleep over gay anything, I grew up in San Francisco and I’ve known perfectly decent (well, except for being liberals…) gay parents, I generally oppose taxes and I’m a THWTH generally a bit to the right of Curt LeMay on foreign policy, but you find me a viable candidate who’ll reopen Guantanamo specifically to chuck James Hansen in there and I’ll max out my campaign contributions in five minutes pretty much no matter what that candidate’s other positions are.

JEM on May 15, 2009 at 4:18 PM

The urban lifestyle: a more efficient allocation of the resources necessary to enable the modern American quality of life than rural living. Such disparities in federal revenue vs. expenditure is an outgrowth of that fact. Oh well.

ernesto on May 15, 2009 at 1:21 PM

Yeah, lets all move into the cities and live urban life-styles (blech!), then we can leave the actual production of food to the robots. What could possible go wrong?

Fatal on May 15, 2009 at 4:34 PM

And for what? No honest estimate pretends to suggest that a U.S. cap-and-trade regime will move the world’s thermometer by so much as a tenth of a degree a half century from now. My fellow citizens are being ordered to accept impoverishment for a policy that won’t save a single polar bear.

Exactly! But by golly it will harm humans.

The rise of unemployment in the state will eventually require more federal dollars flowing into Indiana than flowing out of it, and the coastal states will eventually have to subsidize Hoosiers instead of the opposite.

That too.

Buy Danish on May 15, 2009 at 5:29 PM

Would love to know on what planet Massachusetts (home to recession-proof biotech that helps us live longer), New York (the world’s financial center) and California (ever heard of Silicon Valley?) are the faltering powers. They are all industries where America has an edge, where no jobs get exported because no one is better at these things than us. Yes, the whole system is faltering but it would look a lot worse without these places.

Greef on May 15, 2009 at 1:42 PM

I think your information is a bit old. While Mass was part of the Albany-to- Boston hub known as Silicon Alley, that has been changing rapidly since Romney and Pataki left office. Neither state is remotely business friendly despite Albany Nanotech being one of the leaders in Nanotechnology. As far as Biotech firms go, they seem to be mostly in Virginia and Florida these days. Silicon Valley still has the established tech companies, but when my husband’s company did an analysis on where to base (we own a display company) Colorado came up first – the Silicon Valley business leadership council said Silicon Valley was number 3 or lower as a tech center. NY has been severely wounded as the world’s financial center since Sarbanes-Oxley hit a few years back and with Obama’s anti-capitalist policies Hong Kong and Singapore are poised to become the world leaders. We were advised by a Silicon Valley banker who brokered some of the biggest deals there to not even bother doing an IPO in the US (this was before Obama btw) and go straight to Asia (how many major IPO’s do you recall in the last few years)

Ann NY on May 15, 2009 at 6:23 PM

Yep, I’ve been saying this for a while now, but nobody cared because, well, who the F am I, right?

The fact of the matter is that Daniels is right and it’s not just cap and trade. Think about nuclear energy, for example. The NE is allowed to have a pretty good amount of it. Even back when they were being built, though, the South and Midwest were sort of left out. (IN Gov Daniels might tell you about Marble Hill).

And no – it’s not really a big conspiracy to commit this intranational imperialism purposely, but the evidence of its occurrence is aloofly disregarded. The Federal gov’t doesn’t care, and terrible state governments like NY & CA definitely don’t care.

thebadoutlaw on May 15, 2009 at 9:05 PM

He sounds great! I must be really demoralized, because I figure its just a suck-up to get the nomination, and then he will turn into the typical PAC whore.

PattyJ on May 15, 2009 at 10:06 PM

Daniels is a straight shooter and runs the State of Indiana like a business. He has those skills and is not a politician by today’s standards. And, frankly, I think he’s too smart to return to Washington (he was the Bush II OMB Director). Mitch has been the best thing for Indiana in quite some time.

joeyb1955 on May 16, 2009 at 11:01 AM

Comment pages: 1 2