NEOAVATARA

Telling moment.  When Chip Reid of CBS asked President Obama during his Primetime press conference in the end of March:

“At both of your town-hall meetings in California last week,” Reid began, “you said, quote, ‘I didn’t run for president to pass on our problems to the next generation.’ But under your budget, the debt will increase $7 trillion over the next ten years. The Congressional Budget Office says $9.3 trillion. … Isn’t that kind of debt exactly what you were talking about when you said ‘passing on our problems to the next generation?’”

Obama’s answer?  Hemming and hawing.  He never answered the question.

Which, actually, goes to the heart of the matter:  Ultimately, Obama will have to break his promise, and raise taxes for everyone.

There is no way around it, unless we want to talk about deficits in the tens of trillions of dollars.  Obama has not even begun to broach the topic of entitlements, which are only growing as well.  Do you realize that in the next decade, with retirement of the baby boom generation, the number of people on Social Security and Medicare will DOUBLE!  So ultimately, those of you in the middle class that thought you were exempt, well, welcome to the party.

It actually has already started.  The government this month increased taxes on cigarettes by the largest margin ever.  This disproportionately hits poorer segments of the population, although I favor cigarette taxes for public health reasons alone.  But the broadening of scope of the tax man is coming.

And here is the uglier truth:  if it were not for the current recession, it is likely that Democrats would be considering their tax increases now.  Logic prevailed in the Obama Administration, understanding that the increased tax burden would hurt the economy.  No such logic exited in Congress, where Pelosi and colleagues were pushing a broad range of newer taxes even during this current budget battle.

The biggest example is cap-and-trade.  Cap-and-trade is a simplified term that entails the buying and selling of pollution credits for carbon dioxide and other carbon producing pollutants.  This trading market would primarily occur with energy producers and other manufacturers, in the hope that the increased costs of pollution would drive the amount of pollutants downward.

A worthy goal; one which I support.  But it has drastic repercussions.

Republicans have estimated that the overall increases in costs from a cap-and-trade system would increase the average expenditures for a family of four by $3200.  Now, many including Democrats have disputed that.  For example, Politifact, using MIT professor John Reilly’s numbers, said the number was actually $215, and placed the Republican claim in their hall of shame, called ‘Pants on Fire’.

Sorry? Whose Pants are on Fire?

However, Reilly now admits that his calculations are in error.   The Weekly Standard’s John McCormack has been corresponding with Reilly for several weeks, trying to correct the calculations.  In the end, Reilly admit that there was a gross error in his numbers, and that the actual cost would be approximately $800 per family of four (or $512 for the average 2.56 person household).  Reilly said, “I made a boneheaded mistake in an excel spread sheet. I have sent a new letter to Republicans correcting my error (and to others).”

However, even that number isn’t accurate.  The $512 paid annually per household is merely the “cost to the economy [that] involves all those actions people have to take to reduce their use of fossil fuels or find ways to use them without releasing [Green House Gases],” Reilly wrote. “So that might involve spending money on insulating your home, or buying a more expensive hybrid vehicle to drive, or electric utilities substituting gas (or wind, nuclear, or solar) instead of coal in power generation, or industry investing in more efficient motors or production processes, etc. with all of these things ending up reflected in the costs of good and services in the economy.”

In other words, Reilly estimates that “the amount of tax collected” through companies would equal $3,128 per household.  In other words, the Republican numbers were in fact right, and Dr. Reilly and Politifact were wrong.

And it gets worse.  Reilly now states that his calculation of $800 is on top of the other costs, so the total now would approach $4,000, even more than the initial Republican estimates.  Riley does argue that households would get that money back…but doesn’t exactly say how.  Yikes.

Just to put an exclamation mark on the matter…John Dingell, that liberal icon (and also friend of the auto industry) clearly states to Al Gore that cap and trade is nothing but the most massive, broad tax increase in history…which Gore accepts reluctantly.  Even an internal memo within the Obama Administration accepts that cap-and-trade would dramatically hurt the economy.

httpv://www.youtube.com/watch?v=sSlK9312nWc

Now, in the larger scheme of things, an average $4,000 increased taxes on every household in the country would be, by far, the largest tax increase in world history.  And this is a purely regressive tax; there is no favoritism for income.  Every household, rich, poor, or in between would have to pay these costs.  This, obviously, would again break Mr. Obama’s pledge to not increase taxes on those making less than $250,000.  Of course, I am sure the White House will argue that this is not a tax, per se, but just increased expenditures for the cost of pollution.  Maybe so.  But I doubt that will matter to the 310 million Americans who will have to significantly increase their outward expenditures because of cap-and-trade.

The costs of this program are slowly coming to light.  Republicans and Democrats alike are balking at those costs, which will surely be passed down to consumers, in a regressive way, regardless of what the Obama Administration says.  In many ways, this is likely to be harder to pass than anything else on the liberal agenda.