Obama May Levy Carbon Tax to Cut the U.S. Deficit, HSBC Says
By Mathew Carr – Bloomberg News
Barack Obama may consider introducing a tax on carbon emissions to help cut the U.S. budget deficit after winning a second term as president, according to HSBC Holdings Plc.
A carbon tax starting at $20 a ton of carbon dioxide equivalent and rising at about 6 percent a year could raise $154 billion by 2021, Nick Robins, an analyst at the bank in London, said today in an e-mailed research note, citing Congressional Research Service estimates.
“Applied to the Congressional Budget Office’s 2012 baseline, this would halve the fiscal deficit by 2022,” Robins said.
h/t to WUWT reader “dp”
Lame duck president. Republican House can block him and if in two years if the Senate turns Republican as well, Obamao will really be done.
A carbon tax, is nothing more than a morphing of the broken window fallacy.
Yes it will cut CO2 emissions, simply by cutting economic activity, which always involves an expenditure of energy in some form or other.
An Opinion says:
November 7, 2012 at 2:59 pm
“The Republican Congress will never pass such a bill. The only way Obama can regulate CO2 is through the EPA.”
That could never happen now could it….oh wait….
“””””…..An Opinion says:
November 7, 2012 at 2:59 pm
The Republican Congress will never pass such a bill. The only way Obama can regulate CO2 is through the EPA……”””””
I don’t think you grasp the concept of a “lame duck” politician.
Obama has nothing now standing between him and his concept of dictatorship. He has no precedent for compromise. Now he doesn’t need to.
Perhaps you didn’t catch his statement this morning that he planned to sit down with Mitt Romney.
Why the hell, would any “winning” politician sit down withh is squished foe ?
Well Obama’s problem is that Mitt Romney is the person, who knows the answer to the question; how do I go about fixing this economic mess ?
Romney should exit stage left, and leave Obama swinging from his own yard arm.
As for “working with the leaders of both parties.” Harry Reid isn’t going to sit down with anyone; but Boehner will cave just like the fickle Republican RINOS always do.
Boehner should not again be the Speaker. Give that job to Ryan, who may have some ideas. I would tell the President, that he can come and talk to the house leaders, as soon as Harry Reid comes up with the Senate’s version of a budget; well at least the 2008-2009 budget, which so far isn’t finished.
“””””……Ian H says:
November 7, 2012 at 1:12 pm
Why do you think “HSBC Holdings” has a clue what Obama plans to do? This is pure speculation. It is also ridiculous. The president doesn’t have the power to tax……””””””
Well neither does the Congress; well other than to “pay the National debt and provide for the common defense and general welfare of THE UNITED STATES “.
(Article 1 . section 8, clause 1)
But the Congress DOES have the power to SPEND; which simply transfers the bill onto the National debt, and then they do have the power to lay taxes to pay that.
Why else do you think they love deficit spending ?
So does anyone know just where Lady Michelle, is planning to fly her fleet of aircraft off to this weekend. Seems like it is about time for her to revisist hubby Barry’s brother there in his Kenyan lean to.
Just contemplate what her travel itinerary is going to develop into. And you thought Hilary Clinton, understood White House Travel planning.
Frank K. says:
“See how easy it is force people to pay taxes for a non-existent problem? Ignorant/misinformed people like ericgrimrud are why the U.S. will be bankrupt in just a few short years.”
Grimsrud has no understanding of the Broken Window Fallacy.
Destruction of remaining U.S. Coal reserves, Carbon tax, Automobiles. Great for a Recession!!
William says: @ur momisugly November 7, 2012 at 11:23 am
….It appears the President is hoping to achieve double digit unemployment….
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He already has (~ 23%) and the puppet media has allowed him to get away with his massive lies.
See Graph at website. The actual Unemployment rate has been hovering around 23% with a slight tic up since 2009. The government stats have shown a falling rate as long-term discouraged workers fall off the radar.
Note: It was necessary to defined out of official existence long-term discouraged workers because it was known that signing the WTO and bring China in would wipe out many US jobs permanently. Redefining the statistic allowed government to hide the actual state of affairs while international corporations consolidated their position and packed up US factories to shipped them out of the country – literally. We are now dependent on those cheap imports because no one in the USA manufactures the item any more and all the machinery to do so is GONE. (I know one of the guys whose business did the packing and shipping of those factories.)
The last US census showed the number of manufacturing jobs when from 24% of the population in 1970 to less than 9% after Obama took office. The only wealth creation is from mining, agriculture (including forestry) and manufacturing. All the rest is just moving around that created wealth. The GNP does not reflect true wealth creation.
Don’t say I didn’t warn you…
Really, this is a feint. Waxman-Markey (cap & trade) nearly passed once, and there is probably renewed interest in this approach since the electorate has “seen the light” thanks to the past summer’s drought, Hurricane Sandy etc.
Plus, Romney’s buddies on Wall Street clean up big-time with new products to trade. The bundled-mortgage derivative thing didn’t work out too well in the end….
So, with new Democratic strength in the House and Senate and a need to raise cash, I think that a re-jiggered Waxman-Markey type of bill is the real aim.
markx,
Actually, China is planning on imposing their own carbon tax, at least according to Chinese media (YMMV): http://www.reuters.com/article/2012/01/05/china-carbon-idUSL3E8C5D1220120105
Here, in Australia, our ‘conservative’ Opposition (like many commentators on this thread) is objecting to the Carbon Tax on its economic merits — or lack thereof. If a Carbon Tax is needed to save the planet we will just have to cop the economic consequences.
There are only two reasons for legitimately opposing a measure which is going to save us all from otherwise certain destruction: 1. It won’t work (i.e. we’re doomed anyway); 2. Its scientific basis is rubbish. Arguing the economic merits is playing the game on your opponents’ turf. It implies that you have conceded the points I just mentioned and are merely arguing about correct implementation. At this point you are playing to lose! You need to stick to the science.
One final point: I seem to recall that when Mr Obama first ran for the as Presidency, he was supposedly going to ban (or seriously restrict) firearms ownership. The founder of Cooper Firearms (I hope I have the company name correct.) was forced out of his company because he was discovered to have donated to the Obama campaign. If there was a titanic struggle over this issue in Mr Obama’s early Presidency I must have been asleep.
P.S. I’m not sure that I would necessarily regard “HSBC Holdings Plc” as an authoritative source for inside information on the U.S. President’s domestic policy. Maybe we could wait for a bit and see what the President actually does.
The biggest danger to the world economy now is inflation such as was seen in the 1970s. One good way to address this is to remove the need for governments for deficit financing. this will also have the beneficial effect of withdrawing the government from the debt market thus freeing up more capital for investment in business and the jobs that would go with that.
A consumption tax (of which a carbon tax is one example) is a way to accomplish this. It could put the government on a sound financial basis and remove the dislocations caused by the continual massive deficits.
Canada did this with a version of a value added tax in the early 1990s and now it economy is the envy of the western world. A consumption tax to correct the fiscal imbalance is a sound conservative approach to the current problems. This has to be considered seriously and knee jerk responses and wishful thinking are to be avoided. The current climate policy fiasco has amply demonstrated that. Whether based on carbon or not, a consumption tax could benefit the economy and make everyone richer.
I heard a large flushing sound from south of the Canadian border yesterday. Any idea what that was?
@Tom Gray,
Tax increases of any kind by themselves will not elminated US defict spending. History shows that congress will spend between $1.50 and $2.00 for every additional $1.00 in tax revinue. This increases defict spending.
The debt is a spending problem not a revenue problem.
Once congress demonstrates a capability of making real spending cuts then we can talk about revenues.
G P Hanner says:
November 7, 2012 at 12:31 pm
Yeah. That, and Obamacare, are really going to get the economy going again. Can’t wait to see what happens.
_______________________________
That is real easy to figure out.
1. Any business big enough will have more incentive to leave the country before February 2014.
2. Smaller businesses who were thinking of expanding will not.
3. Any one in business in his right mind will make ALL his workers part time contract workers, AND make sure that he employs fewer than twenty-five full-time equivalent employees (FTEs) whose average salary is below $50,000 if they plan on paying a portion of their worker’s insurance or less that 50 FTEs if they decide not to provide insurance. (Sure puts a cap on salaries and hiring doesn’t it) See: http://www.accountingweb.com/article/cpas-examine-impact-health-care-reform/219788
4. If you are self employed and close to retirement age you might just decide to get the heck out of business entirely instead of dealing with all the new rules and regulations.
The trend of going to part time employees has been the trend for the last twenty years or so and it will only get worse. SEE: http://smallbiztrends.com/2012/07/reason-small-businesses-arent-hiring.html
To get a true picture of the US economy just take a look at the top US employers.
(chart modified to make it fit)
Really inspires confidence in the US economy of sales clerks and burger flippers.
Given the above, a real unemployment rate of 23% and about 1/2 of US jobs came from small businesses, mucking around with things like Obamacare and more regulations could have some really nasty consequences in the very near future as the small businessmen carrying this country make their decision on what to do. (Think Greece)
So who is most effected?
According to the 2008 US census, link there were 27,281,452 firms employing 120,903,551 people. There were only 18,469 Firms with 500 employees or more and they accounted for about half the employment or 61,209,560. The critical groups in the small business category are the Firms with 20 to 99 employees (526,307) with 20,684,691 people and Firms with 100 to 499 employees (90,386) with 17,547,567 people. That is 38,232,258 people or over one quarter of the Americans employed in the private sector whose bosses have tough decisions to make. Some are already saying they are going to not hire or even scale way back.
If I can do a quicky internet search and find this info why the heck couldn’t our representatives do the same before they completely mucked up the economy? Business Week has reported that Small Business has shed jobs according to the Intuit Small Business Employment Index, with Intuit reporting a loss of 10,000 small business jobs in each of the last two months. Not only that small businesses are paying less. The monthly compensation for businesses with fewer than 20 employees is 10.2 percent lower than when the president took office.
Who has no idea ‘how to deal with the debt’?
Either this is the biggest non sequitur I’ve read today or I’m missing something vital …
.
Difficult to get through the house.
A carbon tax at the point of the fossil fuel coming out of the ground or into the country is all good though.
You probably need to give a rebate to exporters though.
polistra says:
What does happen: Presidents slack off in their second term. They feel like the hard work is done, and now it’s time to enjoy the perks of office.
That would be lots of vacations, golf, and celebrity parties, n’est pas?
Sounds a lot like the first term to me.
Let’s hope so. Because if Obama decides to do all of this in reverse and actually gets busy working for his second term, we’ll have a real disaster on our hands.
John from CA says:
November 7, 2012 at 1:51 pm
Sen. Kerry has already sneaked Cap and Trade into the Law of the Sea Treaty that only needs to be passed by the Senate.
We’re screwed one way or the other.
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It will take a 2/3 majority but we have the Lame duck session where lots of rotten laws get passed coming up and it is Sen. Kerry’s plan to hold off the vote till then. Wonder what he knows that we do not?
Alex the skeptic says:
November 7, 2012 at 1:52 pm
How can this carbon tax halve the deficit?…
This means one thing: Either it is an excuse to deliberately raise the price of energy (which will make industry fly to China more and more), or its the proverbial God making one go mad before he is completely destroyed, or both.
Can’t HSBC do math?
_______________________________
HSBC — formerly the Hong Kong and Shanghai Banking Corporation is a Chinese bank. Does that information help?
Tom Gray says:
November 7, 2012 at 4:29 pm
The biggest danger to the world economy now is inflation such as was seen in the 1970s…
A consumption tax … is a way to accomplish this….
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I will grant you those two points but I will not grant the carbon tax. WHY?
A carbon tax is a front end tax and cripples the production of wealth by increasing the cost of a crucial element, energy. I much prefer the Fair Tax a 23% general sales tax and ONLY that tax. This type of tax allows things like energy and basic foods, basic clothing to be taxed at a lower rate or not at all and give a real break to the poverty stricken. A carbon tax on energy, as the UK shows, condemns the fixed low income elderly to death. Two hundred people, most of them elderly, will die in Britain of cold-related diseases every day this winter, according to calculations by Britain’s leading advocacy group for old people..
The Fair tax also taxes EVERYONE and not just wage earners as the current tax system does and that is why it will never pass. The wealthy are not about to give up their loop holes.
American family and factory is already paying 1000% per kilowatt of electricity more, than Chinese family and factory. Carbon tax will produce extra money for the Obama’s green cronies…
In 4y time, American deficit will be so high; China will have a say for what money are spent / how much to be cut from the military budget… similar as the Germans are controlling the Greek government. credit is always the biggest enemy
Someone sent me this a year or so ago.
Tax code explained in Beer
Suppose that every day, ten men go out for beer and the bill for all ten comes to $100…
If they paid their bill the way we pay our taxes, it would go something like this…
The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7..
The eighth would pay $12..
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that’s what they decided to do..
The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by $20”. Drinks for the ten men would now cost just $80.
The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free. But what about the other six men ? How could they divide the $20 windfall so that everyone would get his fair share?
They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer.
So, the bar owner suggested that it would be fair to reduce each man’s bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.
And so the fifth man, like the first four, now paid nothing (100% saving).
The sixth now paid $2 instead of $3 (33% saving).
The seventh now paid $5 instead of $7 (28% saving).
The eighth now paid $9 instead of $12 (25% saving).
The ninth now paid $14 instead of $18 (22% saving).
The tenth now paid $49 instead of $59 (16% saving).
Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.
“I only got a dollar out of the $20 saving,” declared the sixth man. He pointed to the tenth man, “but he got $10!”
“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar too. It’s unfair that he got ten times more benefit than me!”
“That’s true!” shouted the seventh man. “Why should he get $10 back, when I got only $2? The wealthy get all the breaks!”
“Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax system exploits the poor!”
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn’t show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!
And that, boys and girls, journalists and government ministers, is how our tax system works. The people who already pay the highest taxes will naturally get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.
David R. Kamerschen, Ph.D.
Professor of Economics.
For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible
HSBC is a british bank set up in its hong kong colony in the 19th century, and heavily connected to opium trading. hence recent allegations of drug laundering are nothing new.