Will Cap and Spend Kill Michigan Economy?

Michigan has certainly seen its share of hard times in recent years. And, for our part, the loss of jobs and population have certainly hurt charitable bingos. With that in mind, we will be watching with interest the President's proposed Cap and Spend program.

According to an editorial in the Detroit News, this proposal will be particularly damaging to Michigan.

Below is an excerpt:

"President Barack Obama's proposed cap-and-trade system on greenhouse gas emissions is a giant economic dagger aimed at the nation's heartland -- particularly Michigan. It is a multibillion-dollar tax hike on everything that Michigan does, including making things, driving cars and burning coal.

The president is asking for a system of government limits on carbon emissions. The right to emit carbon would be auctioned off to generate revenue for more government spending programs.

The president's budget projects receipts totaling $646 billion through 2019 from the sale of these greenhouse gas permits.

The goal, according to the president's budget outline, is to reduce greenhouse gas emissions such as carbon dioxide to 14 percent below 2005 levels by 2020.

Doing so will drive up the cost of nearly everything and will amount to a major tax increase for American consumers.

Such a tax will hit the Midwest particularly hard, which is why House Minority Leader John A. Boehner, R-Ohio, told the New York Times, "let's just be honest and call it a carbon tax that will increase taxes on all Americans who drive a car, who have a job, who turn on a light switch, pure and simple."

The carbon tax will be paid by energy companies, manufacturers and public utilities, who will pass the cost on to their consumers. Michigan will be especially targeted. It gets 60 percent of its electric power from coal plants, and the state's economy is still reliant on heavy manufacturing such as car and truck assembly and auto parts production.

For the complete story, please see the Editorial Section, Editorial: Cap-and-trade plan will sink Michigan, The Detroit News, March 4, 2009.