Few Americans Know What Cap-and-Trade Is

A new Rasmussen poll shows that few Americans understand what the “cap-and-trade” proposals swirling around Congress are even about:

Given a choice of three options, just 24% of voters can correctly identify the cap-and-trade proposal as something that deals with environmental issues. A slightly higher number (29%) believe the proposal has something to do with regulating Wall Street while 17% think the term applies to health care reform. A plurality (30%) have no idea.

The best reading I could assign is (of course) the Tax Foundation working paper by Andrew Chamberlain on the economic impacts of cap-and-trade:

[C]ap and trade imposes identical economic burdens on households to a similarly designed carbon tax. Using the newly-released 2002 input-output accounts we present new estimates of the distributional impact of a typical cap-and-trade system by income, age, U.S. region and family type. In total, households would face an annual burden of roughly $144.8 billion per year with costs disproportionately borne by low-income households, those under age 25 and over 75 years, those in Southern states, and single parents with dependent children. Using RIMS II multipliers we estimate the broader economic impact of cap and trade.

Depending on how the system is structured, cap and trade could reduce U.S. employment by 965,000 jobs, household earnings by $37.8 billion, and economic output by $136 billion per year or roughly $1,145 per household. Lawmakers weighing the costs and benefits of climate policy should be aware that cap and trade would impose a significant and regressive annual burden on U.S. households, and would not represent a “tax free” way to reduce greenhouse gas emissions.

Other Tax Foundation work on the subject:

• Cap-and-Trade and Econ 101, May 31, 2008, by Gerald Prante
• Who Pays for Climate Policy?, April 22, 2009, by Matt Moon
• Cap-and-Trade and Other Revenue Raisers, March 2, 2009, by Joseph Henchman
• Obama’s Cap and Trade Redistribution Plan, February 27, 2009, by Scott A. Hodge