NCPA - National Center for Policy Analysis


February 18, 2010

Many analyses have indicated that the economic implications of President Obama's cap and trade global warming greenhouse gas reduction plan would be detrimental to our domestic economy.  Cap and trade consists of mandates, subsidies, and efficiency standards, among other provisions, which would ultimately increase production costs for businesses and therefore increase energy costs for families and households, according to Freedom Works.  

The Heritage Foundation found that enactment of cap and trade legislation would produce the following economic consequences: 

  • Inflation-adjusted losses to gross domestic product (GDP) of $9.9 trillion.
  • More than $4.6 trillion in higher energy taxes.
  • Job losses exceeding 2.5 million for some years.
  • Annual family-of-four energy costs rising by $1,000, including a gasoline price increase of more than $1.20 per gallon. 


  • Annual family-of-four energy costs plus increased cost of goods and services totaling more than $3,000.
  • Average GDP loss per family of four above $4,500 per year.
  • Family-of-four net worth dropping by more than $40,000.
  • The family of four's share of the national debt rising by an additional $27,000. 

Cap and trade is a legislative measure that, over time, would inhibit the growth of our domestic economy.  It's simply too expensive, which therefore makes it economically irrational.  The Heartland Institute comments on the financial burden that cap and trade would impose: 

  • It will indeed increase costs significantly, but inefficiently.
  • Constraints on fossil energy use force businesses to substitute more expensive fuels.
  • Thousands of firms will incur costs to monitor and report emissions, and to acquire offsets or additional allowances if they need to exceed their emissions limit.
  • The federal government will have to create a new administrative mechanism for monitoring, auditing, revising regulations and controlling allowance volatility. 

The price tag of cap and trade is intrusive, overbearing and one that American taxpayers can't afford.  As studies indicate, the economic suffering far outweighs the environmental gain that would result from an enactment of cap and trade, says Freedom Works. 

Source: Report, "Cap and Trade: Why Spend A Lot, When Economic Projections Look Grim," Freedom Works, February 17, 2010. 


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