Editore"s Note
Tilting at Windmills

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April 4, 2009

BOEHNER'S RATIONALIZATION.... A wide variety of Republicans, in the House and Senate, have been pushing this absurd claim that the administration's cap-and-trade proposal would impose, on average, a $3,128 energy burden on the typical American home. The figure comes from a bastardization of a study conducted by John Reilly, an M.I.T. scientist who supports the cap-and-trade plan.

Reilly told Republican officials that their talking point isn't true, but as evidenced this week, they keep saying it anyway.

House Minority Leader John Boehner (R-Ohio) explained in a press release why GOP lawmakers feel comfortable repeating a bogus statistic, even after it's been debunked.

How do Republicans arrive at the $3,100 dollar figure? It's pretty simple. We took MIT's own estimate of a key "cap-and-trade" bill from the 110th Congress (S. 309) cosponsored by then-Senator Obama that said S. 309 would generate $366 billion in revenues in 2015.... We took MIT's own number -- $366 billion -- and divided that by the number of U.S. households (we assumed 300 million people and an average household size of 2.56 people...which is 117 million households). Using this formula, you get roughly $3,000 per household. [...]

An MIT professor has questions about the $3,100 figure but his letter makes assumptions that are factually inaccurate. Moreover, he claims "government rebates to consumers" must be factored in. But we all know that Democrats have no intention of using a cap-and-trade system to deliver rebates to consumers; they want the tax revenue to fund more government spending. Key Democrats -- including Senators Reid & Conrad -- have even said they want to use cap-and-trade to fund their bureaucrat-controlled health care plan. In fact, nothing in the Democrats' budget would provide rebates or any relief to consumers.

Let's unpack this a bit. First, the method of finding a per-household average is itself misleading. Brad Plumer noted that the GOP's arithmetic "brushes off the fact that most carbon revenue would be rebated back to consumers, and that certain conservation measures could help reduce energy bills. But the actual MIT study implies that the welfare cost would be around $31 per person in 2015, rising to an average of $85 per person per year -- not including the benefits of cleaner air and a habitable planet."

Second, as Brian Beutler explained, "Reilly's objections were farther reaching than [Boehner indicated] and included not just the idea that increased costs will be somewhat offset by rebates, but that consumers will respond to higher energy prices by being more efficient and reducing consumption and that alternative fuels will become cheaper and so on. In other words, their methodology is flawed even if you grant them the assumption that the government will rebate $0 to consumers."

And third, Boehner insists that Democrats intend to use cap-and-trade revenue to "fund their bureaucrat-controlled health care plan." Not only is this an absurd description of the Democratic health care plan, but both Reid and Conrad have specifically rejected the idea of financing health care reform through a cap-and-trade system.

In other words, Boehner, trying to justify repeating an obvious lie, doesn't know what he's talking about. Again.

Steve Benen 12:25 PM Permalink | Trackbacks | Comments (13)

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Posted by: pat on April 4, 2009 at 12:35 PM | PERMALINK

no, Professor Reilly, we'll tell YOU what your study says. after all, I have a business degree, and we all know business trumps those soft sciences you people study.

Posted by: northzax on April 4, 2009 at 12:38 PM | PERMALINK

on the other hand, i think we should be a touch careful here: the primary way to cut energy consumption is to make it more expensive. that's what we should want.

putting aside how the costs are ultimately allocated and what the feedback loops are and so forth, i wouldn't want to be in a position of claiming there are no costs in reducing the rate of global warming increase.

Posted by: howard on April 4, 2009 at 12:42 PM | PERMALINK

Apart from the figures, their ideological attachment to unregulated carbon-based energy supply is profoundly flawed. Don't they know it is unsustainable and detrimental to the environment, the atmosphere and health? They don't seem to be able to see beyond the end of their noses. Ostriches spring to mind, which is a pity because in all other respects ostriches are rather nice birds. Does anyone still take these perverse numskulls seriously?

Posted by: Goldilocks on April 4, 2009 at 12:42 PM | PERMALINK

On the other hand we should be a touch careful here;Yup like preserving the planet so that it remains habitable for humans. Unless of course republicans aren't human and have something else in mind.

Posted by: Gandalf on April 4, 2009 at 1:12 PM | PERMALINK

An MIT professor has questions...

I love Boehner's anonymous appellation for Professor Rielly. His dismissal of Rielly as just 'an MIT professor,' and not the author of the initial study is all the evidence we need to know Boehner is being disingenuous.

Well, that, and his lips are moving.

Posted by: doubtful on April 4, 2009 at 1:20 PM | PERMALINK

Howard: reducing energy use is one goal, perhaps. But the goal of cap and trade is to increase efficiency, to help defray the capital costs of new power plant construction and to encourage the market to find innovative solutions by muliplying their short term financial benefits.

Posted by: Northzax on April 4, 2009 at 2:13 PM | PERMALINK

So, Boehner tells us the Dems will charge us $3000 per year for carbon, and he also tells us they will use the money to provide healthcare that currently costs the average family about $14,000 per year.

Sounds like a great deal- bring it on!

Sadly, it's more likely Boehner is just a moron who doesn't know what he's talking about.

Posted by: serial catowner on April 4, 2009 at 2:15 PM | PERMALINK

The fundamental issue is whether Americans will, and should, have to pay higher prices for energy.

There is no way to skirt this issue, or address it indirectly. Whether or not Rep. Boehner's estimates are in the ballpark -- and let's face it, at this point anyone's estimates of costs arising from a cap-and-trade system won't be any better than just in the ballpark -- he's right that a cap on carbon emissions is a back-door way to get Americans to use less energy by raising its price. In other words, the Obama administration is trying to impose an energy tax on Americans while calling it something else.

There's no way to make raising energy prices, and thereby reducing energy usage and carbon emissions, easy in the United States. There are ways to make this very necessary step harder than it needs to be. One of them is dodging the fundamental issue with long convoluted explanations of a bureaucratic approach to greenhouse gases in the atmosphere. The public won't track them, and will understand the accusation that cap-and-trade is just camouflage for higher taxes.

Camouflage that doesn't fool anyone is just extra weight. Dump it. There is a good case for higher energy taxes, so make it.

Posted by: Zathras on April 4, 2009 at 2:54 PM | PERMALINK

But the theoretically graceful part about C&T (the part that should actually make it more attractive to Republicans) is that it isn't inherently a tax increase: if a business can find a way to improve its efficiencies such that it stays under the cap, or can keep the costs of its credit trades low enough to offset with other efficiencies or innovation, it is revenue neutral.

But for the rest of us, it is largely win-win: either pollutors pay a cost that more accurately covers their negative externalities, which can then be used explicitly to cover the impacts of those externalities that are otherwise borne by the public (implicitly) anyway, or the polluters innovate, change, or improve efficiencies are the negative externalities are eliminated that way, too.

To say it raises energy "costs" for average Americans is to use an overly narrow but-oh-so-American view of "costs." We pay less for a kW of coal-fired electricity than it really "costs" if diffuse costs/tragedy of the commons costs are accounted for. All C&T (or a more direct carbon tax) does is actually forces each and every producer and consumer to confront the true economic costs to the public collectively -- that is (and Republicans, if they were true to their claimed beliefs, should love this) C&T send more accurate signals to the market about the quantities of carbon that should be demanded and supplied. The key difference between a carbon tax and C&T is that (a) the cap portion allows the tax to be avoidable through innovation and (b) the tax uses experts to approximate the value of the negative externality per unit of carbon, while C&T uses a market mechanism to do the same.

Is it really a "tax" to expect people to pay the true cost (price plus negative impact) of what they buy? Isn't the absence of the payment for a negative impact really an implicit subsidy for that which should not be encouraged? Calling the removal of a subsidy a "tax" seems of a kind with Republicans linguistic game-playing along the lines of "death taxes."

Posted by: zeitgeist on April 4, 2009 at 3:34 PM | PERMALINK

northzax, don't get me wrong: i support cap-and-trade! but the odds that the system is just full of sufficient inefficiency that there is no cost back to the end-user are very, very, very long, and that's why i (and i notice several others in this thread) don't want to shy away from admitting what is real: that energy costs almost certainly will be higher under cap-and-trade than they would be by continuing the status quo.

that is, as zeitgeist so acutely notes, as "costs" are defined in the political system today: i think we should be emphasizing the "benefits" that cap-and-trade would bring, which are to me well worth whatever "cost" to the end-user emerges....

Posted by: howard on April 4, 2009 at 4:32 PM | PERMALINK

In other words, Boehner, trying to justify repeating an obvious lie, tells another set of lies. Again.

There. corrected for you.

Posted by: gregor on April 4, 2009 at 5:20 PM | PERMALINK

If revenue from a cap-n-trade system is used for something other than energy, it pretty much sucks. A national cap-n-trade system is only a temporary solution since it will force energy intensive businesses to relocate to other countries. So, at best, a national cap-n-trade regime will only impact consumers.

At some point, liberals, conservatives, whoever must come to the stark realization that there is a global limit on energy use. We are not there yet, we still think that we can consume energy at the same rate. But even Obama said that if China and India used as much energy, per person, as the US, that we would have "melted" by now.

Posted by: tomj on April 5, 2009 at 3:31 AM | PERMALINK



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