Editore"s Note
Tilting at Windmills

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June 22, 2009

THEY WERE ONLY OFF BY A FACTOR OF 18.... For several months, whenever the issue of cap-and-trade comes up, GOP policymakers and their allies immediately turn to their favorite talking point: a 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 -- and who has tried to explain to Republicans why the claim is wrong.

Told, over and over again, that their talking point has no basis in reality, Republican officials nevertheless keep saying it. When the GOP isn't denying climate change science altogether, it's pushing the $3,128 claim.

OK, so we know the Republicans are lying, but what's the actual cost Americans can expect if a cap-and-trade system becomes law? The Congressional Budget Office, which has produced several reports of late that Republicans just love, reported on the expected costs of Waxman-Markey.

...CBO estimates that the net annual economywide cost of the cap-and-trade program in 2020 would be $22 billion -- or about $175 per household. That figure includes the cost of restructuring the production and use of energy and of payments made to foreign entities under the program, but it does not include the economic benefits and other benefits of the reduction in greenhouse gas emissions and the associated slowing of climate change.

Some households would pay a little more, and some of the nation's poorest households would actually get money back, but the average is about $175 per household, the equivalent, Chris Harris noted, of "a postage stamp per day."

Better yet, the costs go down in future years, as carbon permits are sold, and the proceeds are "rebated to taxpayers."

House Minority Leader John Boehner (R-Ohio), who pushed the $3,128 line as aggressively as anyone, told Brian Beutler in April he would revisit Republican talking points if additional information came to light.

I'm glad to hear that. Congressional Republicans now have a chance to approach the debate in an honest, serious way. Anyone want to lay odds on whether they keep using the discredited argument anyway?

Steve Benen 12:35 PM Permalink | Trackbacks | Comments (23)

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The problem of costing these things out is that generally the status quo is used as the baseline against which costs are compared. However, the costs of doing nothing is high and gets higher. Predictions of drought in the southwest, or other effects of climate change are not revenue neutral.

Posted by: patrick on June 22, 2009 at 12:44 PM | PERMALINK

In the spirit of bipartisanship, the Democrats should just accept the Republican figure of $3128.

Posted by: qwerty on June 22, 2009 at 12:49 PM | PERMALINK

So the EPA says less than 38 cents/day, CBO has 48 cents/day.

Your turn, GOP. Maybe Newt Gingrich can come up with a study of his own, say a million dollars a day?

Posted by: Ohioan on June 22, 2009 at 12:56 PM | PERMALINK

Steve, you must obviously be delusional to have come up with a number of $175 per household per year.

Here in Indianapolis, the coal & energy industries are spending large amounts of $$$ to run advertisements that proposed energy legislation would cost $50 per month per person and that money would go directly to the Obama administration to spend as they want.

And we know that corporations would never deceive the Amerikan sheeple to protect corporate profits!

Posted by: AngryOldVet on June 22, 2009 at 12:56 PM | PERMALINK

Once again facts are shown to have a liberal bias. The Republicans don't like the actual facts. Because they are faith based and obviously the facts have a liberal bias, Republicans don't have to believe or deal with them. Don't expect Republicans or their friends in the press to drop the $3128 number they prefer anytime soon.

Posted by: Ron Byers on June 22, 2009 at 1:18 PM | PERMALINK

Unfortunately, my "Democratic" (Blue Dog) representative in Congress is against Waxman-Markey. We gotta get these Blue Dogs out of there.

Posted by: CJ on June 22, 2009 at 1:33 PM | PERMALINK

Steve,
No question about what Boehner and his crew in Congress will do concerning cap and trade is necessary. They'll do what they usually do: lie and obstruct in order to undermine ANYTHING that Obama and the majority of Americans want. It's already a matter of public record.

Posted by: majii on June 22, 2009 at 1:48 PM | PERMALINK

If a fact contrary to Republican talking points falls in the Village wood, and no Villager reports it, does the fact indeed exist?

Posted by: terraformer on June 22, 2009 at 1:48 PM | PERMALINK

...CBO estimates that the net annual economywide cost of the cap-and-trade program in 2020 would be $22 billion -- or about $175 per household. -- cboblog

I think it would be better to make it an exact, rather than a rounded (about) number. $174.63 or $176.27 may be more difficult to remember, but it *looks* more "serious" and, therefore, credible. You'll notice that the Repubs managed to memorise $3128, even though $3100 would have been easier and 3250 more impressive.

Repubs may have very little use for facts and truth but they really *are* excellent at using the language to its full, insinuating and convincing capacity...

Posted by: exlibra on June 22, 2009 at 2:27 PM | PERMALINK

from the summary: The net financial impact of the program on households in different income brackets would depend in large part on how many allowances were sold (versus given away), how the free allowances were allocated, and how any proceeds from selling allowances were used. That net impact would reflect both the added costs that households experienced because of higher prices and the share of the allowance value that they received in the form of benefit payments, rebates, tax decreases or credits, wages, and returns on their investments.

Apparently, this is from the new version in which most of the CO2 credits are given away by the federal government, rather than being auctioned. Thus, not only does it cost a lot less, but the government collects a lot less revenue than previously touted. Pending further information, it appears that the Republicans made their point, and forced the change in the program.

Posted by: MatthewRMarler on June 22, 2009 at 2:39 PM | PERMALINK

On that basis, the Congressional Budget Office (CBO) estimates that the net
annual economywide cost of the cap-and-trade program in 2020 would be
$22 billionor about $175 per household. That figure includes the cost of
restructuring the production and use of energy and of payments made to foreign
entities under the program, but it does not include the economic benefits and other
benefits of the reduction in GHG emissions and the associated slowing of climate
change. CBO could not determine the incidence of certain pieces (including both
costs and benefits) that represent, on net, about 8 percent of the total. For the
remaining portion of the net cost, households in the lowest income quintile would
see an average net benefit of about $40 in 2020, while households in the highest
income quintile would see a net cost of $245. Added costs for households in the
second lowest quintile would be about $40 that year; in the middle quintile, about
$235; and in the fourth quintile, about $340. Overall net costs would average 0.2
percent of households after-tax income.

Which quintile are you in? And that's only for one year? So that's the project per household per year? Am I reading that right? As opposed to what? A big unknown. And I don't see anything that says what the cost is prior to 2020.

This is garbage.

Posted by: Eric Blair on June 22, 2009 at 3:03 PM | PERMALINK

Repubs face a terrible choice:

(1) Fight to preserve or accelerate (drill, baby, drill) our current path toward global climate change, or
(2) Allow Dems to take credit for slowing the pace of climate change.

Based on past behavior, which do you think they'll go for?

Posted by: beep52 on June 22, 2009 at 3:10 PM | PERMALINK

from the third paragraph of the summary:

In the initial years of the program, the bulk of allowances would be distributed at no cost to various entities that would be affected by the constraint on emissions. Most of those free allocations would be phased out over time, and by 2035, roughly 70 percent of the allowances would be sold by the federal government, with a large share of revenues returned to households on a per capita basis. This analysis focuses on the effect of the legislation in the year 2020, a point at which the cap would have been in effect for eight years (giving the economy time to adjust) and at which the allocation of allowances would be representative of the situation prior to the phase-down of free allowances.

So, indeed, the plan as analyzed is not the earlier plan that was criticized by the Republicans. It has a low cost because it brings in no revenues.

Posted by: MatthewRMarler on June 22, 2009 at 3:38 PM | PERMALINK
Once again facts are shown to have a liberal bias.

Posted by: Ron Byers on June 22, 2009

LOL 707 ROFLMAO yep

Posted by: MarkH on June 22, 2009 at 5:36 PM | PERMALINK

AngryOldVet:

Here in Iowa our local power company is advertising that they support the cap part of cap and trade, but that trade thing will increase everyone's utility bills by 25%. And the utility will have to spend $280 million per year that will all go to out of state companies.

Hi Harry and Louise. Hi Swift boaters.

Posted by: madstork123 on June 22, 2009 at 7:03 PM | PERMALINK

A REAL cap and trade program probably would cost $3000 per household. The faux cap and trade plan being worked on by Congress, the one that reduces global warming by almost nothing, naturally doesn't cost much.

That's because it doesn't do much except allow Congrress to pat themselves on the back and say they did something. Oh, and they got to hand out mondo political favors in the process to the Big 3 auto companies and Big Coal and Big Ag.

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