CBO estimate of cap and trade costs: $175 per year, per person

[Wild Cobra]

Just looking at the table of contents, the 300 page larger bill has dome deleted sections, and even more added:

Removed sections:

Sec. 128. Temporary Vehicle Trade-in Program.

Sec. 191. Study of ocean renewable energy and transmission planning and siting.

Sec. 431. Energy tax credit.

Sec. 432. Energy refund program for low-income consumers.

Added sections:

No idea how the intact sections have been changed.

Sec. 133. Support of Indian renewable energy and energy efficiency programs.

Sec. 172. Advanced energy research.

Sec. 174. Centers for Energy and Environmental Knowledge and Outreach.

Sec. 188. Indirect support.

Sec. 191. Conforming amendments.

Sec. 195. Increased hydroelectric generation at existing Federal facilities.

Sec. 339. National strategy for domestic biological carbon sequestration.

Sec. 431. Energy refund program.

Sec. 432. Modification of earned income credit amount for individuals with no qualifying children.

Sec. 433. Protection of Social Security and Medicare trust funds.

[TeyshaBlue]

from an opinion piece in today's wsj:

House Speaker Nancy Pelosi has put cap-and-trade legislation on a forced march through the House, and the bill may get a full vote as early as Friday. It looks as if the Democrats will have to destroy the discipline of economics to get it done.

Despite House Energy and Commerce Chairman Henry Waxman's many payoffs to Members, rural and Blue Dog Democrats remain wary of voting for a bill that will impose crushing costs on their home-district businesses and consumers. The leadership's solution to this problem is to simply claim the bill defies the laws of economics.

Their gambit got a boost this week, when the Congressional Budget Office did an analysis of what has come to be known as the Waxman-Markey bill. According to the CBO, the climate legislation would cost the average household only $175 a year by 2020. Edward Markey, Mr. Waxman's co-author, instantly set to crowing that the cost of upending the entire energy economy would be no more than a postage stamp a day for the average household. Amazing. A closer look at the CBO analysis finds that it contains so many caveats as to render it useless.

For starters, the CBO estimate is a one-year snapshot of taxes that will extend to infinity. Under a cap-and-trade system, government sets a cap on the total amount of carbon that can be emitted nationally; companies then buy or sell permits to emit CO2. The cap gets cranked down over time to reduce total carbon emissions.

To get support for his bill, Mr. Waxman was forced to water down the cap in early years to please rural Democrats, and then severely ratchet it up in later years to please liberal Democrats. The CBO's analysis looks solely at the year 2020, before most of the tough restrictions kick in. As the cap is tightened and companies are stripped of initial opportunities to "offset" their emissions, the price of permits will skyrocket beyond the CBO estimate of $28 per ton of carbon. The corporate costs of buying these expensive permits will be passed to consumers.

The biggest doozy in the CBO analysis was its extraordinary decision to look only at the day-to-day costs of operating a trading program, rather than the wider consequences energy restriction would have on the economy. The CBO acknowledges this in a footnote: "The resource cost does not indicate the potential decrease in gross domestic product (GDP) that could result from the cap."

The hit to GDP is the real threat in this bill. The whole point of cap and trade is to hike the price of electricity and gas so that Americans will use less. These higher prices will show up not just in electricity bills or at the gas station but in every manufactured good, from food to cars. Consumers will cut back on spending, which in turn will cut back on production, which results in fewer jobs created or higher unemployment. Some companies will instead move their operations overseas, with the same result.

Even as Democrats have promised that this cap-and-trade legislation won't pinch wallets, behind the scenes they've acknowledged the energy price tsunami that is coming. During the brief few days in which the bill was debated in the House Energy Committee, Republicans offered three amendments: one to suspend the program if gas hit $5 a gallon; one to suspend the program if electricity prices rose 10% over 2009; and one to suspend the program if unemployment rates hit 15%. Democrats defeated all of them.

The reality is that cost estimates for climate legislation are as unreliable as the models predicting climate change. What comes out of the computer is a function of what politicians type in. Those Members who vote for this climate bill are voting for what is likely to be the biggest tax in American history. Even Democrats can't repeal that reality.




That's some pretty snakey math.

[Aggie Hoopsfan]

According to the WSJ, the analysis doesn't factor in the impact on our GDP at all. Here's the gory details (gee, wonder why the Congressional s left this out...):

The biggest doozy in the CBO analysis was its extraordinary decision to look only at the day-to-day costs of operating a trading program, rather than the wider consequences energy restriction would have on the economy. The CBO acknowledges this in a footnote: "The resource cost does not indicate the potential decrease in gross domestic product (GDP) that could result from the cap."

The hit to GDP is the real threat in this bill. The whole point of cap and trade is to hike the price of electricity and gas so that Americans will use less. These higher prices will show up not just in electricity bills or at the gas station but in every manufactured good, from food to cars. Consumers will cut back on spending, which in turn will cut back on production, which results in fewer jobs created or higher unemployment. Some companies will instead move their operations overseas, with the same result.

When the Heritage Foundation did its analysis of Waxman-Markey, it broadly compared the economy with and without the carbon tax. Under this more comprehensive scenario, it found Waxman-Markey would cost the economy $161 billion in 2020, which is $1,870 for a family of four. As the bill's restrictions kick in, that number rises to $6,800 for a family of four by 2035.

Note also that the CBO analysis is an average for the country as a whole. It doesn't take into account the fact that certain regions and populations will be more severely hit than others -- manufacturing states more than service states; coal producing states more than states that rely on hydro or natural gas. Low-income Americans, who devote more of their disposable income to energy, have more to lose than high-income families.

Even as Democrats have promised that this cap-and-trade legislation won't pinch wallets, behind the scenes they've acknowledged the energy price tsunami that is coming. During the brief few days in which the bill was debated in the House Energy Committee, Republicans offered three amendments: one to suspend the program if gas hit $5 a gallon; one to suspend the program if electricity prices rose 10% over 2009; and one to suspend the program if unemployment rates hit 15%. Democrats defeated all of them.

How do you like that? Republicans actually being conservative on those amounts for gas prices, electricity rates, and unemployment rates, but the Dems want no part.

That should tell you the reality to expect in all this:

* Gas will be over $5/gallon
* Electricity rates will be up well over 10%
* Unemployment rates will coast by the 15% rate no problem.

Every jackass who votes for this bill should be out at the next available time (2010, 2012, etc.)

http://online.wsj.com/article/SB124588837560750781.html

[Wild Cobra]

According to the WSJ, the analysis doesn't factor in the impact on our GDP at all. Here's the gory details (gee, wonder why the Congressional s left this out...):



How do you like that? Republicans actually being conservative on those amounts for gas prices, electricity rates, and unemployment rates, but the Dems want no part.

That should tell you the reality to expect in all this:

* Gas will be over $5/gallon
* Electricity rates will be up well over 10%
* Unemployment rates will coast by the 15% rate no problem.

Every jackass who votes for this bill should be out at the next available time (2010, 2012, etc.)

http://online.wsj.com/article/SB124588837560750781.html

Absolutely.

You see, it doesn't matter what the cost is projected to be. CBO numbers are static numbers that no not reflect real changes that are in known market forces. When you take Cap and Trade, you make a supply and demand market. As energy users need more energy, they will be buying from others who have credits. These credits will, through supply and demand, increase in price. As the cap gets cranked down, the price will get higher and higher for credits.

Please notice. The legislation I linked used the term "minimum price" when referring to this new Energy Tax! That is why the estimates made by responsible people say this will effectively be a 90% tax on energy.

[ElNono]

I don't know what conservatives are ing about. If this legislation is as unpopular and as bad as they claim, then you probably will only have to deal with it for the next 3 1/2 years (maybe even less). Plus it would open a window for the Republican party to reposition itself with valid criticism.

[Wild Cobra]

I don't know what conservatives are ing about. If this legislation is as unpopular and as bad as they claim, then you probably will only have to deal with it for the next 3 1/2 years (maybe even less). Plus it would open a window for the Republican party to reposition itself with valid criticism.

You didn't read the legislation.

Most of this stuff doesn't go into effect for a few years. This will more likely affect the next president or two. Not the sitting one.

Example I already posted:

Any new fossil fuel electrical generation initially permitted after 2019 is required to have a 65% or more decrease in CO2 emissions.

[ElNono]

You didn't read the legislation.

Most of this stuff doesn't go into effect for a few years. This will more likely affect the next president or two. Not the sitting one.

Example I already posted:

Doesn't matter. If this thing is so bad, then it can only help the Republicans. All they need is control of congress again to overrule this new law (if it passes).
What are you complaining about again?

[Wild Cobra]

Doesn't matter. If this thing is so bad, then it can only help the Republicans. All they need is control of congress again to overrule this new law (if it passes).
What are you complaining about again?

I can come up with so many things to complain about. Primarily, the public is left in the dark to the true details of such bills. I see it highly probable that this will pass, and then we will be stuck with the costs before there's any time to fix it. Same thing with the health care ideas.

[ElNono]

I can come up with so many things to complain about. Primarily, the public is left in the dark to the true details of such bills. I see it highly probable that this will pass, and then we will be stuck with the costs before there's any time to fix it. Same thing with the health care ideas.

The public simply doesn't know about proposed laws in general. That I agree is a problem. I just don't think this one is going to be much different.

[Wild Cobra]

The public simply doesn't know about proposed laws in general. That I agree is a problem. I just don't think this one is going to be much different.

Yep, not any different in theory. Just so much more expensive.

[Aggie Hoopsfan]

I don't know what conservatives are ing about. If this legislation is as unpopular and as bad as they claim, then you probably will only have to deal with it for the next 3 1/2 years (maybe even less). Plus it would open a window for the Republican party to reposition itself with valid criticism.

The Dems are being smart about Tax and Spend. The majority of the changes won't go into effect until 2012. Long enough for them (and Obama) to make it through the 2011 election cycle without anyone seeing their electric bills go up 50%+ and unemployment hit 15-20% nationwide.

[ElNono]

The Dems are being smart about Tax and Spend. The majority of the changes won't go into effect until 2012. Long enough for them (and Obama) to make it through the 2011 election cycle without anyone seeing their electric bills go up 50%+ and unemployment hit 15-20% nationwide.

You can bet that if it passes it will be a campaign topic, considering the economy is topic numero uno until the recession is officially over.

[Wild Cobra]

You can bet that if it passes it will be a campaign topic, considering the economy is topic numero uno until the recession is officially over.

Last I heard, they are 12 votes short and only 17 undecided. I've been listening to Hannity while in the car today. I almost turned him off because even he was talking about Jackson. I'm already in Jackson overload.

Anyway, apparently at the last minute, another 300+ pages was added to the 1200+ pages. Now more democrats are wavering on it. I haven't checked C-Span, and if I actually turn on the TV I might have already missed the vote. I am faithful that it will not pass today. Hope I'm not wrong.

[Winehole23]

Nate Silver, using CBO assumptions, shows Louisiana, Wyoming and Alaska as cost outliers. The latter two presumably for heavy reliance on private planes for transportation.

[Winehole23]

Kucinich votes against Cap and Trade. Too backloaded he says, and too generous to coal interests.

[jman3000]

ha... Kucinich is one liberal mfer.. but he does stand for his principles.

[JoeChalupa]

ha... Kucinich is one liberal mfer.. but he does stand for his principles.

I concur.

[jack sommerset]

The Dems bankrupt California and now they will do the same for the USA.

[Winehole23]

In one sentence; Cap and Trade, Goldman Sachs AND Chicago.

Matt Taibbi's article in the new Rolling Stone, "The Great American Bubble Machine" directly makes the connection.

[Marcus Bryant]

Matt Taibbi's article in the new Rolling Stone, "The Great American Bubble Machine" directly makes the connection.

Regulatory schemes enrich and protect the regulated instead of the public. More news at 11.

[Winehole23]

I didn't post it for your benefit, MB. It might not be old hat for everybody.

[Winehole23]

It's not easy IMO to boil this thing down in a pop journalism format. This Taibbi piece and his last are as good as I've seen in the genre.

[Marcus Bryant]

Did not mean to be critical of you, but rather the 'system' or 'revolving door' or whatever it is known by these days.

And yes, it is interesting how this latest crisis didn't become a national emergency until Goldman was threatened. Then you had the Treasury Secretary scrambling to increase the federal budget by 33% to save it. And we are to believe that this is a nation of laws.

[Marcus Bryant]

Is "public-private partnership" still in vogue?

[Winehole23]

Is "public-private partnership" still in vogue?

No. Supposedly because the banks were scared of it.

Have you got a guess why?