Commentary: Cap and trade could cost families $1,761 a year
Editors' note: Declan responds to critiques of this post in a subsequent piece he wrote in his Taking Liberties blog at CBSNews.com: "Cap And Trade Redux: $1,761 Annually Per Family? Or Not?"
The Obama administration has privately concluded that a cap and trade law would cost American taxpayers up to $200 billion a year, the equivalent of hiking personal income taxes by about 15 percent.
A previously unreleased analysis prepared by the U.S. Department of Treasury says the total in new taxes would be between $100 billion to $200 billion a year. At the upper end of the administration's estimate, the cost per American household would be an extra $1,761 a year.
A second memorandum, which was prepared for Obama's transition team after the November election, says this about climate change policies: "Economic costs will likely be on the order of 1 percent of GDP, making them equal in scale to all existing environmental regulation."
The documents (PDF) were obtained under the Freedom of Information Act by the free-market Competitive Enterprise Institute and released on Tuesday.
These disclosures will probably not aid the political prospects of the Democrats' cap and trade bill. The House of Representatives approved it by a remarkably narrow margin in June--the bill would have failed if only six House members had switched their votes to "no"--and it faces significant opposition in the Senate.
Cap and trade--or emissions trading--is an approach to reducing pollutants by offering companies financial incentives to clean up their acts. The current bill focuses specifically on reducing greenhouse gases linked to climate change.
One reason the bill faces an uncertain future is concern about its cost. House Republican Leader John Boehner has estimated the additional tax bill would be at $366 billion a year, or $3,100 a year per family. Democrats have pointed to estimates from MIT's John Reilly, who put the cost (PDF) at $800 a year per family and noted that tax credits to low income households could offset part of the bite. The Heritage Foundation says that, by 2035, "the typical family of four will see its direct energy costs rise by over $1,500 per year."
One difference is that while Heritage's numbers are talking about 26 years in the future, the Treasury Department's figures don't have a time limit.
"Heritage is saying publicly what the administration is saying to itself privately," says Christopher Horner, a senior fellow at the Competitive Enterprise Institute who filed the FOIA request. "It's nice to see they're not spinning each other behind closed doors."
"They're not telling you the cost--they're not telling you the benefit," says Horner, who wrote the Politically Incorrect Guide to Global Warming. "If they don't tell you the cost, and they don't tell you the benefit, what are they telling you? They're just talking about global salvation."
The FOIA'd document written by Judson Jaffe, who joined the Treasury Department's Office of Environment and Energy in January 2009, says: "Given the administration's proposal to auction all emission allowances, a cap-and-trade program could generate federal receipts on the order of $100 (billion) to $200 billion annually." (Obviously, any final cap-and-trade system may be different from what Obama had proposed, and could yield higher or lower taxes.)
Because personal income tax revenues bring in around $1.37 trillion a year, a $200 billion additional tax would be the equivalent of a 15 percent increase a year. A $100 billion additional tax would represent a 7 percent or 8 percent increase a year.
One odd point: The document written by Jaffee includes this line: "It will raise energy prices and impose annual costs on the order of XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX." The Treasury Department redacted the rest of the sentence with a thick black line.
The Freedom of Information Act, of course, contains no this-might-embarrass-the-president exemption (nor, for that matter, should federal agencies be in the business of possibly suppressing dissenting climate change voices). You'd hope the presidential administration that boasts of being the "most open and transparent in history" would be more forthcoming than this.
Update 9/16/2009: The Environmental Defense Fund has responded to the documents' release with a statement saying, in part:
Even if a 100 percent auction was a live legislative proposal, which it's not, that math ignores the redistribution of revenue back to consumers. It only looks at one side of the balance sheet. It would only be true if you think the Administration was going to pile all the cash on the White House lawn and set it on fire. The bill passed by the House sends the value of pollution permits to consumers, and it contains robust cost-containment provisions. Every credible and independent economic analysis of the American Clean Energy and Security Act (such as those done by the non-partisan Congressional Budget Office, the Energy Information Administration, and the Environmental Protection Agency) says the costs will be small and affordable -- and that the U.S. economy will grow with a cap on carbon.
Declan McCullagh is a contributor to CNET News and a correspondent for CBSNews.com who has covered the intersection of politics and technology for over a decade. Declan writes a regular feature called Taking Liberties, focused on individual and economic rights; you can bookmark his CBS News Taking Liberties site, or subscribe to the RSS feed. You can e-mail Declan at declan@cbsnews.com. 
If the Chicago Machine says they're "open", they're open. Just like Nancy Pelosi's "most ethical Congress ever".
Why can't you just listen to the Anointed Ones and accept our control? If you disagree you're a racist who isn't being bipartisan.
Silence your dissent and we'll throw you a piece of the paycheck someone else worked for, until you're so dependent on government handouts we'll never have to worry about reelection again. We're trying to establish a political class with lifetime appointments here--and that means feeding at the public trough!
Problem is the socialist wing of the Democratic Party - the wing that is in control - are all for this. A higher % of the population would need a subsidy check to cover it. More votes!
http://en.wikipedia.org/wiki/Liberal_Party_of_Canada
You can see in the 2008 election, the total popular votes it garnered was 3,629,990. In 1984, it attracted 3,516,486 popular votes. Now if the Liberal Party got MORE votes in the 2008 than it did in 1984, how the 2008 votes turn into the "lowest number of votes in it's [sic] 140 year history"? Answer: it doesn't. mmntech is simply lying and expect trusting readers to believe instead of verifying and exposing his lie.
And it's also interesting how the mmntech does not mention how the Green Party increased its total vote count by over 200,000 votes, the only major party to gain votes since the last election (the Conservative Party lost 170,000 votes). And the New Democratic Party also increased the number of its parliamentary seats. Both the Greens and the NDP favor strong environmental rules including climate control regulations. So why doesn't mmntech mention the electoral gains of those parties? Oh right, because their electoral gains inconveniently muddy the poster's flat wrong lies and spin.
The US is the only important country that has voted in a liberal pro-spending government into power in the last two decades. Even the new labor of England only came in after abandoning increased spending platform.
Keep up the good work, Declan.
Declan keeps repeating extremist conservative garbage that he digs up from extremist conservative organizations.
Is CNET becoming Matt Drudge?
Nothing but cheering on every government takeover and proposed layer of control over our lives.
Not sure why so many people here welcome every step towards a command economy and the socialist poverty it will bring, unless they've already "got theirs"...a crushing tax burden is a great way to lock everyone into their caste and keep anyone from moving up in life.
http://seclists.org/politech/2000/Oct/0032.html
He was correctly pointing out some of the factual inconsistencies in what Gore had claimed, and also giving him due credit for being one of the biggest Congressional boosters for the internet too. I'd say that article was a lot more balanced than this current one.
http://wattsupwiththat.com/2009/08/19/uk-arrests-in-carbon-credit-trading-scam-organized-crime-said-to-be-involved/
http://www.canadafreepress.com/2007/cover031307.htm
Earlier today I spent an hour at the post office to buy $5 worth of stamps. Thanks for the lovely preview of government run programs of the future!
As for the post office, they'd make WAY more money if they raised the rates for junk mail. The cheap prices they charge to subsidize private industry is ridiculous. I guess the mail order lobby is doing its job.
And why do you hate the troops? The military is a government run program.
I fear that this money will NOT make it to new tech that will fix the polution problem.
I think his main point was the gov estimated it to last for 4 months and it didn't last a weekend. The gov.'s math is horrible and always under estimating!
We are supposed to be living in a time when we are open to thoughts and ideas. As soon as one person comes up with something, it is immediately shot down by opposite sides without giving it much consideration because of his or her stance on certain issues.
Propaganda is out there and it's hard to conceive what information might be best to trust, but not everything from the opposing side of your views is completely wrong. Not everything from your side is entirely correct either. The fact of the matter is that Global Warming is still debatable (even the name has switched over to Climate Change because of the sheer unpredictable nature of... well... nature) and no money should be put on an issue that can't be further confirmed (please don't give me links that "prove" or "disprove" it, I understand the issue from both sides and remain undecided until further independently funded research is committed).
That being said, doing everything for the environment is incredibly important, and I leave that as an issue that should be encouraged in companies and the American public. I'm not exactly sure that this cap and tax is the best idea. What research groups have led this to being the best solution? What information is provided that this will actually work? More to the point, is this what we should be doing with the hard earned money of American taxpayers? (Do not give me links about this either, I know there are, I just wanted you to know them too, by doing your own research and branching out to form new ideas and solutions)
- by montex66 September 16, 2009 5:23 AM PDT
- I don't understand how increasing taxes reduces CO2 emissions. Will we drive our cars less? Will all those coal power plants suddenly disappear? Will the government use the money to build massive solar stations in Arizona?
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- by Magallanes September 16, 2009 6:33 AM PDT
- In almost every single country (but USA and some dictatorship countries) approved the Kyoto Protocol that, in easy words, say that business must spend in pollution-less process or face fines.
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Showing 1 of 2 pages (46 Comments)From what I read, all the money goes to corporations. What a big surprise. Dumping billions into the hands of corporate CEO's is not the sort of thing I expect from Democrats, though. Republicans, sure. That's what they do. But Democrats are not supposed to suckle the corporate teat like that.
Technically speaking, a business can use coal and to be green. The trick is to use filter and to process the disposed material (for example). But today, there are not a incentive to do it, just put a chimney and start polluting almost freely. It is not just about Global Warming but also for the heath care of the citizen (for example Los Angeles and Pittsburgh)