The Cost of Cap & Trade

My friend and esteemed Keloland colleague, Cory Heidelberger, has a post worth reading on the Waxman-Markey bill. Here is a gem:

On the costs of cap and trade: How big a pocketbook bite would SHS have had to sell to us to justify a yes vote on ACESA? According to the Truth-o-Meter folks at Politifact.com, the Congressional Budget Office estimates this specific bill would cost $175 per household... a little more than one postage stamp a day.

Well, that sounds manageable. Of course there is a logical problem. The bill is supposed to force everyone from Wal-Mart down to the guy with the shifty eyes in the one bedroom apartment to go green. Is one postage stamp a day really going to do that?

But leave that alone for a moment. Cory thinks that the bill will be cheap. What does Barack Obama think? Here is Jeff Jacoby writing for the Boston Globe:

In an interview with the San Francisco Chronicle in January 2008, [Obama] calmly explained how cap-and-trade - the carbon-dioxide rationing scheme that is at the heart of Waxman-Markey - would work:

"Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket . . . because I'm capping greenhouse gases, coal power plants, natural gas, you name it . . . Whatever the plants were, whatever the industry was, they would have to retrofit their operations. That will cost money, and they will pass that [cost] on to consumers.''

In the same interview, Obama suggested that his energy policy would require the ruin of the coal industry. "If somebody wants to build a coal-fired plant, they can,'' he told the Chronicle. "It's just that it will bankrupt them, because they are going to be charged a huge sum for all that greenhouse gas that's being emitted.''

Okay. President Obama wants electricity rates to "skyrocket." He wants to ruin the coal industry, from which we get about 23% of our energy. And all this is going to cost us a postage stamp a day? The thing is, I think Cory might be right. If Waxman-Markey passes, and does what the President wants it to do, a single postage stamp might really cost more than any American can afford.

update: this post was mentioned favorably at one of my favorite sites: No Left Turns. Thanks to Peter Lawler.  

Comments

[Joe]

The $175 amount comes from a CBO based on this bill on May 21 - read the report and you will find at this time the gross cost to be much more.

From the CBO Report base on bill May 21:

Lowest Quintile $425
Second Quintile $555
Middle Quintile $675
Fourth Quintile $815
Highest Quintile $1,380

Income Level Source - http://www.taxpolicycenter.org/numbers/displayatab.cfm?DocID=2007&topic2ID=40&topic3ID=81&DocTypeID=2

Lowest Quintile $18,981
Second Quintile $37,595
Middle Quintile $66,345
Forth Quintile $111,645

A CBO letter to Henry Waxman http://www.cbo.gov/doc.cfm?index=10376

Based on a review of H.R. 2998, the American Clean Energy and Security
Act, as amended and reported by the House Committee on Rules on
June 26, 2009, CBO and the Joint Committee on Taxation (JCT) estimate
that enacting the legislation would increase revenues by $873 billion over
the 2010-2019 period and would increase direct spending by $864 billion
over that 10-year period.

...CBO has not completed an estimate of the bill’s estimated
impact on discretionary spending.

[KB]

Thanks, Joe.

[De]

People keep saying it will only cost consumers a "postage stamp a day." But the important thing is that's the cost in "a decade" (See the President's speech). What I want to know is: What is it going to cost comsumers next year?

[William]

Don’t Confuse Accounting Budgets with Real Economic Impacts.

CBO’s job is to project the bill’s effect on the federal budget. Here’s the bottom line, which is what the Washington Times story was reflecting:

http://legalplanet.wordpress.com/2009/06/16/what-does-the-cbo-report-on-waxman-markey-actually-mean/

[James Raider]

CAP and TRADE Will Create Companies TOO BIG TO FAIL

So what’s the real scoop? Ignore the proselytizers and find out from those who “shaped” the Bill ….

http://pacificgatepost.blogspot.com/2009/07/dear-mr-president-thanks-again-for-cap.html

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