September 2009

[youtube:http://www.youtube.com/watch?v=gda33DLFGX4 285 234]

Today the Washington Post carried a follow-up article on CEI’s release of Treasury’s estimates — through a FOIA request –  on the cost of cap-and-trade legislation.  The article by Steven Mufson was quick to find and quote those who said CEI’s interpretation of those costs – an extra $1,761 each year for each American household – were built on false assumptions.  What was more interesting about the article, however, is the subtle slant the reporter gave in his depiction of both CEI and Declan McCullagh, who broke the story.

First, in its only description of CEI, the article states:  “. . . Competitive Enterprise Institute, which questions whether human and industrial activity is linked to global warming. . . .”  That certainly doesn’t describe CEI and the many issues it works on nor its approach to global warming.  Why didn’t the reporter depict it as “a free market policy group” and then go on to describe its global warming position accurately?

Second, the article disparagingly referred to Declan McCullagh as “A CBS News blogger named Declan McCullagh.”  Now, McCullagh is a respected and accomplished journalist, and he is listed on the article referenced by WaPo as “a correspondent for CBSNews.com.” Here’s what his bio says:

Declan McCullagh is a senior correspondent for CBS News’ Web site. He became the chief political correspondent for CNET News in 2002, where he remains a frequent contributor, and lives in the San Francisco area after spending over a decade in Washington, DC.

An award-winning journalist, McCullagh writes and speaks frequently about technology, law, and politics. From 1998 to 2002, he was Wired’s Washington bureau chief. Previously he was a reporter for Time Magazine, Time Digital Daily, and The Netly News, as well as a correspondent for HotWired. At CBS, McCullagh writes for the Taking Liberties section, the successor to a weekly column he started in October 2008 titled Other People’s Money.

Guess straight-forward descriptions didn’t fit what Mufson and the Post wanted to get across.

In his update to his post, Declan McCullagh notes an objection by the Center for American Progress:

The fourth objection is the most compelling. The Center for American Progress writes: “The potential benefits of clean energy legislation far outweigh the modest costs.” That’s a reasonable cost vs. benefit calculation, and it includes the claim that even with the extra taxes, cap and trade is so vital to America, it’s still worth it.

That’s the right approach to take: it would be a very good thing if all federal regulation were subject to a cost vs. benefit analysis. For example, if rising temperatures are significantly harming the planet, and cap and trade would reduce greenhouse gases enough to slow the rise, that would be a real benefit. But the Center for American Progress never actually makes that argument, and as CEI senior fellow Christopher Horner says: “Nobody has ever said this will change the temperature. It won’t.”

Well, we’ve already covered that one.  Even taking the most favorable analysis to WaxKey, the costs to Americans massively outweigh the benefits to them.  Here’s my post from a week ago:

There’s a new cost:benefit study from New York University Law School’s Institute for Public Integrity that, its authors claim, shows that, “From almost any perspective and under almost any assumption, H.R. 2454 [Waxman-Markey] is a good investment for the United States to make in our own economic future and in the future of the planet.”  A good investment for the US? Really?

The authors recognize that the benefits they find are global, while the costs are located in the US.  So let’s see what benefits accrue to US citizens and at what cost. (I am working with the authors’ figures here, which derive from the EPA, and are significantly different from the figures provided by such groups as the Heritage Foundation or the American Council for Capital Formation, which find much, much higher costs.)

Highest possible benefit = $5.2 trillion / 6 billion people = benefits of $866 per person

Cost to US citizen = $660 billion / 300 million people = cost of $2200 per citizen

That means a best possible benefit to cost ratio for a US citizen of 0.4:1.

The report talks about thinking of the Waxman-Markey costs as a “highly effective, highly leveraged form of foreign aid.”  One has to doubt that, given that the benefits that accrue to the developing world do so mostly in the far future, while the developing world is in desperate need of greater wealth – and better access to energy – today.  Even if it were true, however, one wonders whether the American public will accept a de facto tax increase of around $1300 per person, or $400 billion total, to pay for such climate aid.

Yet that’s assuming that the “high end” benefits scenario is what occurs.  The global low end benefits are actually far outweighed by the American costs, leading to a benefit:cost ratio to America of something in the order of 0.05:1 (or a cost:benefit ratio of 20:1).

And, of course, there’s no guarantee that a reduction in American emissions will amount to a reduction in global emissions.  We have seen the response to European cap-and-trade schemes being the relocation of facilities to other jurisdictions.  If so, the effective foreign aid program of Waxman-Markey might actually be a loss of American jobs to be replaced by developing world jobs, with no emissions reduction at all.  That would be very generous of us, but not quite what the authors of this study have in mind.

To summarize, the authors of the study have conclusively demonstrated that the Waxman-Markey bill is actually a very bad deal for the United States, and their attempts to claim otherwise are just spin.

As I’m sure you’ve heard by now, CEI has used the Freedom of Information Act to find out what the administration thought its proposal to introduce cap-and-trade would cost the economy. CBSNews’s Declan McCullagh can fill you in on the details:

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.”

Politico’s Ben Smith posted a story on this, to be greeted by an angry harrumph from the League of Conservation Voters:

Specifically, the original White House plan had 100% of emissions permits being distributed by auction; the plan that passed has just 15%.  “Can you say ‘irrelevant analysis’? It would be like pricing the health care bills currently in front of Congress based on a single-payer system,” he writes.

Well, CEI never said that the documents refer to the cost of cap and trade as it passed the House (for the record, the 15% is a bait-and-switch payoff to industry, with the percentage moving to 100% over a number of years), but the figure accurately reflects the likely cost of the president’s proposal, which is, amazingly enough, also the actual position of none other than the League of Conservation Voters:

By embracing a mandatory cap-and-trade program, the Obama energy plan would provide incentives to cut production of carbon dioxide and other pollutants that cause global warming.  In addition, because this program is a 100% auction, this system will generate significant revenues for reinvestment in job-creating, clean energy industries.

So what’s going on here? Is the LCV now fully behind the 15% plan? Or is it annoyed that it has been established that its favored 100% plan is actually just as expensive as everyone now realizes it is?

Oh, and the LCV spokesman added the “postage stamp” canard (the idea that the cost of cap and trade will be less than a postage stamp a day). That only works if you deposit your postage stamp cost in a guaranteed interest account today and withdraw it when the bill comes due in 2020, and even then it will only pay for the real cost, not the nominal cost (see here for a full analysis of the postage stamp claim). One thing even the current bill will not cost is just “a postage stamp a day per household . . . in 2020.”

But the real problem with the postage stamp claim is that even that figure is more than people are willing to pay. Polls show that only 10% are willing to pay more than $100 a year for cap and trade. That’s considerably less than a postage stamp a day.

Even the LCV’s Doublethink won’t get it past that one.

Of course, even the basic premise of the “irrelevance” argument can’t stand when the Administration is still projecting massive revenues (p33) as a result of cap-and-trade.

Meanwhile, how does the Huffington Post repsond?  EXXXXXOOOOOONNNNNN!!!!

The global warming scare campaign goes through phases. Warmists are collectivists, and they buzz like a hive. The overall narrative of doom does not change, but every couple of months or so the hive settles on a different scare to buzz about most loudly.

That’s the best way to get media and public attention, after all. Single out one alleged global warming terror, publicize the heck out of it until ”everybody knows” the “crisis” is “even worse than scientists previously believed,” and then move on to the next scare-of-the-month. The intended effect, as H.L. Mencken put it, “is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.”

Previously featured scares include killer heat waves, malaria epidemics, more powerful hurricanes, catastrophic sea-level rise, ocean acidification, and, my personal favorite, a shutdown of the Gulf Stream leading to a new ice age. Some of these have been scares-of-the-month more than once — a form of recycling, if you will.

You might think that after so many years of hearing about so many ways global warming is going to wreck the planet, the American people would be “clamorous to be led to safety” and demand cap-and-trade as the salvific path to a “clean energy future.”

But no, the American people aren’t buying it — at least not enough to overcome their repugnance to a massive new energy tax, which, many now understand, is what cap-and-trade boils down to.

So proponents of the Waxman-Markey bill need a new scare du jour, and this month it’s “climate change threatens U.S. national security.” Instead of warning, implausibly, that we’re going to fry, drown, blow away, or freeze, the new sales pitch is more sophisticated.

Here’s what they say. Climate change is a “threat multiplier.” It aggravates several problems – poverty, drought, famine, coastal flooding – that already foster instability and conflict. A warming world will be plagued by more frequent and more intense conflicts among and within nations.

A coalition of eco-warriers and defense hawks has formed to push the message. What each side gets out of this strange-bedfellow coalition is obvious. The defense professionals get mission creep — an expansive rationale to justify new DOD and intelligency agency programs, capabilities, and activities, all funded by the taxpayer, from now until 2100 and beyond, regardless of the actual geopolitical and military threats facing the country. Greenies, for their part, gain allies respected by conservatives, who up to now have opposed Kyoto-style “global governance” and greater political meddling in energy markets.

On the free-market energy blog, MasterResources.Org, I have written a two-part essay titled, ”Even the Generals Are Worried! Mission Creep, Climate Change and National Security.” Part 1 shows that the “threat multiplier” argument is hype. Part 2 shows that climate change policy poses greater risks to national security than does climate change itself.

The middle class is facing big tax increases thanks to Obama and liberal congressional leaders.

Even the trimmed-down version of Obama’s health-care plan recently announced by a ranking Senator contains lots of tax increases for the middle class (see below).

And the costly cap-and-trade energy legislation passed by the House and supported by Obama would lead to big tax increases in the name of fighting global warming, Administration officials privately have conceded, even though they publicly claim otherwise.  “Officials at the Treasury Department think cap-and-trade legislation would cost taxpayers hundreds of billion in taxes, according to internal documents circulated within the agency and provided to The Washington Times” by CEI.  It would also result in “loss of steel, paper, aluminum, chemical, and cement manufacturing jobs,” as jobs migrate overseas to countries which have fewer environmental protections than the U.S. does.

Obama earlier admitted that “under my plan of a cap and trade system, electricity rates would necessarily skyrocket.” As Obama admitted, that cost would be directly passed “on to consumers” — just the way Herbert Hoover’s excise tax increases were in 1932, aggravating the Great Depression. Although the tax’s supporters claim it will cut greenhouse gas emissions, it may perversely increase them and also result in dirtier air, as well as harming forests and water supplies.

Americans for Tax Reform summarizes the tax increases in the trimmed-down version of ObamaCare revealed by its principal drafter, Senator Max Baucus (D-Montana).  Here is a partial list:

· Individual Mandate Tax.  If you don’t sign up for health insurance, you will have to pay a tax in the following range:

· Employer Mandate Tax. $400 per employee if health coverage is not offered.  Note: this is a huge incentive to drop coverage, as $400 is much less than the average plan cost of $11,000 for families or $5000 for singles (Source: AHIP)

· Excise Tax on High-Cost Health Plans.  New 35% excise tax on health insurance plans to the extent they exceed $21000 in cost ($8000 single)

· Medicine Cabinet Tax.  Americans would no longer be able to purchase over-the-counter medicines with their FSA, HSA, or HRA

· Eliminate tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D

· Report Employer Health Spending on W-2. This is clearly a setup for the easy individual taxation of employer-provided health insurance down the road.

· Cap Flex-Spending Account (FSA) Contributions at $2000. Currently unlimited.

· Backdoor Death of HSAs. By requiring that all plans (besides the few that are grandfathered) provided first-dollar coverage for most services, there would be no HSA-qualifying plans available from the Massachusetts-like exchanges

Yesterday, I blogged on how CEI’s Chris Horner used the Freedom of Information Act to uncover internal documents from the Obama administration in which Treasury Department officials admit that a cap-and-trade would impose a steep energy tax on American families.

In only 24 hours, the story has gone viral.

Here’s what CBS News is reporting:

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.

This FOIA story has been highlighted by the Drudge Report, Breitbart, The Weekly Standard, and the Politico.

To read the internal Treasury Department documents, click here.