2009

An Independent Analysis

by Iain Murray on September 18, 2009

The Greens keep trying to change the subject when it comes to what the released Treasury documents about cap-and-trade actually show.  They’ve got a bunch of talking points and, by Jove, they’re sticking to them.  One of them is this one, from the Environmental Defense Fund’s spokesman:

In terms of the Waxman-Markey bill, “Every one of the independent analyses out there show small costs,” Kreindler added.

Really?  Every one?

What about this one? (”The annual cost of emissions permits to energy users will be at least $100 billion by 2012 and could exceed $390 billion by 2035″)

Or this one? (”High energy prices, fewer jobs, and loss of industrial output are estimated to reduce U.S. Gross Domestic Product (GDP) by between $419 billion and $571 billion by 2030″)

Ah, but they aren’t independent, are they?  After all, they weren’t, err, produced by, erm, arms of the Federal Government like the Congressional Budget Office, Energy Information Administration or Environmental Protection Agency.

Meanwhile, even using the figures of those “independent” government estimates, the Waxman-Markey Bill is still a terrible deal for Americans.

Just Breaking

by Julie Walsh on September 18, 2009

in Blog

The Treasury Department just released to my CEI colleague Chris Horner the unredacted FOIA documents on their internal discussions of cap and trade policy that he had requested. The information previously covered up? “One advantage of auctioning allowances is the potential for raising large revenues (perhaps $300 billion annually)…” That’s over 2% of GDP! Another of the previously blacked out text: “Domestic policies…will involve significant costs and potential revenues, possibly up to several percentage points of annual GDP (i.e. equal in size to the corporate income tax).”

No wonder they had previously blacked out that information. And some people have claimed that these global warming policies would only cost Americans a postage stamp a day. The background behind this story is from the Director of Freedom Action, also Director of Energy and Global Warming Policy at CEI. From the Cooler Heads Digest, 18 September 2009:

The big news this week is furnished by my colleague at CEI, Chris Horner, who released some interesting documents he obtained through a Freedom of Information Act request from the Treasury Department. Chris’s initial blog post was picked up first by Amanda Carpenter in the Washington Times and then by Declan McCullough at CBSNews.com. There has been a flurry of stories since then, most of them trying to explain why it isn’t really a news story. (I wish more reporters spent more time explaining why what they are writing can be safely skipped. It would save a lot of time.)

It turns out that a busy team of economists hired by Bush Treasury Secretary Henry Paulson to devise a better cap-and-trade program were fully aware that it would be very costly for consumers. Treasury’s upper end estimate works out to $1761 for the average household per year.

That’s in line with what President Obama said when he was running for President (“Under my plan of a cap and trade system, electricity rates would necessarily skyrocket.”), but a lot less than what EPA and the White House have been saying about the Waxman-Markey bill.

Global warming alarmists have been quick to point out that Treasury’s $1761 estimate couldn’t possibly apply to the Waxman-Markey bill that passed the House in June on a 219-212 vote because, first, Waxman-Markey didn’t exist when Treasury was making its estimate and, second, Treasury assumed that all the ration coupons would be auctioned whereas Waxman-Markey gives most of the coupons away to big business special interests in the early years of the program.

That argument is specious. As Peter Orszag, now director of the White House Office of Management and Budget, explained in congressional testimony last year when he was head of the Congressional Budget Office: “Under a cap-and-trade program, firms would not ultimately bear most of the costs of the allowances, but instead would pass them along to their customers in the form of higher prices. Such price increases would stem from the restriction on emissions and would occur regardless of whether the government sold emission allowances or gave them away. Indeed, the price increases would be essential to the success of a cap-and-trade program….”

The most interesting thing about the documents Chris obtained from Treasury are the bits that are redacted (see above). For example, a paragraph headed Overview says: “[I]t will raise energy prices and impose annual costs on the order of [rest of sentence is blacked out].” Perhaps the folks in the FOIA Compliance Office at Treasury didn’t get the January 21st memo from President Obama on increasing transparency in his administration. The memo says in part: “The Freedom of Information Act should be administered with a clear presumption: In the face of doubt, openness prevails. The Government should not keep information confidential merely because public officials might be embarrassed by disclosure, because errors and failures might be revealed, or because of speculative or abstract fears. Nondisclosure should never be based on an effort to protect the personal interests of Government officials at the expense of those they are supposed to serve.”

Energy Ration Coupons Cost A Mint – Even When They’re Given Away for “Free”

by Chris Horner on September 18, 2009

in Blog

My former CEI colleague and now academic Jonathan Adler has an unfortunate post over on The Volokh Conspiracy manifesting a fundamental misunderstanding of how cap-and-trade is expected to work, how it has worked in Europe, and what the documents, received under FOIA from the Department of Treasury and causing his fellow academics so much angst, represent.

You can read Jonathan’s frustration for yourself (and the slightly better informed commenters’ thoughts, as well) here.

I have already addressed the 100% auctioning is irrelevant can’t we move on that’s old news line of, for lack of a better word, argumentation. The same revenue projections from 100% auctioning made by the administration in February were in the administration’s mid-session review published about three weeks ago: that is, it remains 100% the administration’s policy to 100% auction. Ok, the House passed a bill. That wasn’t the subject of the Treasury memos setting forth the administration’s expectations. Nice try.

Well, not that great, actually. That bill, Waxman-Markey may not arrange to sell 100% of the ration coupons — when it kicks in, it is three-fourths, not the 15% you are being distracted with — but it does require 100% of them be bought. That’s a distinction without a difference to the people who have to buy them, and to the consumer/ratepayer/taxpayer. The distinction is that the state gives away a quarter of the ration coupons to folks who are not covered by the law and have no use for them but to sell them to poor saps who are covered by the law. To the people that matter, trust me, that makes no difference. It is a phony argument at worst and a distraction at best.

Nor does it make any difference even if 100% were given away. At least, if you take Obama’s budget director at his word. You can read current OMB director and former CBO director Peter Orszag saying just that — on numerous occasions in several slightly different ways here among numerous other places:

Under a cap-and-trade program, firms would not ultimately bear most of the costs of the allowances but instead would pass them along to their customers in the form of higher prices. Such price increases would stem from the restriction on emissions and would occur regardless of whether the government sold emission allowances or gave them away

Also, in Europe, we see that the ration coupons were given away for free, just as Waxman-Markey — again, not the focus of the Treasury documents– largely does as well for the scheme’s first few years. In Europe, prices of electricity and that which has electricity or energy embedded in it (everything) went up. Period. To claim, as Waxman-Markey proponents do, that they’ll just avoid Europe’s experience by telling local distribution companies to make sure the cost is not passed on to the ratepayer though emissions (energy use) must go down, flies in the face of practice and economic theory. This later case is made in a forthcoming paper, which to be thorough and fair I will note here, referencing this post.

Jonathan has waded in on matters on the side of the greens before and I have always enjoyed how the repartee ends up, so I welcome this foray, too. The more opportunity we have to correct silly distractions, misstatements and misunderstandings, the better.

Big Green Fury & Bile Belies Big Green Fabrications

by Chris Horner on September 17, 2009

in Blog

The greens have responded with, so far as my experience has it, unprecedented fury and bile to my FOIA request exposing the Department of the Treasury’s internal discussion of how the administration, like the rest of us, expect cap-and-trade to chase away manufacturing jobs particularly in key industries like steel, chemical and cement, and lard the full equivalent of the entirety of environmental regulation on what’s left of the economy (while shaving a full 1% off of GDP).

What has most riled them, indicating that it is what most frightens them, is the internal assessment that the administration expects to raise between $100-200 billion per year from the taxpayer in revenues from selling CO2 ration coupons. Oddly, that’s up to three times how much the administration asserted to the public in February it expected to raise from 100% auctioning, which they said they still expect it to raise, as of three weeks ago (p. 33), well after the March memo citing the $100-200 billion was written. So much for having abandoned their position of auctioning, which it turns out is still the administration position.

In response the greens have tossed out any number of distractions, like claiming that we are ignoring “CBO data” (sic); by which they mean a remarkably cherry-picked CBO estimate of the cost in the cheapest year of the Waxman-Markey bill, a bill not referenced in Treasury’s outed expectation. That’s a distraction but it’s not data, although with so little on their side I understand their need to fudge.

Let me say this as plainly as I can, at risk of House censure: With the help of a remarkably incurious media, Big Green’s claims about what we revealed include not just stretchers but brazen, outright fabrications.

Consider Politico, and how the greens talked the same reporter who they talked into saying that Al Gore signed Kyoto into repeating, with the accuracy we are coming to expect, their new mantra that auctioning the ration coupons is “a long-ago-scrapped proposal made by the Obama administration.”
Ahem. Not “long-ago-scrapped”. The accurate phrase is “House-passed.”

No one who has read Waxman-Markey – a universe I know better than to expect includes reporters “reporting” on it – can honestly claim to believe that the bill scrapped auctioning, if not 100%, then the vast majority of these “allowances”. It mandates it.

It’s right there plain as can be in the 1,400 page bill, Title VII, Subtitle B, Sections 701 through 729 and Subtitle B, Part H! It ends up selling three-fourths of the things (with the rest politically allocated to groups not required to have them and with no use for them other than to sell ‘em to less politically favored saps who do). How can they miss that?

What this tells us is the folly of claiming that the House bill makes Treasury’s assumption of auctioning many or most allowances irrelevant. The allowances that bill does still give away in a few years are given away to entities for resale, not to the productive sector covered by the requirement that they have the things. That means that for all intents and purposes by giving none away to the people and businesses required to have them, Waxman-Markey is de facto auctioning 100%. For anyone familiar with the scheme to say that auctioning is “long-ago-scrapped” is a fabrication intended to deceive.

In the same newspaper we see a lie wrapped in an even bigger whopper intended to distract, in the form of a claim that Treasury’s internal assessment is irrelevant. For example, Politico’s Ben Smith quoted the League of Conservation Voters stammering incoherently:

“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,’ [LCV spokesman] writes.”

But as we see, his implication that the House bill only requires auctioning of 15% is flagrantly untrue.

What an actual journalist might do is note how the teaser “only of 15% auctioned!”, which explodes to 100%, gives meaning to Friends of the Earth’s description of the scheme as “subprime carbon”.
But that wouldn’t help the agenda’s chances now, would it?

Now, what about the claim that giving away the ration coupons changes the cost, the cost being what the greens are up in arms over?

Not a bit. At least, if you believe Obama’s economic team. As you see below, even OMB director Peter Orszag-led CBO recently noted the taxpayer pays either way, it’s just that they give corporate buddies much of the loot for a while as part of the deal. It isn’t even disputed in relevant quarters that it doesn’t matter who gets the money — 85% to special interests and 15% to the government or 100% to the government — it still comes out the taxpayer’s pocket.

“Under a cap-and-trade program, firms would not ultimately bear most of the costs of the allowances but instead would pass them along to their customers in the form of higher prices. Such price increases would stem from the restriction on emissions and would occur regardless of whether the government sold emission allowances or gave them away.”

The supposedly controlling Waxman-Markey effort merely gave most of these allowances away for a few years to the GEs and Duke Energys and Chicago’s Exelon, for example, for a few years to buy political support.

One might think that the fact that Waxman-Markey still will ding the taxpayer but for billions to be handed over, at least for the introductory decade, to rent-seeking industry that spent so much on making the scheme happen. That’s not an issue they should want to emphasize, on its face, but that’s the trouble with lying in the first place. It’s out there.

Glenn Beck is addressing this issue this afternoon, as he has already indicated on his radio program earlier, including by kindly including me. I get a sense that his picking up on the scent is the thing that’s most unnerving the greens at the moment. Can anyone say “Van Jones”?

Big Green Fury & Bile Belies Big Green Fabrications

by Chris Horner on September 17, 2009

in Blog

The greens have responded with, so far as my experience has it, unprecedented fury and bile to my FOIA request exposing the Department of the Treasury’s internal discussion of how the administration, like the rest of us, expect cap-and-trade to chase away manufacturing jobs particularly in key industries like steel, chemical and cement, and lard the full equivalent of the entirety of environmental regulation on what’s left of the economy (while shaving a full 1% off of GDP).

What has most riled them, indicating that it is what most frightens them, is the internal assessment that the administration expects to raise between $100-200 billion per year from the taxpayer in revenues from selling CO2 ration coupons. Oddly, that’s up to three times how much the administration asserted to the public in February it expected to raise from 100% auctioning, which they said they still expect it to raise,  as of three weeks ago (p. 33), well after the March memo citing the $100-200 billion was written. So much for having abandoned their position of auctioning, which it turns out is still the administration position.

In response the greens have tossed out any number of distractions, like claiming that we are ignoring “CBO data” (sic); by which they mean a remarkably cherry-picked CBO estimate of the cost in the cheapest year of the Waxman-Markey bill, a bill not referenced in Treasury’s outed expectation. That’s a distraction but it’s not data, although with so little on their side I understand their need to fudge.

Let me say this as plainly as I can, at risk of House censure: With the help of a remarkably incurious media, Big Green’s claims about what we revealed include not just stretchers but brazen, outright fabrications.

Consider Politico, and how the greens talked the same reporter who they talked into saying that Al Gore signed Kyoto into repeating, with the accuracy we are coming to expect, their new mantra that auctioning the ration coupons is “a long-ago-scrapped proposal made by the Obama administration.”
Ahem. Not “long-ago-scrapped”. The accurate phrase is “House-passed.”

No one who has read Waxman-Markey – a universe I know better than to expect includes reporters “reporting” on it – can honestly claim to believe that the bill scrapped auctioning, if not 100%, then the vast majority of these “allowances”. It mandates it.

It’s right there plain as can be in the 1,400 page bill, Title VII, Subtitle B, Sections 701 through 729 and Subtitle B, Part H! It ends up selling three-fourths of the things (with the rest politically allocated to groups not required to have them and with no use for them other than to sell ‘em to less politically favored saps who do). How can they miss that?

What this tells us is the folly of claiming that the House bill makes Treasury’s assumption of auctioning many or most allowances irrelevant. The allowances that bill does still give away in a few years are given away to entities for resale, not to the productive sector covered by the requirement that they have the things. That means that for all intents and purposes by giving none away to the people and businesses required to have them, Waxman-Markey is de facto auctioning 100%. For anyone familiar with the scheme to say that auctioning is “long-ago-scrapped” is a fabrication intended to deceive.

In the same newspaper we see a lie wrapped in an even bigger whopper intended to distract, in the form of a claim that Treasury’s internal assessment is irrelevant. For example, Politico’s Ben Smith quoted the League of Conservation Voters stammering incoherently:

“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,’ [LCV spokesman] writes.”

But as we see, his implication that the House bill only requires auctioning of 15% is flagrantly untrue.

What an actual journalist might do is note how the teaser “only of 15% auctioned!”, which explodes to 100%, gives meaning to Friends of the Earth’s description of the scheme as “subprime carbon”.
But that wouldn’t help the agenda’s chances now, would it?

Now, what about the claim that giving away the ration coupons changes the cost, the cost being what the greens are up in arms over?

Not a bit. At least, if you believe Obama’s economic team. As you see below, even OMB director Peter Orszag-led CBO recently noted the taxpayer pays either way, it’s just that they give corporate buddies much of the loot for a while as part of the deal. It isn’t even disputed in relevant quarters that it doesn’t matter who gets the money — 85% to special interests and 15% to the government or 100% to the government — it still comes out the taxpayer’s pocket.

“Under a cap-and-trade program, firms would not ultimately bear most of the costs of the allowances but instead would pass them along to their customers in the form of higher prices. Such price increases would stem from the restriction on emissions and would occur regardless of whether the government sold emission allowances or gave them away.”

The supposedly controlling Waxman-Markey effort merely gave most of these allowances away for a few years to the GEs and Duke Energys and Chicago’s Exelon, for example, for a few years to buy political support.

One might think that the fact that Waxman-Markey still will ding the taxpayer but for billions to be handed over, at least for the introductory decade, to rent-seeking industry that spent so much on making the scheme happen. That’s not an issue they should want to emphasize, on its face, but that’s the trouble with lying in the first place. It’s out there.

Glenn Beck is addressing this issue this afternoon, as he has already indicated on his radio program earlier, including by kindly including me. I get a sense that his picking up on the scent is the thing that’s most unnerving the greens at the moment. Can anyone say “Van Jones”?

Democratic Governor Criticizes Deficit-Exploding Obama Health-Care Plan; Middle Class Faces Huge Health and Global-Warming Tax Hikes

by Hans Bader on September 17, 2009

in Blog

Tennessee Governor Phil Bredesen (D) is criticizing Obama’s health-care plan as “the mother of all unfunded mandates,” saying it will force states to spend so much that they will have to either massively raise taxes or run large budget deficits that violate state constitutions. Earlier, Martin Feldstein, one of Obama’s economic advisors said his health-care plan would explode the federal budget deficit and lead to “crippling deficits,” as well as “higher taxes, debt payments, and interest rates” that would cut America’s standard of living.

The middle class is facing big tax increases thanks to Obama and Congressional Democrats. Even the trimmed-down version of Obama’s health-care plan recently announced by a ranking Senate Democrat 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, 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 could raise household taxes by $1761 per year, equivalent to a 15 percent tax increase. 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 are just a few of those tax increases: an individual mandate tax of $900 per individual or $3800 per family (if you don’t have health insurance); an employer mandate tax of $400 per employee if health coverage is not offered; an “excise tax on high-cost health plans”; a “medicine cabinet tax”; capping Flexible-Spending Accounts (FSA’s); abolishing most HSAs; and increasing tax penalties for HSAs.

Financing expanded health-care coverage requires a growing economy. But the President is undermining the economy through trade policies that destroy jobs and drive up costs for consumers in order to satisfy the demands of left-wing unions — while sharply contradicting his own “free trade” rhetoric. That includes what the Washington Post calls a “regressive tax” on tires, a “tax on tires” demanded by union leaders.

Obama’s welfare-filled stimulus package, which the Congressional Budget Office says will shrink the economy “in the long run,” destroyed tens of thousands of jobs in America’s export sector. It contained poorly-written “buy American” provisions that were too weak to cut imports much, but explicit enough to trigger broad retaliation from countries that buy much of our exports, like Canada and Mexico, cutting our exports and increasing our trade deficit.

Enviros flail over FOIAed Treasury documents

by Marlo Lewis on September 17, 2009

A headline in yesterday’s evening edition of Greenwire (subscription required) declares: ”Treasury; enviros go on offensive against media reports of cap-and-trade costs.” In fact, enviros went on defense.

As has been widely reported (e.g. here, here, here, and here), CEI, using the Freedom of Information Act (FOIA), obtained two Treasury Department documents discussing the cost of a cap-and-trade program. The first of these documents, dated 11/6/08, states (p. 1) that the administration’s plan to auction all allowances under a cap-and-trade program “could generate federal receipts on the order to $100 to 200 billion annually.” It further states (p. 2) that, “Economic costs will likely be on the order of 1% of GDP, making them equal in scale to all existing environmental regulation.”

To put these numbers in perspective, CBS reporter Declan McCullagh said that a cap-and-trade program costing $200 billion annually would be ”equivalent to hiking personal income taxes by about 15%,” or an “extra $1,761 per household.” As you can imagine, cap-and-traders went ballistic.

Greenwire faults McCullagh for neglecting to “state that Obama publicly stepped back from a 100% auction of allowances as the House negotiated and passed a climate bill that gives away more than three-quarters of the allowances for free during the program’s first years. The House legislation auctions only 18% of the allowances until about 2020.”

Greenwire quotes Treasury official Alan Kreuger, Harvard economist Robert Stavins, Josh Dorner of Sierra Club, and Tony Kreindler of Environmental Defense Fund, all asserting that McCullagh’s analysis is incorrect, because both the Obama plan and the House bill would return billions of dollars to taxpayers from auction permit sales.

Three points are in order here. First, Obama has not abandoned 100% auctioning.  OMB’s Mid-Session Review of the federal budget (Table S-11) projects “climate revenues” from “emission allowance auctioning” of $626 billion during 2010-2019. That’s slightly lower than the $645.7 billion in climate revenues projected in the President’s Budget(Table S-2). But the difference results from a technical adjustment, not a change in policy to accommodate the Waxman-Markey bill. The Mid-Session Review is an official statement of administration policy; it assumes 100% auctioning of emission allowances.

Second, the whole issue of auctions vs. free allocations is largely a distraction. Whether emission allowances are auctioned or distributed free of charge, the emissions cap determines the total number of allowances, and the market (supply and demand) determines allowance prices. The 11/6/08 Treasury memo is quite clear on this point: “Emission allowances under a cap and trade system are valuable assets regardless of their allocation method (analogous to revenue under an equivalent tax policy).”

As the cap tightens, the supply of allowances declines, allowance prices increase, and energy prices increase. Consequently, consumer spending, GDP, job creation, and wages all decrease relative to what they would be in a non-carbon-constrained economy. 

These impacts are the intended effect of a cap-and-trade program, and they occur regardless of whether allowances are auctioned or given away. The Heritage Foundation’s analysis of the Waxman-Markey bill, for example, assumes the allowance allocation scheme outlined in Reps. Waxman and Markey’s May 14, 2009 Memorandum, “Proposed Allowance Allocation.” The allocation formula in the final legislation passed by the House in June differs only in the details. The Heritage analysis projects significant economic impacts by 2035:

  • Gasoline prices will rise 58% (or $1.38/gallon) above the baseline forecast, which already contains price increases;
  • Natural gas prices will rise 55%;
  • Heating oil prices will rise 56%;
  • Electricity prices will rise 90%;
  • A family of four can expect to pay $1,241 more for energy costs per year;
  • Including taxes, a family of four will pay$4,609 more per year;
  • A family of four will reduce its consumption of goods and services by up to $3,000 per year, as its income and savings fall;
  • Aggregate GDP losses will be $9.4 trillion;
  • Job losses will be nearly 2.5 million; and,
  • The national debt will rise an additional $12,803 per person.

Third, returning part of the revenues from auction sales to households via tax rebates does not ensure low economic impact. Payments for auctioned permits are not the only cost of Waxman-Markey. A bigger cost is the damage done to the economy via higher energy prices. Even with the distribution of allowance revenues to households and other interests, the Heritage Foundation finds Waxman-Markey’s damage to the economy exceeds $9 trillion in the first 24 years.

 A reductio ad absurdum may help clarify this. Imagine that we tax milk at $30,000/gallon and rebate the tax revenue directly to each citizen. Bill Gates buys one gallon per year and nobody else buys any. The tax is returned to the 300 million residents of the United States and each gets $0.0001.

Proponents thus conclude that there is no economic impact. They overlook a whole slew of devastating costs: Lost profits and jobs in the dairy sector, lost tax revenues from the dairy industry, higher unemployment benefit payments, poorer nutrition and health, etc.

Claims that Waxman-Markey is a bargain once you consider the taxpayer rebates are similarly bogus.

Climate Chains Trailer

by Richard Morrison on September 17, 2009

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

WaPo on CEI’s FOIA release – biasing by innuendo

by Fran Smith on September 17, 2009

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.

Firing Blanks on FOIA Part II

by Iain Murray on September 17, 2009

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.

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