CBO Reveals The True Costs Of Cap And Trade

By Justin Gardner | Related entries in Energy, Environment, Legislation, Money

Congressional Republicans have been telling voters that the cap and trade energy policy that’s set for a vote on Friday will cost each household about $3,100.

CBO puts the lie to those numbers and shows that they’re nearly 20 times the actual costs…in 2020.

From Reuters:

WASHINGTON (Reuters) – Climate change legislation pending in Congress would cost U.S. households only about $175 annually in higher energy and consumer prices, far less than the $3,100 “burden” opponents have claimed would result, according to a Congressional Budget Office estimate.

“The net annual economy wide cost of the cap and trade program in 2020 would be $22 billion, or about $175 per household,” the CBO, which gives Congress nonpartisan advice about the impact of legislation under consideration, said in an analysis delivered to Congress late on Friday.

And that’s just the average price. These costs would be distributed differently based on incomes…

Low-income households would see an average net benefit of $40, mostly through rebates and other aid, while high-income families could see added net costs of $245 per year in 2020.

Think high-income families can afford an additional $245 a year so we can move much closer to energy independence?

Moving on…


This entry was posted on Wednesday, June 24th, 2009 and is filed under Energy, Environment, Legislation, Money. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

14 Responses to “CBO Reveals The True Costs Of Cap And Trade”

  1. Tully Says:

    It’s amazing that they can score a bill that’s changed yet again, adding another 300 pages or so, one that they haven’t yet actually seen.

    Don’t bother checking THOMAS. The final version of the bill is scheduled to be voted on Friday morning, but won’t be available until sometime after the amendment-submission deadline Thursday morning, at the earliest. All (currently) 1201 pages of it.

  2. Tully Says:

    Meant to add…the Reuters article speaks of the annual cost in 2020, but not at all to the transition costs along the way. It would be nice to link to the actual CBO report, no?

  3. kranky kritter Says:

    Justin, do you have ANY actual concrete reason to claim that the CBO numbers are reasonable, accurate, and count everything related to the proposed changes?

    Do you have any actual knowledge about the things involved, or what calculating the costs would entail? Or did you just summarily decide to trust the CBO?

    I personally have no knowledge whatsoever of any of this stuff, but I feel like I can safely assume that it involves extremely lengthy and detailed calculations based on a vast store of specialized knowledge to which only a small handful of people are actually privy.

    Are you one of these people? I don’t think you are. I think you simply made a partisan choice to suggest to all of your readers that we all ought to simply trust the CBO and presume that the Republicans are, well, just lying.

    Words fail to express the amount of contempt I have for such a practice. I have no clue whether the CBO or the GOP is close to the truth, and I freely and cheerfully admit it.

    I also freely declare that I don’t want to pay more for energy. And I think that with purchasing power falling, people losing jobs, consumer demand in the toilet, and the prospect of inflation looming as gas prices head back to $3/gallon, most americans don’t want to pay more, whether its $300 or $3000.

    I would prefer to breathe what may be slightly dirtier and warner air, and manage to make my mortgage payment.

  4. rob Says:

    Transparency is to US Policy as Legitimacy is to Iranian Elections.

    But hey, at least our mullahs honor our intelligence by making a reasonable effort at promoting the charade instead of just ham-fisting it.

  5. the Word Says:

    kranky wrote
    we all ought to simply trust the CBO and presume that the Republicans are, well, just lying.

    I think you’d be safe with that :-)

  6. ExiledIndependent Says:

    Have we looked at the actual environmental impact of these changes? I’m talking hard numbers. For the sake of argument–assuming that anthropogenic global warming is real and not a product of some faulty predictive models–what sort of decrease in temperature will this cause?

    I’m going to guess (and some of you science-minded types correct me, please) that it’s probably less than .5 degrees C. So towards the end of the Global Warming Decision Tree, we have to ask ourselves, “Will this choice significantly reduce the global temperature?” And from what I can glean so far, the answer is “no.”

    The rest of the GWDT:
    1) Is the earth getting hotter?
    2) Is a warmer earth bad?
    2) If so, are people causing it?
    3) If so, what can we do to cool the earth?
    4) Do those actions result in significant cooling?
    5) If so, is the opportunity cost of those actions acceptable?

    Honestly, feels like there are a bunch of unintended consequences associated with this thing, and it’s a really bad idea in terms of timing.

  7. mdgeorge Says:

    I take everyone’s point that the CBO is not omnicient, but in Justin’s defense – wasn’t the CBO citing an incomplete CBO report to come up with their $3100 in the first place?

  8. kranky kritter Says:

    Exlied, you’re talking to the wall.

    Whenever I bring up such concerns, my answers are usually along the line of
    global warming is
    •sure,
    •evil,
    •human-caused,

    and must be stopped no matter the cost.

    And then my favorite dismissal, which one way or another asserts that if I want to apply a comprehensive cost-benefit analysis or question a liberal one that seems suspect, then I am
    • evil
    •ignorant
    •a conservative lackey
    • a corporate apologist
    •part of the problem

    In other words, you and I are both wasting our time suggesting that installing some sort of global bureaucracy (to manage trading of evil rights to pollute etc) will lead to giant new complicated system that the powerful will game for their benefit, and for which regular folks will not only pay dearly, but be told to like and admire.

    We are just useful idiots for Big Oil etc, etc, etc. To question the virtue of this plan is to prove our ignorance and evilness and lackeydom. They are right. We are wrong. Just drink the F%&^kin koolaid so we can all get along.

  9. phin Says:

    It’s not like this tax-grab, errr, I mean, government power-grab, errrr, I mean, superficial feel good narcissistic but ultimately useless and needlessly expensive moronic leftist fetish hasn’t been tried and implemented in Europe so we can all see the fantastically good end results…oh wait! Oops!! Nothing to see here folks, move along! Must.Ignore.European.Results…Does.Not.Compute.With.Hopyness.And.Changiness.Error.Error…

    Bhahahahahahahahaha! Hope and Change babe…Don’t stop believing!!

  10. Tully Says:

    WSJ weighs in. With some very relevant observations.

    Weird as it seems, I feel compelled to defend CBO’s continually being wrong, even though I’ve savaged them previously.

    You see, it’s not their fault. They are tasked with answering specific questions, and they do their best, and they do a very professional job of it. But they are asked for are miracles, namely, accurate forecasts of events and trends extending far in the future. And not only don’t they t have a time machine, their reports are almost always abused by cherry-picking to make them out as what they are not.

    Truth is (I have covered this ground quite often) that any forecast extending more than 6-12 months into the future is likely to be somewhat wrong, and those extending out even farther are likely to be very very wrong indeed. No matter how professionally they are constructed. This is because of several things, but chief among them are the problems of unforseen events, and sensitive dependence on initial conditions (SDIC), and the fact that ALL models are gross simplifications of the reality they attempt to assess (which exacerbates SDIC). CBO’s forecasts are ALWAYS dependent on ceteris paribus, the assumption that “all other things remain the same.” And they don’t. Never ever.

    CBO reports are positively laden with prominent caveats about these problems. They are pros, and they KNOW that a simplistic static model assessment goes somewhat awry almost as soon as it’s released, sometimes even before, and those are the GOOD ones. They KNOW that projections of events and trends a decade or more into the future are little better than intelligent wild-ass guesses.

    Just to complicate that more, laymen are used to assuming that econ models are based on physical science, and economics is part science, and part mass psychology. The science modelling parts are somewhat determinative (though still subject to MAJOR SDIC and assumption problems) but the mass psych parts are additionally subject to the vagaries of human behavior, which is not exactly mathematically certain natural law. People do funny things that are not logical nor amenable to determinative modelling. But laymen read things such as a CBO report and assume that they are forecasts that determinatively predict the future. They are not and they do not. They simply assess the likely results of a particular action applied to a static environment (ceteris paribus). And there ain’t no such thing.

  11. Jimmy the Dhimmi Says:

    Should we believe this prediction, like the last one issued 6 months ago by Obama and Congressional Democrats regarding the stimulus package and the unemployment rate?

    By Justin’s logic, this graph proves that President Obama lied.

  12. Tully Says:

    Key graf from the WSJ piece:

    A closer look at the CBO analysis finds that it contains so many caveats as to render it useless.

    Remember I told you so. Also remember that the same modelling problems that apply to CBO forecasts alos apply to global warming modelling. The more complicated the model, the more that even the tiniest assumption error will render it wildly erroneous after just a few cycle iterations.

  13. the Word Says:

    Of course, based on your earlier comments, the WSJ is some of the most slanted info on the planet now that Pravda is gone :-)

  14. Tully Says:

    Actually WSJ splits into two components. The op-ed section is solidly fis-con, and the news section is solidly left-centrist. Both omit things at times, neither make things up. One expects op-ed in the op-ed section, but one also gets it in the “news” sections, just from a somewhat different take. So, check out the facts offered and THEN knock ‘em if you find errors. I know, I know, it’s work. But you gotta do the work or simply cheerlead/demonize from ignorance.

    BTW, Pravda isn’t gone, tWord. There are few less trustworthy news outlets in the world. I wouldn’t even compare Keith Olbermann to Pravda. Heck, they make al-Jazeera look honest. They’re about on a par with the Weekly World News*.

    [*–MiB assures me I am slandering http://WWW...

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