More on the Waxman-Markey CBO Score
I noted earlier the CBO’s analysis indicating that the poorest 20 percent of Americans will actually gain money as a result of Waxman-Markey’s cap-and-trade provisions, while even the wealthiest Americans will pay less than a dollar a day. Kevin Drum helpfully found the table that lays out the precise figures:
Meanwhile, my colleague Dan Weiss notes that even this is almost certainly too pessimistic:
Signficantly, CBO’s estimate also does not include the economic benefits of other provisions in H.R. 2454. The American Council for an Energy Efficient Economy estimates that the efficiency provisions alone could save businesses and consumers $22 billion annually by 2020. The savings would be $170 per household in 2020 –- roughly equal to CBO’s cost per household estimate for ACES in 2020.
To be sure, in part the low cost of compliance reflects the fact that Waxman-Market’s emissions targets aren’t especially aggressive. Still, there’s a heck of a lot more aggressive than doing nothing. And the CBO’s accounting of this explicitly doesn’t include the benefits of averting catastrophic climate change—a fairly important piece of the puzzle. Historically, meanwhile, compliance with new environmental regulations has typically proven easier than people believed ex ante. You can’t do an analysis which just assumes that as-yet-uninvented technologies will come into being, but typically a new regulatory regime does, in fact, spur the creation of as-yes-uninvented technologies or practices that help with compliance.
30 Responses to “More on the Waxman-Markey CBO Score”
Register
RSSLogin
Topic Cloud
ArchivesBlog RollAbout Matt YglesiasContact Me
Donate
June 21st, 2009 at 5:55 pm
The CBO also can’t account for broader changes in policy at the state local and federal level which occur once CO2 is priced into things. Suddenly a whole range of policies make sense when energy is somewhat more expensive or when certain interests are weaker.
June 21st, 2009 at 6:10 pm
This looks like an epistle from the “Church of What’s Happening Now”. I can safely say that anyone claiming a tax program will save you money, is a fool or a liar.
June 21st, 2009 at 6:29 pm
Did CBO assure us that enacting this program would have “any” effect on global warming
June 21st, 2009 at 7:00 pm
Shooter:
It’s quite clear from the chart – once you redistribute the $ you get from the permits, the cost of higher energy bills and the like goes away for the lowest quintile, and is dramatically reduced to less than a dollar a day for everyone else.
The question, however, is what “allocation to businesses and net income to domestic offset providers” means precisely, and how we know how that money would break down.
June 21st, 2009 at 7:15 pm
This is part of why I don’t really care if the targets in the bill are too weak at first, as long as it puts in place a framework with targets that can be increased. We are almost surely going to find the costs to be lower than many people are asserting, and so with experience (and hopefully without a recession going on) we should find it politically easier to ramp up the targets in the near future.
June 21st, 2009 at 7:18 pm
I can safely say that anyone claiming a tax program will save you money, is a fool or a liar.
This, of course, is idiotic. When tax revenues get spent, almost inevitably there are going to be some net beneficiaries (people who get more from the spending than they pay in taxes).
June 21st, 2009 at 7:31 pm
The CBO projections are of course based on the assumption that the program works in the manner it is claimed to work.
June 21st, 2009 at 8:05 pm
The CBO projections are of course based on the assumption that the program works in the manner it is claimed to work.
Actually, no. To summarize a complex topic, the CBO basically reads the bill and forms its own model of the likely effects. Accordingly, the CBO projections can often come as an unpleasant surprise to the proponents of the bill.
June 21st, 2009 at 8:22 pm
Sigh.
Wouldn’t be easier to just say the Republicans are PROMOTING global warming because the temperature rise will make Israel uninhabitable.
IF we pissed away $2 Trillion –and 4500 lives — sucking up to the Israel Lobby’s billionaires then what will that meme deliver.
Throw in an afterthought about Big Oil wanting to depopulate Saudi Arabia/Iraq so that they can steal the oil without royalties (something that didn’t occur to the Ottoman Empire) and you will close the deal.
June 21st, 2009 at 8:22 pm
This isn’t saving money, it’s welfare as a selling point.
June 21st, 2009 at 8:28 pm
Yes, the CBO forms its own model but that does not mean the bill will work in the way the CBO or anyone else projects. You can’t perform this kind of projection without making a hell of a lot of assumptions. Look at it this way: we’ve been seeing hysterical prophesies about global warming disasters for the last 20 years and they haven’t worked out.
June 21st, 2009 at 8:56 pm
This isn’t saving money, it’s welfare as a selling point.
So we should never have built canals, railroads, or roads.
June 21st, 2009 at 9:21 pm
This isn’t saving money, it’s welfare as a selling point.
Call it whatever you want, it doesn’t change the facts.
June 21st, 2009 at 9:21 pm
It would seem those projects build economic activity rather than retard it, as this bill would. What’s the analogy exactly?
June 21st, 2009 at 9:24 pm
Heh. It might be conjecture, speculation, or just plain pie in the sky… but it isn’t factual.
June 21st, 2009 at 9:26 pm
Shooter@14
Why would cap and trade retard growth? The whole point is to move the economy that is based on green technology rather than fossil fuels.
June 21st, 2009 at 9:27 pm
Yes, the CBO forms its own model but that does not mean the bill will work in the way the CBO or anyone else projects.
Sure–although of course that cuts both ways, and the real world effects can be better, not worse, than what the CBO projects. Anyway, my point was just that the CBO doesn’t assume the bill’s proponents’ claims are correct.
Look at it this way: we’ve been seeing hysterical prophesies about global warming disasters for the last 20 years and they haven’t worked out.
Sure, from a few people. Similarly, we’ve been seeing blanket denials of any effects at all, and the accumulated evidence is also against those denials. With respect to the actual scientific models, my understand is that things are looking worse, not better, than the models originally predicted.
Anyway, the bottomline is that in an uncertain world, you have to do your best to make informed predictions and then act accordingly.
June 21st, 2009 at 9:32 pm
Heh. It might be conjecture, speculation, or just plain pie in the sky… but it isn’t factual.
It’s a fact that almost every program creates some net beneficiaries when both taxes and expenditures are accounted for. So while the details of the CBO projections may be wrong (indeed undoubtedly will be wrong to the extent they are never going to be 100% accurate), it is extremely likely there will be some net beneficiaries.
June 21st, 2009 at 9:33 pm
It would seem those projects build economic activity rather than retard it, as this bill would. What’s the analogy exactly?
No analogy. The government helps steer the course of economic development with railroads, canals, etc.
June 21st, 2009 at 9:34 pm
EDIT
Shooter@14
Why would cap and trade retard growth? The whole point is to move the economy from one based on fossil fuels to green technology.
June 21st, 2009 at 10:14 pm
And I’ll bet you believed Obama would increase transparency in Government. Considering 85% of the permits are going to given away for free, any movement toward green anything will be incidental.
This program is all about restriction and taxation, both of which retard growth. Personally, I’d rather have Govt. plant trees.
June 22nd, 2009 at 7:05 am
Me and my friend were arguing about an issue similar to this! Now I know that I was right. lol! Thanks for the information you post. Feel free to check out my site Oregon business address when you got time.
June 22nd, 2009 at 8:37 am
I’m not sure equality itself should be a goal, but addressing the threat of global warming probably should be a goal (although I am concerned that if everyone in the world were to live like Manhattan-ites of vague environmental consciousness, there would still be much, much more in carbon emissions) and it’s good that the bill works out so that the cost won’t be felt too strongly by the people who have the least money.
June 22nd, 2009 at 8:38 am
Concerned by the conceptual possibility that if everyone in the world etc. etc.
June 22nd, 2009 at 10:08 am
Can anybody explain to me how it would be in any way rational for the president to intentionally restrict the economy when its success will obviously be the biggest test for his reelection? It’s stupid and irrational.
The program is about laying the groundwork for climate policy, and if it’s not as aggressive as some of us would have liked, it is because of the need to operate in political reality whereby Republicans do everything they can to promote short-term monetary wealth over the benefit of having a decent planet to spend it on.
June 22nd, 2009 at 11:01 am
I’d like more comments on how to get past Collin Peterson’s resistance to this bill. The Fergus Falls Journal, located in his district, had two editorials last week supporting him on this, both based on the fear this will hurt the ethynol producers. Yet mainstream farmers here have recognised all along corn based ethynol was to have a short life span. What I’m not seeing is much about the progress of the research to make ethynol out of switch grass or other products that would be more efficient , and environmentally friendly. Peterson’s district is not naturally a corn producing area, and would likely benefit more from the development of some kind of grass based crop. What is needed is information to confront his current assumptions on what’s best for his district. Any sources?
June 22nd, 2009 at 12:49 pm
[...] a new non-partisan analysis of the House climate change bill — proving that capping CO2 can save money for the poorest fifth [...]
June 22nd, 2009 at 12:49 pm
[...] a new non-partisan analysis of the House climate change bill — proving that capping CO2 can save money for the poorest fifth [...]
June 22nd, 2009 at 1:29 pm
[...] Matt Y again [...]
June 23rd, 2009 at 2:57 am
“Yes, the CBO forms its own model but that does not mean the bill will work in the way the CBO or anyone else projects. You can’t perform this kind of projection without making a hell of a lot of assumptions. Look at it this way: we’ve been seeing hysterical prophesies about global warming disasters for the last 20 years and they haven’t worked out.”
REALLY. How about you provide us with ONE, just ONE “hysterical prophesy about global warming disasters” that were supposed to occur in the past 20 years, from a scientifically respected institution.