Two weeks ago, I noted that the Congressional Budget Office had completed a preliminary analysis of the Waxman-Markey climate change bill and determined that it would be a net deficit reducer over 10 years,
Whatever the merits of the legislation, that’s an important political fact–one that makes it more difficult for Blue Dogs and other deficit hawks to oppose the bill on the inaccurate grounds that it will balloon the federal deficit. But, of course, that has only indirect bearing on the separate objection–much beloved by Republicans–that pricing carbon will be tantamount to a consumer tax. House Republicans in particular are fond of the canard that a cap and trade bill will cost the average household over $3,000.
Well, a more thorough CBO scoring reveals that they were only off by about a factor of 18.
[T]he Congressional Budget Office (CBO) estimates that the net annual economywide cost of the cap-and-trade program in 2020 would be $22 billion–or about $175 per household. That figure includes the cost of restructuring the production and use of energy and of payments made to foreign entities under the program, but it does not include the economic benefits and other benefits of the reduction in GHG emissions and the associated slowing of climate change. CBO could not determine the incidence of certain pieces (including both costs and benefits) that represent, on net, about 8 percent of the total. For the remaining portion of the net cost, households in the lowest income quintile would see an average net benefit of about $40 in 2020, while households in the highest income quintile would see a net cost of $245.
Interestingly, this tracks pretty well with the findings of John Reilly, the M.I.T. environmental economist whose analysis Republicans distorted to arrive at the misleading $3,000 figure.
Back in April when that controversy was still live, a spokesman for House Minority Leader John Boehner told me Republicans would revisit their talking points if new facts came to light. I’ll let you know if they plan to stand by that pledge.