Gingrich’s Many Cap-and-Trade Distortions

On Friday, I posted a clip of Newt Gingrich’s testimony before the House Energy & Commerce committee, in which the former House Speaker stood by misleading GOP charges that cap-and-trade legislation will cost the average family thousands of dollars a year.

We’ve been over much of this before–the most famous Republican talking point has its roots in an MIT study, which estimates that the government will initially collect $366 billion in revenue from a cap-and-trade bill every year. Republicans assumed that industry would pass this cost on to consumers, divided that number by an estimate of the number of households in America and–voila–concluded that, on average, each household would be responsible for $3,128 worth of increased energy costs.Gingrich stands by this analysis, and, on Friday, used as a reference this Weekly Standard article, which is perfectly airtight as long as you assume that the government lights that $366 billion on fire. A somewhat likelier scenario has the government rebating most of this revenue to consumers and offsetting much of that increased cost.

But what about the other numbers? Gingrich relies (PDF) on the good faith of Reagan economic adviser and discredited supply-sider Arthur Laffer for his claim that, by hampering economic growth, cap-and-trade legislation would cost a family of four $10,800 a year by 2020. This is based on an assumption that the U.S. responds to cap-and-trade legislation just as it responded to the oil shocks of the 1970s. (Keep in mind that proposed cap-and-trade bills don’t “shock” so much as create a years-long buffer between passage and implementation.)

Likewise, Gingrich cites a 10-year-old Wharton Econometrics study of the Kyoto Protocol–a favorite of climate change denialist Sen. James Inhofe (R-OK)–for his contention that cap-and-trade would cost a family of four $2,700 per year.

Well, others–with perhaps a bit more credibility on the question–have looked at this very question and come to similar extremely different conclusions. A McKinsey & Co. study, for instance, found that the cost of cutting greenhouse gas emissions to 35 percent below 1990 levels by 2030 could cost less than 1 percent of global GDP. And as for the United States alone? An EPA study (PDF) of new House climate change legislation concluded that the bill would cost U.S. households between $98 and $140 per year between now and 2050.

But Gingrich’s most misleading citation may have been his last one. “$750 per year for the poorest quintile according to the Center for Budget and Policy Priorities.” That study is here. The section Gingrich is talking about reads: “Our analysis, using an approach developed by the Congressional Budget Office, finds that even a modest 15 percent reduction in greenhouse-gas emissions would cost the poorest fifth of Americans an average of $750 a year per household.”

And that might well be the nail in the coffin of climate change legislation–except two sentences later, the report cautions that “[t]he $750 figure is the cost before any action is taken to mitigate these effects and is a measure of what would happen if low-income households were left on their own to cope with the effects of higher energy prices.”

In fact, earlier in the same study, we learn that “[a] well-designed bill can fully shield low-income consumers from the economic hardship that could otherwise result from higher energy-related prices.” And in a different CBPP study called “Cap and Trade Can Fight Global Warming Effectively While Also Protecting Consumers,” we learn that cap and trade can fight global warming effectively while also protecting consumers.

All of this from the Republicans’ big ideas man, who two years ago said, “I think if you have mandatory carbon caps combined with a trading system, much like we did with sulfur, and if you have a tax-incentive program for investing in the solutions, that there’s a package there that’s very, very good. And frankly, it’s something I would strongly support.”

That was a big idea. It’s also the exact opposite of what he’s saying today, parroting a GOP tendency to scare voters by misrepresenting numbers buried in obscure policy documents. And though a parrot is a truly impressive and exotic type of bird, we should really be getting our input on complex legislation from a smarter animal.

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