Cap and Trade costs

[Big Train]

The decimal point is not their friend it seems. I can't believe the guys Barry O lets run the numbers. Tax cheat on one hand, MIT professor who somehow can't count on the other.

Hot Air » Blog Archive » On second thought, GOP cap-and-trade cost estimates on the money

Fuzzy Math

On second thought, GOP cap-and-trade cost estimates on the money

Republican opponents to Barack Obama’s cap-and-trade policy claimed that the costs passed along to the energy consumer would eventually amount to about $3100 a year, calling this a tax by other means. Proponents scoffed at the suggestion, claiming that the actual cost would be less than a tenth of that amount. They cited John Reilly, an MIT professor who claimed that the GOP lied about the study he conducted in order to concoct that number — and organizations from newspapers to Think Progress to MS-NBC and even the Wall Street Journal used his statement to call Republicans liars for the last several weeks.

They may have to eat those words. Professor Reilly has rechecked his figures, and now he says that not only were the Republicans right after all, they actually underestimated the costs to the consumer. John McCormack scores the exclusive:

Many congressional Republicans, including members of the GOP leadership, have claimed that the plan to limit carbon emissions through cap and trade would cost the average household more than $3,100 per year. According to an MIT study, between 2015 and 2050 cap and trade would annually raise an average of $366 billion in revenues (divided by 117 million households equals $3,128 per household, the Republicans reckon).

But on March 24, after interviewing one of the MIT professors who conducted the study on which the GOP relied to produce its estimate, the St. Petersburg Times fact-check unit, Politifact, declared the GOP figure of $3,100 per household was a “Pants on Fire” falsehood. The GOP claim is “just wrong,” MIT professor John Reilly told Politifact. “It’s wrong in so many ways it’s hard to begin.” …

During a lengthy email exchange last week with THE WEEKLY STANDARD, MIT professor John Reilly admitted that his original estimate of cap and trade’s cost was inaccurate. The annual cost would be “$800 per household”, he wrote. “I made a boneheaded mistake in an excel spread sheet. I have sent a new letter to Republicans correcting my error (and to others).”

While $800 is significantly more than Reilly’s original estimate of $215 (not to mention more than Obama’s middle-class tax cut), it turns out that Reilly is still low-balling the cost of cap and trade by using some fuzzy logic. In reality, cap and trade could cost the average household more than $3,900 per year.

The $800 paid annually per household is merely the “cost to the economy [that] involves all those actions people have to take to reduce their use of fossil fuels or find ways to use them without releasing [Green House Gases],” Reilly wrote. “So that might involve spending money on insulating your home, or buying a more expensive hybrid vehicle to drive, or electric utilities substituting gas (or wind, nuclear, or solar) instead of coal in power generation, or industry investing in more efficient motors or production processes, etc. with all of these things ending up reflected in the costs of good and services in the economy.”

In other words, Reilly estimates that “the amount of tax collected” through companies would equal $3,128 per household–and “Those costs do get passed to consumers and income earners in one way or another”–but those costs have “nothing to do with the real cost” to the economy. Reilly assumes that the $3,128 will be “returned” to each household. Without that assumption, Reilly wrote, “the cost would then be the Republican estimate [$3,128] plus the cost I estimate [$800].”

At issue is what happens to all of the cap-and-trade funds that get collected by the government in the Obama plan. In order to believe that the Obama-predicted revenues pulled out of the energy industry won’t impact the consumer, either one has to believe that energy producers won’t pass along those costs in price hikes (which is ridiculous), or that the Obama administration envisions a profit-sharing plan in which the money all goes back to the consumers. The latter is equally ridiculous, and demonstrably so. In the first place, Obama has already hiked federal spending $400 billion in the next fiscal year, and even his own OMB predicts trillion-dollar deficits for the next decade after that. Massive rebates might sound great to Republicans, but Democrats will never, ever agree to them. In any case, with these deficits, the money for rebates technically doesn’t exist.

Besides, the money has already been earmarked. Obama himself said he would use the money for massive government expenditures on renewables research. Other Democrats counted on the money to fund health-care reform. No one in the administration or Congress ever envisioned giving the money back to the consumers, directly or even indirectly.

Once the government gets this money from energy production, they’re going to keep it. That means that Reilly’s final figure of $3900 per household is the correct number to use. It validates what the Republicans have said all along — that Obama’s cap-and-trade policy will be a disastrous burden on American families. Maybe all of the scoffers should read what Reilly has to say now, but that’s not nearly as much fun as calling Republican liars.

[hideyoursheep]

[Big Train]

Use your words. C,mon your a big boy now...sound it out.

[hideyoursheep]

Sorry, kid....just trying to give this thread some Bang!

Okay, you want my opinion?

Here it is..







ZZZzzzzzzzzzzzzzzzzzzzzzzzz....................... ..............

[Big Train]

I know, a $3k tax hike is just fine by you, why think twice? Sleep it away old man....wake up some day and wonder where all the money went.

[hideyoursheep]

Oh, I know it's being wasted, but what's new?

There was a helluva party thrown the last 8 years, now we all gotta pay the tab.

[Big Train]

What a 3K climate change tax has to do with the Iraq War, you got me there. Unless stalling the recovery with this boogeyman tax is somehow "paying for the party" of the last 8 years.

[Nickdfresh]

Great, from a blog. I mean, whomever checks facts like bloggers?

[Big Train]

That's weak Nick. It's not like the MIT guy himself is admitting it, oh wait, yes he is. You could google that from any number of sources and come back with the same thing.

[ULTRAMAN VH]

And who again will the Government take this out of, why the middle class taxpayer. When the middle class is sucked dry from paying for everything from welfare to healthcare for those who don't want to work and be government dependent, who will be next?

[hideyoursheep]

Originally Posted by ULTRAMAN VH

And who again will the Government take this out of, why the middle class taxpayer. When the middle class is sucked dry from paying for everything from welfare to healthcare for those who don't want to work and be government dependent, who will be next?

Which is why I can't figure out why Big Tranny shows any interest in the subject.

She has no class.

[Nickdfresh]

Originally Posted by ULTRAMAN VH

And who again will the Government take this out of, why the middle class taxpayer.

The ones who just got another tax break?

When the middle class is sucked dry from paying for everything from welfare to healthcare for those who don't want to work and be government dependent, who will be next?

You don't pay for healthcare now? Welfare is a drop in the bucket, and we pay far more for the massive military industrial complex we maintain...

[Nickdfresh]

Originally Posted by Big Train

That's weak Nick. It's not like the MIT guy himself is admitting it, oh wait, yes he is. You could google that from any number of sources and come back with the same thing.

Yeah, it's "weak" alright...

THE $3100 LIE

The MIT study estimates the average value of the carbon market over a thirty-five year period to be $366 billion per year. If you were to divide that value by the number of households in America, you get $3,128 per household. Asserting that the value of the market is equivalent to the economic cost of the policy – which one has to do to claim that the cost of cap and trade is $3100 per household — requires the assumption that this revenue stream magically disappears somewhere. Reilly attempted to explain this to the Weekly Standard:

It is not really a matter of returning it or not, no matter what happens this revenue gets recycled into the economy some way. In that regard, whether the money is specifically returned to households with a check that says “your share of GHG auction revenue”, used to cut someone’s taxes, used to pay for some government services that provide benefit to the public, or simply used to offset the deficit (therefore meaning lower government debt and lower taxes sometime in the future when that debt comes due) is largely irrelevant in the calculation of the “average” household. Each of those ways of using the revenue has different implications for specific households but the “average” affect is still the same.

For example: Exxon Mobil became the largest corporation in the world by raking in $442.9 billion in revenue in 2008, “costing” the average American household $3,785.

Is the existence of Exxon Mobil a $3,800 tax on American families? No, because most of its revenues are redistributed in the economy — as oil rig employment, petroleum products (which fuel transportation and trade), and of course, multimillion-dollar salaries for its top executives and massive profits for its shareholders.

THE $3900 LIE

The MIT study of the economic effects of cap and trade did estimate the “welfare cost” of the transition from an unsustainable pollution-based economy to a clean-energy economy. As Reilly explained to McCormack (to no avail), this “cost to the economy involves all those actions people have to take to reduce their use of fossil fuels or find ways to use them without releasing [greenhouse gases]“:

So that might involve spending money on insulating your home, or buying a more expensive hybrid vehicle to drive, or electric utilities substituting gas (or wind, nuclear, or solar) instead of coal in power generation, or industry investing in more efficient motors or production processes, etc. with all of these things ending up reflected in the costs of good and services in the economy.

The MIT study found that this “welfare cost” is tiny with respect to the size of the economy, even with strong reductions in global warming pollution and a very high price for carbon permits. The change in total welfare is less than one-tenth of one percent in 2015, never rising above two percent for the forty-year run of their model. Averaging out the “price” of a clean-energy economy versus the status quo over those forty years, Reilly found the cost for “the average household just in 2015 is about $80 per family, or $65 if more appropriately stated in present value terms,” and the “present value cost per average current household through 2050″ is “about $800.”

McCormack decided to add $3100 to $800 and get $3900, even though Reilly told him one has to assume the carbon market value gets flushed down the toilet:

If you took the revenue and flushed it down the toilet or burned it, the cost would then be the Republican estimate plus the cost I estimate. But that is quite unrealistic, as the auction revenue will be recycled into the economy some way.

Using McCormack’s logic, we could take our $3,800 Exxon Mobil “tax” and then add in, say the $855 per household per year spent on the war in Iraq (given a lowball estimate of $100 billion in total expenditures per year) as the welfare cost of the existence of Exxon Mobil. Adding $3785 to $855 returns a figure of $4640 per average household.

Saying “Exxon Mobil is a $4640 tax” would be silly and intellectually irresponsible. But that’s essentially what McCormack is doing, as is the once-respected Heritage Foundation, who is promoting McCormack’s nonsensical $3900 figure.

THE ‘AVERAGE HOUSEHOLD’ LIE

The actual costs and benefits to individual consumers is dependent on how the policy is constructed. As Reilly explained in his April 14 letter, “the burden on lower income households can be offset through the use of auction revenues.” The cost of building a green economy could be paid entirely, in fact, by the richest one percent of the United States, for example – those whose income has nearly tripled in the last thirty years of our pollution-based economy while the bottom 80 percent has seen an increase of only 20 percent.
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Wonk Room » Weekly Standard Compounds $3100 GOP Lie With A $3900 Lie

[ZahZoo]

Originally Posted by Nickdfresh

The ones who just got another tax break?

This alleged tax break... what is it like annually $800 for single and $1600 married..?

I don't know doesn't really feel like much of a break...

[Nickdfresh]

Originally Posted by ZahZoo

This alleged tax break... what is it like annually $800 for single and $1600 married..?

I don't know doesn't really feel like much of a break...

Geez, then why is everyone bitching about taxes all of a sudden? I recall a distinct lack of mentioning of this subject in threads when fearless leader was pResident...

[GAR]

Why can't the volcanoes, geysers and tectonic fissures calculated against the hot air created by civilization?

If the Carbon Homos can get away with quantifying how much damage a deep exhale can do to the environment, they must certainly be capable of calculating how much hot air damage the environment does to civilization.

I hope Al Gore tries to tax God. God will fucken kick his ass!

[GAR]

Originally Posted by Nickdfresh

The cost of building a green economy could be paid entirely, in fact, by the richest one percent of the United States,

By "green economy" they mean a way to buy and sell permissions to exhale, to exhaust your vehicle, to cook a stew.. the way to green the economy is to compost the DNC for biofuel production.

[Nickdfresh]

Originally Posted by GAR

By "green economy" they mean a way to buy and sell permissions to exhale, to exhaust your vehicle, to cook a stew.. the way to green the economy is to compost the DNC for biofuel production.

Try idling in the garage, assbandit...

[Big Train]

Originally Posted by Nickdfresh

Yeah, it's "weak" alright...



Wonk Room » Weekly Standard Compounds $3100 GOP Lie With A $3900 Lie

Wonkette (and you are on me about MY sources?), explain to me how it is a lie if the guy who did the study himself says his math was off and essentially agrees with the GOP ballpark figures. It requires a bit of voodoo.

It's a curious assumption that this money will magically (to keep with the theme of the article) be reabsorbed and redistributed somewhere further down the trough. It's wishful thinking to be generous. It's possible in theory that perhaps a park will be built or a someone will get food stamps or that the nation's debt would be retired. There is no concrete way to guage how that money might cycle through the system, so those numbers are essentially meaningless.

Exxon example was interesting. Exxon is not a tax on the American people, it's a cost. Likewise, this "tax" is a cost.

Summer's Eve asked above what my interest is in this. I don't like artificial add-on taxes based on un-debated science adding undue stress on an economy trying to recover.

With gas prices going drastically up and down, there is opportunity enough on the basis of pure capitalism alone to begin switching to a cleaner running economy. The huge fleets who have already invested in low sulfur or biodiesel, electric and aerodynamic fleets (fuckin WalMart even) made those decisions on naturally existing supply and demand. They did not need government getting involved to come to that conclusion.

[LoungeMachine]

Originally Posted by Big Train

the GOP ballpark figures.

stop.

sides hurt.