There’s been a lot of joy among the radical environmentalists lately since the Congressional Budget Office (CBO) came out with a report that seems to say that the costs of the pending cap and trade legislation — the Waxman-Markey bill — is small.
At a annual cost of $175 per household, that shouldn’t be much to worry about, should it?
Sure enough, the report does mention this figure, and if you’re willing to overlook some obvious facts, it’s good news. Here’s what the report states:
“On that basis, the 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’s what radical environmentalists are gleefully reporting. As a recent Wall Street Journal editorial explains “The biggest doozy in the CBO analysis was its extraordinary decision to look only at the day-to-day costs of operating a trading program, rather than the wider consequences energy restriction would have on the economy. The CBO acknowledges this in a footnote.”
Here’s the footnote the Journal article refers to: “The resource cost does not indicate the potential decrease in gross domestic product (GDP) that could result from the cap. The reduction in GDP would also include indirect general equilibrium effects, such as changes in the labor supply resulting from reductions in real wages and potential reductions in the productivity of capital and labor.”
There’s some other problems with the bill, and the Journal piece reports on them: “The whole point of cap and trade is to hike the price of electricity and gas so that Americans will use less. These higher prices will show up not just in electricity bills or at the gas station but in every manufactured good, from food to cars. Consumers will cut back on spending, which in turn will cut back on production, which results in fewer jobs created or higher unemployment. Some companies will instead move their operations overseas, with the same result.”
The piece reports that Democrats know that steep price increase in energy are coming: “Even as Democrats have promised that this cap-and-trade legislation won’t pinch wallets, behind the scenes they’ve acknowledged the energy price tsunami that is coming. During the brief few days in which the bill was debated in the House Energy Committee, Republicans offered three amendments: one to suspend the program if gas hit $5 a gallon; one to suspend the program if electricity prices rose 10% over 2009; and one to suspend the program if unemployment rates hit 15%. Democrats defeated all of them.”
Recently I attended a public information session regarding rate consolidation in Westar, the large electric utility in Kansas. Several speakers spoke of the hardship that higher electricity rates would case. Something tells me that some of the people are in favor of the Waxman-Markey bill and other “green” measures. Are they will to pay the higher energy costs associated with this bill?