Republicans' Fuzzy Cap-and-Trade Math
Via Brad Plumer of The New Republic comes this article from the St. Petersburg Times throwing some cold water on the Republican party's allegation that the Democrats are planning to institute a "light-switch tax" that would cost every American household $3,128 annually. The punchline is this: The Times got in touch with John Reilly, one of the authors of the study the GOP cited as the source of that number, and he said, "It's wrong in so many ways it's hard to begin."
As we noted earlier, "light-switch tax" is a tendentious renaming (or misnaming) of "cap-and-trade legislation", which would price and reduce greenhouse gas emissions. But where did the GOP come up with that price tag?
Apparently from this M.I.T. study, which found that a cap-and-trade plan along the lines of the one envisioned by the Obama administration would raise $366 billion a year at the outset. In reality, many of those costs will be passed on to consumers, but those costs will be offset by rebates and conservation and efficiency measures and the transition to other fuel sources and so on. In fact, the exact same study concluded that the actual costs to consumers would begin at $31 a year--or $79 per family. So the Republicans were off by a factor of about 40. But hey, what's an order of magnitude or two between friends.
Apparently, though, House Republicans talked to Reilly himself, and he told them that their reading was wildly inaccurate and misleading. Always on the side of solid science, Republicans withdrew the contention totally ignored him and kept chugging along with that number.
We have a call out to Dr. Reilly, and if he has any more light to shed on that conversation, or anything else, we'll bring it to you.
Josh
Matt
Eric
Cap-and-Trade means a market is used to put a value on atmospheric carbon dioxide. Something like : $20/tonne
This is about the same as saying one has to pay to use oxygen from the atmosphere. So in effect a value is placed on the atmosphere.
Question : does this mean we are about to take the previously unpriced atmosphere, put a value on it, and parcel it out to its first owners ?
Will we read in the business press, a few years from now, about the first CO2 billionaire - a guy who made a fortune buying and selling air ?
The mind reels.
The oil, gas and coal people have thought about this a lot more than others. They know their product is no good unless oxygen is available to burn it. They may block any political plan that they do not like. They will not tolerate the idea that their product requires users to go buy the right to burn it from someone other than them.
Speculation : they may insist that the atmosphere be given, outright, to them. For this deal, they will remove all objections.
Just speculating here - what do you think ?
April 1, 2009 7:37 PM | Reply | Permalink
Look at the water rights issues in the western US and you'll see your answer. In Clark County (Las Vegas, Nevada), I believe there is an ongoing fight by the county water works against people in rural areas for digging a well for water. The county wanted to put meters on all wells because they claimed they had the water rights. Water is like air - you gotta have it to live.
April 2, 2009 7:17 AM | Reply | Permalink
This is about the same as saying one has to pay to use oxygen from the atmosphere. So in effect a value is placed on the atmosphere.
Question : does this mean we are about to take the previously unpriced atmosphere, put a value on it, and parcel it out to its first owners ?
The thing you are so carelessly overlooking is that there IS a price to using any finite resource. The atmosphere is not infinite, thus we each own an individual share of it, and further our shares have value.
The system currently works in such a way that anyone is allowed to use any amount of the atmosphere that they want, without a cost. This means that people will use as much as possible to increase their profits. They will not limit the use of this finite resource, because it will be more profitable to use as much of it as they can. When there is a cost to scrubbing CO2 and no cost to dumping it into the atmosphere, then obviously you choose to dump it into the atmosphere.
The situation is artificial though, there is a real cost to dumping CO2 into the atmosphere. The current setup allows people to ignore the cost. Cap and trade puts a value on something that has value, but is currently being ignored.
Overall your argument is silly, gold used to be valueless free rocks that you picked up off the ground. Once it was determined that those valueless free rocks were a finite resource with some value, we put mineral rights on them and started trading the finite resource for other finite resources. Oxygen, and the atmosphere is the same thing, it is a finite resource that has value. Currently this common finite resource is cost free on paper, but not cost free to humanity when it is used. We have to translate that cost to paper such that people using the resource pay the cost they are extracting from humanity by using it.
April 2, 2009 11:44 AM | Reply | Permalink
Um, what happened to Elana Schor? Her picture and short bio mysteriously vanished from the right hand side of the page w/o any explanation, and no posts from her today.
Lucy, you need to 'splain...
April 1, 2009 8:18 PM | Reply | Permalink
I have also noticed a bunch of new names on the by lines. Interns perhaps?
April 2, 2009 10:58 AM | Reply | Permalink
She was fired for political reasons! Start an investigation!
April 2, 2009 11:25 AM | Reply | Permalink
Is that really what happened, SFC Wallace? If so, why the Kremlin-like wall of silence? Whatever happened to transparency? If that's what up it's too bad---I enjoyed her reporting.
April 2, 2009 12:36 PM | Reply | Permalink
Actually, in that domain, it is two orders of magnitude.
April 1, 2009 8:49 PM | Reply | Permalink
Olbermann had Boehner as the worst person in the world for this.
April 1, 2009 9:14 PM | Reply | Permalink
Excuse me, but if the plan raises $1000 per person for the government (300M people times $1000 = $300B), consumers or investors will be paying that in one way or another, and maybe more with retail markups. What would the family get from the government for that extra $3K+?
Now if the plan didn't raise $1000/person for the government but would simply be wealth transfer from what I will call "polluters" to non-polluters (recipients of the money), then there might be no net cost to consumers at all.
"At various points in the discussion we have pointed out the similarities between a cap-and trade system and an emissions tax. Another option introduced in Section 2.1 is a hybrid
consisting of cap-and-trade system with a safety valve." - the Reilly link
So, what is being discussed, a tax or cap and trade?
April 1, 2009 10:58 PM | Reply | Permalink
Sigh. You have to hand it to the GOP. They have a knack for "rebranding" an idea using words and phrases designed for maximum verbal impact. It's a lot harder to patiently explain the nuances of policy to someone after they've been hit with "death tax" or "light-switch tax" or "marriage penalty." Thus, even though this idea of a "light-switch tax" has almost no basis in reality, I expect it to crop up everywhere in the cable TV talking points and right-wing blogosphere. And to some degree, I'm afraid the force of the words alone may convince some people that cap-and-trade is going to cause a significant increase in their energy bills.
April 2, 2009 1:08 AM | Reply | Permalink
Whether its a light-switch tax or replacing the dollar with a global currency, the repuglicans are vainly searching for catchy phases and circus gimmicks that resonates with the ignorant public to whom are given the privilege of voting without being questioned of their grasp of the issues. Unfortunately for our Republic, it works to their advantage to misrepresent facts in such a manner to give them political credit for issues of simple-minded imagination gone astray(Bachmann), to the confusing arguments (light-switch tax) based on cherry-picked facts to support a pre-determined conclusion counter to what the facts actually support.
April 2, 2009 7:06 AM | Reply | Permalink
Its what Alex Jones and his ilk have been doing for years: willful misreading of legislation and conspiracy theories as to its effects. I could understand when it was the bunker down and grab your guns, lunatic fringe, doing this, but a viable, mainstream political party? I worry for the health of our republic when the opposition moves toward the extreme in an effort to debunk the majority party.
April 2, 2009 8:52 AM | Reply | Permalink
As usual, the republicans are lying !! Republicans are the biggest liars on the planet. Instead of forming some good ideas, all they do is tear everbody down and lie to "prove" it !!
April 2, 2009 1:50 PM | Reply | Permalink