Skip to comments.Fuzzy Math - According to an MIT study, cap and trade could cost the average household more...
Posted on 04/25/2009 8:51:28 PM PDT by neverdem
According to an MIT study, cap and trade could cost the average household more than $3,900 per year.
It's just another inconvenient truth: If Americans want any of the government remedies that would supposedly save a planet allegedly imperiled by global warming, it's going to cost them.
Just how much it will cost them has been a point of contention lately. 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."
According to Politifact, Reilly's report included an "estimate of the net cost to individuals" that "would be $215.05 per household. A far cry from $3,128."
Running with Politifact's report, bloggers at Think Progress called the GOP's claim a "deliberate lie," a "myth", and an "outright lie". On April 1, MSNBC's Keith Olbermann said that cap and trade's "average additional cost per family six years from now would be 79 bucks, minus the amount foreign gas prices would drop based on decreased demand, and minus lowered health care costs, because of the cleaner atmosphere. Thirty-one bucks, 3,100 bucks, it's all the same to Congressman John the mathlete Boehner, today's worst person in the world." On April 8, MSNBC's Rachel Maddow said of the GOP's figure: "No. Pants on fire. The MIT guy says 'no.' That's not what the study says. Not true. You can't say that."
From Politifact to Think Progress to MSNBC, Reilly's rebuttal of the GOP cap-and-trade estimate made its way to the Democratic caucus in the House of Representatives. During an April 2 floor debate, New Jersey Democrat Rob Andrews criticized Republicans for citing a study that "the author claims is just being blatantly misrepresented," and the staff of the House energy committee chairman, Massachusetts Democrat Edward Markey, wrote that the figure was "more fuzzy math from Republicans."
The falsity of the $3,100 per household cap-and-trade estimate became a well-established fact among members of the press. News outlets that reported Reilly's criticism of the GOP's figure included not only liberal outlets like The New Republic and The Washington Independent, but mainstream publications like Congressional Quarterly, The Hill, Politico, McClatchy, and the Wall Street Journal.
Minnesota Republican Michele Bachmann faced harsh criticism after citing the $3,100 figure in an April 7 Minneapolis Star-Tribune op-ed. "Bachmann: I, Too, Know More About Climate Change Than MIT Scientist," sneered one headline at the website TPM. "Whether Bachmann is ignorant or dishonest is unclear," wrote The Washington Monthly's Steve Benen.
When the Star-Tribune's opinion page editor Eric Ringham was contacted about Bachmann's use of the figure, he apologized for letting her include it in her column. "It wasn't on my radar. I'm embarrassed to have let it go unchallenged," Ringham told Think Progress. "You can rest assured this study is never going to be represented in the paper again . . . without confirmation it's being accurately portrayed."
But, as the saying goes, a lie can make its way halfway around the world while the truth is putting its shoes on. 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]."
In Reilly's view, the $3,128 taken through taxes will be "returned" to each household whether or not the government cuts a $3,128 rebate check to each household.
He wrote in an email:
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. [...] The only way that money does not get recycled to the "average" household is if it is spent on something that provides no useful service for anyone--that it is true government waste.
He added later: "I am simply saying that once [the tax funds are] collected they are not worthless, they have value. If the Republicans were to focus on that revenue, and their message was to rally the public to make sure all this money was returned in a check to each household rather than spent on other public services then I would have no problem with their use of our number."
Most Americans probably care a great deal whether they would get to spend that $3,128 themselves or the government spends it on programs to put a chicken in every pot and a Prius in every garage. And the fact is, it's anybody's guess how cap-and-trade revenues would end up being spent. Obama has suggested he would like to use most of cap-and-trade revenues to fund his "making work pay" middle- and lower-class tax credit ($400 per individual and $800 per family per year). Congressional Democrats have left the door open to spending the revenues to "invest in clean energy jobs and cost-saving energy efficient technology," as Rep. Markey's staffers have written.
After corresponding with Reilly, I contacted Politifact's reporter Alexander Lane and editor Bill Adair to ask if they would correct their report that the GOP's estimate of cap and trade's cost is a "pants on fire" falsehood.
Lane wrote in an email: "The detail of my piece that you think needs correcting seems to be in flux...". The "detail" to which he referred was Reilly's admission that the real cost per household would be $800--not $215 per household as Politifact originally reported.
While the discrepancy between these figures was solely Reilly's fault, Politifact's report contained inaccuracies that it should have been able to avoid. Politifact accepted Reilly's logic that the $3,128 collected per household via taxes translates to a net-cost of $0 per household. It reported that "results of a cap-and-trade program, such as increased conservation and more competition from other fuel sources, would put downward pressure on prices," but it didn't make clear that Reilly's estimate of the "real cost"--which didn't include the $3,128 per household--already accounts for these downward pressures. "Moreover," Politifact added, "consumers would get some of the tax back from the government in some form." In fact, Reilly assumed that all--not "some"--of the tax revenue would be returned. Politifact and other news outlets reporting on Reilly's criticism of the GOP's estimate have not made it clear that taxpayers would "get" some or most of this money back through government spending.
When I asked Bill Adair over the phone last week if Politifact would correct its report, he didn't answer the question and ended our conversation by saying: "You're getting me at a really bad time. I would love to talk about this any time tomorrow." Adair did not reply to further inquiries.
On Monday, Politifact won a Pulitzer prize. It has not yet corrected its report.
John McCormack is a deputy online editor at THE WEEKLY STANDARD.
Correction: An earlier version of this article incorrectly reported that Reilly's estimated "real cost" per household was $800 for a family of four. In fact, Reilly calculated this $800 cost for the average-sized American household--2.56 people, the same figure Republicans used in their calculation.
I'm sure it's wrong, too. It's probably too low.
Surmising the endless stream of available government money is translated by goverment bean-counters as likely the same for American households. They would be WRONG and severely underestimating the burden they will be creating.
I think glo-bull warming is one of the biggest pieces of crap to come down the pike in a long time - but - the first part of a book titled “how to lie with statistics” which was written in the 30s and which I got from my grand pa - deals with never letting yourself be roped into revealing the mean.
Always, always, always use averages if you intend to deceive.
There aren’t good enough numbers in this to evaluate it.
But the strict use of averages makes it highly suspect. Let the DUmmies do the spinning.
“ANYTHING that costs cash strapped (many unemployed and some fearing unemployment on a daily basis) citizens will be an excessive burden.”
But, of course, it will be a bigger burden for women and minorities.
With all the nObama prosperity that should be flooding the nation, it will be a mere pittance for each household to cough up another $260 a month!
put any number on it, still wont reduce the emissions that will still be allowed, they will just have to be bought and sold...
the rest of the dirtiest polluters will remain, and until the sun decided to change its cycle we'll warm or cool as it sees fit...
Dont Waste Time Cutting Emissions NY Times guest OpEd
Some noteworthy articles about politics, foreign or military affairs, IMHO, FReepmail me if you want on or off my list.
Great Post, everyone should read this.
This is still a huge understatement in the cost, Manufacturers aren’t going to get some of the money returned to them, and if they did it would be a world trade organization violation.
Bottom line, you can say bye to manufacturing.
Thanks for the ping!
A professor's view of Hillary's “We will take your money for the greater good” and the Great O’s “Redistribution of wealth” in action.
If I was a betting man that is where I would put my money. For example
Congressional Democrats have left the door open to spending the revenues to "invest in clean energy jobs and cost-saving energy efficient technology," as Rep. Markey's staffers have written.
Democrats trolling for campaign cash by sending tax dollars to useless start ups that could not make a profit with out government subsidy
Yes, that cap and trade program Europe sure has has been a real winner. One need only look to Europe to see both why America still needs coal, and how cap-and-trade policies are doomed for failure. The European Unions cap-and-trade program is in complete collapse as much of Eastern Europe, Italy, and Germany are all demanding exemptions from their carbon limits. Not only has the EUs cap-and-trade failed to actually reduce carbon emissions, but even if the reductions were met, they would have no impact on world temperatures. Meanwhile, Germany plans to build 27 coal-fired plants by 2020. Italy plans to increase its reliance on coal from 14% today to 33% in just five years. In all of Europe, 40 new major coal power plants are set to be built in the next five years.
While the rest of the world is adding power supply, we are subtracting it. Obamas allies at the National Resources Defense Council have stopped construction on 65 coal plants and 13 natural gas plants nationwide. Right now, the U.S. has 760 gigawatts of power to meet consumption. We will need 135 gigawatts of new capacity over the next decade to keep the lights on, but right now only 57 gigawatts of power are planned. Coal supplies almost half of our nations electricity and more than 20% of our nations total energy consumption. We need more coal plants, not less. Despite decades of subsidies, alternative energies such as wind and solar power contribute only 1% of our nations energy needs. http://www.qando.net/details.aspx?Entry=9626
Now if you listen to Obama’s little SF spiel, he said that he would institute a “100%” system. That means no exemptions. None. OBAMA TELLS SAN FRANCISCO HE WILL BANKRUPT THE COAL INDUSTRY http://www.youtube.com/watch?v=Hdi4onAQBWQ There’s a reason I consider Gore the most dangerous man alive. Here is Al Gore’s 5 step, economist sanctioned plan to save the world and America’s economy.
OBAMA: “So if somebody wants to build a coal-powered plant, they can. Its just that it will bankrupt them because theyre going to be charged a huge sum for all that greenhouse gas thats being emitted. You know, when I was asked earlier about the issue of coal, uh, you know Under my plan of a cap and trade system, electricity rates would necessarily skyrocket. Even regardless of what I say about whether coal is good or bad. Because Im capping greenhouse gases, coal power plants, you know, natural gas, you name it whatever the plants were, whatever the industry was, uh, they would have to retrofit their operations. That will cost money. They will pass that money on to consumers.”
Here the links and reports of cap-and-trade in Europe. The European Unions cap-and-trade program is in complete collapse as much of Eastern Europe, Italy , and Germany  are all demanding exemptions from their carbon limits. Not only has the EUs cap-and-trade failed  to actually  reduce carbon emissions , but even if the reductions were met, they would have no impact on world temperatures . Meanwhile, Germany plans to build 27 coal-fired plants by 2020 . Italy plans to increase its reliance on coal from 14% today to 33% in just five years . In all of Europe, 40 new major coal power plants are set to be built in the next five years .
Cap & Trade: Even More Expensive Than Thought The fact is, cap and trade is going to cost taxpayers significantly more than the measly $13/week tax cut that the Democrats and the left are so excited about. While the $3,900 cost cited by John McCormack is an accurate accounting of what Reillys study portends, even that is probably an unrealistically low estimate.
I get it!
Taxes don’t cost anybody ANYTHING, because the government is going to SPEND the taxes on GOOD THINGS!
You got it! Taxes don’t cost anything. In fact, because the government spends the money it collects BETTER than you would have, the more you are taxed, the RICHER you get!
Whatever the true cost, this cap and trade baloney is like attaching a one pound or more weight to the leg of sprinter, and then claiming the runner can still run almost as fast as he or she could before the weight was put on. The question is: why put the weight on in the first place?
You'd be surprised at how many people believe that. Or maybe you wouldn't. I've talked to Dems who get absolutely apoplectic when I tell them that they can spend their money better than the government can. For these people, the government (in the hands of Dems of course) is all-wise and all-knowing.
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