Fuzzy Facts
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)."
It is nice to see that MIT professors fall prey to the same mistakes (in relying on spread sheet calculations and typos) as the rest of us do. It is comforting in some small way. However, the mistake gets even bigger as the interview with Weekly Standard goes on.
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...
So in other words, the House Republican Caucus was RIGHT...cap and trade will cost the American taxpayer $3128 a year IN ADDITIONAL TAXES!!!!! Michele Bachamann was right - someone alert Eric Ringham (Star Tribune editor)!
Now there is some debate on what will happen with those tax dollars....
...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.
That is a big assumption given that we are talking about a government that already takes more (in the form of taxes) than it gives back to the people. However, that is only one of many assumptions that this MIT professor makes when he makes this statement. First off, who is going to get that money from those that collected it? The state government or the Feds? It should be the states since they most closest regulate the energy companies, but I think we can safely assume that since this is federal cap and trade that it will go to the feds. The next assumption is that there is a mechanism in the bill to give that money back which there currently is not! Then there is the assumption that the average citizen thinks like an MIT professor....
The average citizen does not think like an MIT professor. They see the additional expenses in their monthly bill as just that. IF they get anything back from the government, they will not think of it as a "repayment" of that monthly expense - because that has already been spent. The Republicans presented this cap and trade increase in a way that the average bill payer is going to see it - as an upfront expense which is going to hurt those on fixed incomes the most!
The fact that Democrats are out to over tax everyone - rich and poor alike is no surprise to those of us in the "loyal opposition". Whether it is raising taxes on every day expeditures like food and clothing, to the occasional "luxury" like alcohol and cigarettes (more on this later), to electricity and heat, the Democrats are out to over tax everything that moves in order that they can force their lifestyle choices on the rest of us. It is time for the average citizen to say "Enough is enough". The Tax Day Tea Parties were just the beginning. Now is the time for every citizen to make sure that their legislator (state and federal) hears from them regularly - whether they agree with you or not! Make sure that the will of the voters are known in St. Paul, Salt Lake City and Washington DC! Make sure that your cap and trade supporting governors like Pawlenty and Huntsman know that you are NOT PLEASED with their signing on to a scheme that will take more and more of your hard earned tax dollars away from the more important things like private charity and your own family. That is the beginning....more to come.
Labels: Cap And Trade, Environmentalist Hypocrites
posted by The Lady Logician at
9:06 AM
6 Comments:
OMG the Democrats want high taxes! Everything they propose is geared toward the goal of raising taxes! Not true.Initial estimates by the Congressional Budget Office project that an economy-wide cap-and-trade program would generate at least $50 billion per year, but could reach up to $300 billion. Approximately 10 percent of this revenue should be allocated to help offset costs to businesses and shareholders of affected industries. Of the remaining revenue, approximately half should be devoted to help offset any energy price increases for low- and middle-income Americans that may occur as a result of the transition to more efficient energy sources. The other half of the remaining revenue should be used to invest in renewable energy, efficiency, low-carbon transportation technologies, green-collar job training, and the transition to a low-carbon economy.
...Revenues from the permit auction would essentially be “recycled” back into the economy to facilitate the transition to an efficient, low-carbon energy economy and ensure that consumers are not unduly burdened by potentially higher energy costs.
By
rmwarnick, at 10:24 AM
You write: That is a big assumption given that we are talking about a government that already takes more (in the form of taxes) than it gives back to the people.Care to quatify that, especially since it is the first sentence in a paragraph decrying the injustice of large assumptions?
And you should read up a bit more before typing these posts.
ONE: The GOP Claim. In a press release Tuesday afternoon, House Minority Leader John Boehner charged that cap-and-trade legislation to lower greenhouse gas emissions in the U.S. would raise household utility bills by $3,100 per house. Boehner cited an MIT study on the economic impact of cap-and-trade as the basis for his claim.
TWO: The MIT Study. According to a 2007 MIT study titled “Assessment of U.S. Cap-and-Trade Proposals,” the actual economic impact of a cap-and-trade system (beginning in 2015) would be more along the lines of $31 per person a year, or about $75 for a family. That cost would rise to a high of $510 in 2025, then fall back to $205 by 2050. Taken together and averaged, the study figured the average cost per year would be about $340, “only a part of which would be actual energy bill increases.”
THREE: The MIT Response. MIT was not happy to have its academic study distorted. The lead author of the MIT study, Prof. John Reilly, sent a letter Wednesday saying his study was “misrepresented” by the Republicans. In an interview with PolitiFact, the professor said he warned Republicans earlier last month that the number they were using was wrong. “Someone from the House Republicans had called me (March 20) and asked about this,” Reilly said. “I had explained why the estimate they had was probably incorrect and what they should do to correct it, but I think this wrong number was already floating around by that time.”
FOUR: The GOP Math. In spite of the study’s author asking Republicans to stop using the wrong numbers, Thursday, Rep. John Boehner sent out another press release which re-iterated his claim that cap-and-trade would cost families $3,100 a year. Rep. Boehner said he stood by his “formula” for using the MIT data, in which he took the total number of revenues generated by cap-and-trade from power plants in 2015 and then divided by the number of households in the country (assuming that power companies directly passed the expense on to their consumers.” Prof. Reilly and the other mathmaticians say this formulation just doesn’t make sense. Prof. Reilly explains, “The tax revenue collected through such an auction, the costs of reducing greenhouse gas emissions, and the average impact on a household are very different concepts.”
FIVE: The Actual Cost. From Politifact: “The tax might push the price of carbon-based fuels up a bit, but other results of a cap-and-trade program, such as increased conservation and more competition from other fuel sources, would put downward pressure on prices. Moreover, consumers would get some of the tax back from the government in some form.” In fact, MIT has another study, “Report 160, Analysis of U.S. Greenhouse Gas Tax Proposals,” which calculated the cost on families at different income levels. According to Prof. Reilly, “Our Report 160 shows that the costs on lower and middle income households can be completely offset by returning allowance revenue to these households.” (In his press release, Rep. Boehner tried to deflate the rebate concept, saying, “Nothing in the Democrats’ budget would provide rebates or any relief to consumers.” The reply from the Wall Street Journal coverage of the issue: “The draft budget information on planned rebates of cap-and-trade revenue is on page 11, if anyone’s interested.")
By
Jason The, at 8:58 PM
What new or higher taxes are you paying?
An angry uneducated mob is not equal to a movement. The tea parties were a joke at best.
By
Anonymous, at 9:07 PM
Looks like The Weekly Standard is in your same book club:
http://wonkroom.thinkprogress.org/2009/04/23/weekly-standard-3900-lie/
By
Jason The, at 11:19 PM
Follow this link & watch the video. After you've watched it, try telling me that this isn't a huge tax increase. Your claim of it costing $75/yr. per family is laughable.
This bill is nothing if not a multi-trillion dollar tax increase masquerading as environmental policy.
By
Gary Gross, at 11:58 PM
Jason darling - did you even READ the post. The MIT professor came out and REFUTED the numbers he gave in Slate and said that when you add everything up the number is HIGHER than the GOP's numbers.
The old talking points have been disproven - or do you claim to be smarter than an MIT professor????
LL
By
The Lady Logician, at 10:28 PM
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