Cap and Screwed... I mean... Trade

[david austin]

The Honorable Timothy F. Geithner
Secretary of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220

Secretary Geithner:

I am writing to respectfully request that you make fully available recently released documents regarding the Administration’s cap-and-trade initiative. The five documents were released this week in response to a FOIA request, and I was confounded to see that every reference, with one exception, to government revenue and costs was deliberately censored.

It appears that the Treasury Department is seeking to suppress the real costs to the American public. Meanwhile, Administration officials continue to purport that the costs of cap-and-trade will be that of “a postage stamp a day,” despite many studies to the contrary, including findings from your own Office of Environment and Energy.

I am particularly interested in the one-page document entitled Domestic Climate Policy that was prepared by Judson Jaffe. The Jaffe document omits important figures, most glaringly, on the annual costs under a cap-and-trade regime, stating, “It will raise energy prices and impose annual costs on the order of XXXXXXXX dollars.”

The Jaffe document does reveal Treasury expectations that, “A cap-and-trade program could generate federal receipts on the order of $100 to $200 billion annually.” This figure in itself, while it corroborates various studies that predict exorbitant costs to American families under cap-and-trade, seems to contradict Administration claims that cap-and-trade’s impact on American families will be minimal.

Study after study has predicted cap-and-trade will result in skyrocketing energy bills and massive job losses. The Congressional Budget Office conservatively estimated that meeting the mandated reductions would cost $864 billion, while some anticipate closer to $1.5 trillion. CBO also predicted gasoline costs would increase by 77 cents per gallon and diesel by 88 cents. And now Treasury documents suggest families will see an annual increase of $1,700, at a minimum.

I respectfully request that all five documents be released in their entirety:

• Domestic Climate Policy, prepared by Judson Jaffe
• Domestic Climate Change Policy transition memo, Draft 2, 11/6/08
• Treasury’s New Office of Environment and Energy, prepared by Jim Kapsis
• Treasury’s Office of Environment and Energy, prepared by Jim Kapsis
• Transition Memo, Subject: Carbon Market Oversight

The censorship of these documents does not correlate with the Administration’s efforts for greater transparency, and raises many serious questions regarding one of the Administration’s leading initiatives that stands to eliminate millions of jobs and affect every single American citizen at a time when the national unemployment rate hovers just below ten percent.

Release of these documents in their entirety will provide a unique opportunity to have an open and honest discussion on the expected costs that a cap-and-trade regime will have on American families and our overall economy.

I have provided copies of the censored documents to remove any potential for confusion. I appreciate your time and prompt consideration of this matter.

Sincerely,
Fred Upton
Member of Congress

Apparently black magic marker is the new 'transparency'


Am I allowed to say the 'black magic marker'?

I doubt this will ever pass with the number of headaches Obama has going for him at the moment... but... this should be calling into question who is really benefiting from all of this 'change'.

I find it interesting that the only number reveled is how much the government would make... while leaving out the net affect on the consumer and how it got there.

[Deff Gordon]

depends on the marker... sometimes you can still read the indention even if it *is* blacked out.

LOL

that's nutz

[SeedfulMusic]

The biggest laugh of this whole article was this part right here...

"The Honorable Timothy F. Geithner"
Secretary of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220

[Turntabletech]

AKA "Cap and TAX" ... essentially it is nothing more than a tax revenue scheme which will funnel middle class money to the global elite / global government in the guise of protecting the environment and subsidizing poor nations who are supposed to economically impacted by warmer temperatures and resulting global catastrophe...

AKA "not going to pass the Senate!"

[PETA]

Originally Posted by Turntabletech

AKA "Cap and TAX" ... essentially it is nothing more than a tax revenue scheme which will funnel middle class money to the global elite / global government in the guise of protecting the environment and subsidizing poor nations who are supposed to economically impacted by warmer temperatures and resulting global catastrophe...

AKA "not going to pass the Senate!"

Actually the tax levied against industry will be paid by all consumers proportionately to their buying because the tax will be factored into price increases... meaning it will be very regressive in impact. Obama's been counting on this to fund his new great society and it looks DOA... thank god.

[vinnie97]

Yet the lefties aren't decrying it...that must be because it's idealistic and no matter how much damage it risks causing, it's AOK because the intent is in the right place.

[PETA]

Environmentalism Is the New Religion - Ian Plimer

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[tricky]

September 28, 2009
Op-Ed Columnist
Cassandras of Climate

By PAUL KRUGMAN
Every once in a while I feel despair over the fate of the planet. If you’ve been following climate science, you know what I mean: the sense that we’re hurtling toward catastrophe but nobody wants to hear about it or do anything to avert it.
And here’s the thing: I’m not engaging in hyperbole. These days, dire warnings aren’t the delusional raving of cranks. They’re what come out of the most widely respected climate models, devised by the leading researchers. The prognosis for the planet has gotten much, much worse in just the last few years.
What’s driving this new pessimism? Partly it’s the fact that some predicted changes, like a decline in Arctic Sea ice, are happening much faster than expected. Partly it’s growing evidence that feedback loops amplifying the effects of man-made greenhouse gas emissions are stronger than previously realized. For example, it has long been understood that global warming will cause the tundra to thaw, releasing carbon dioxide, which will cause even more warming, but new research shows far more carbon dioxide locked in the permafrost than previously thought, which means a much bigger feedback effect.
The result of all this is that climate scientists have, en masse, become Cassandras — gifted with the ability to prophesy future disasters, but cursed with the inability to get anyone to believe them.
And we’re not just talking about disasters in the distant future, either. The really big rise in global temperature probably won’t take place until the second half of this century, but there will be plenty of damage long before then.
For example, one 2007 paper in the journal Science is titled “Model Projections of an Imminent Transition to a More Arid Climate in Southwestern North America” — yes, “imminent” — and reports “a broad consensus among climate models” that a permanent drought, bringing Dust Bowl-type conditions, “will become the new climatology of the American Southwest within a time frame of years to decades.”
So if you live in, say, Los Angeles, and liked those pictures of red skies and choking dust in Sydney, Australia, last week, no need to travel. They’ll be coming your way in the not-too-distant future.
Now, at this point I have to make the obligatory disclaimer that no individual weather event can be attributed to global warming. The point, however, is that climate change will make events like that Australian dust storm much more common.
In a rational world, then, the looming climate disaster would be our dominant political and policy concern. But it manifestly isn’t. Why not?
Part of the answer is that it’s hard to keep peoples’ attention focused. Weather fluctuates — New Yorkers may recall the heat wave that pushed the thermometer above 90 in April — and even at a global level, this is enough to cause substantial year-to-year wobbles in average temperature. As a result, any year with record heat is normally followed by a number of cooler years: According to Britain’s Met Office, 1998 was the hottest year so far, although NASA — which arguably has better data — says it was 2005. And it’s all too easy to reach the false conclusion that the danger is past.
But the larger reason we’re ignoring climate change is that Al Gore was right: This truth is just too inconvenient. Responding to climate change with the vigor that the threat deserves would not, contrary to legend, be devastating for the economy as a whole. But it would shuffle the economic deck, hurting some powerful vested interests even as it created new economic opportunities. And the industries of the past have armies of lobbyists in place right now; the industries of the future don’t.
Nor is it just a matter of vested interests. It’s also a matter of vested ideas. For three decades the dominant political ideology in America has extolled private enterprise and denigrated government, but climate change is a problem that can only be addressed through government action. And rather than concede the limits of their philosophy, many on the right have chosen to deny that the problem exists.
So here we are, with the greatest challenge facing mankind on the back burner, at best, as a policy issue. I’m not, by the way, saying that the Obama administration was wrong to push health care first. It was necessary to show voters a tangible achievement before next November. But climate change legislation had better be next.
And as I pointed out in my last column, we can afford to do this. Even as climate modelers have been reaching consensus on the view that the threat is worse than we realized, economic modelers have been reaching consensus on the view that the costs of emission control are lower than many feared.
So the time for action is now. O.K., strictly speaking it’s long past. But better late than never.

[tricky]

September 27, 2009, 10:16 am The textbook economics of cap-and-trade

I realized, after the last post, that it might be useful to write down just what the Econ 101 version of cap and trade looks like; as it happens, this also helps explain the intellectual sins of Glenn Beck and Martin Feldstein.
So here we go. Bear in mind that something like what follows can be found in just about every intro textbook.
Think of the benefits to the private sector from pollution. Yes, benefits — in the sense that it’s cheaper to pollute than not to, or that it’s easier to produce goods if you don’t worry about whatever emissions result as a byproduct. So we can think of drawing a curve representing the private marginal benefit of emissions, as in this figure:

http://www.princeton.edu/%7Epkrugman/capandtrade.png
In the absence of government action, the private sector will increase emissions up to the point where there is no further marginal benefit. That is, emissions will rise to whatever level is implied by profit-maximization, paying no attention to the effects on the environment.
A cap-and-trade system puts a limit on overall emissions, so that emitters have to pay a price for emitting. This price will, as shown in the figure above, equal the marginal benefit of the last unit of emissions allowed.
Now, the cost to the economy of this limit is the benefit the private sector would have gotten by emitting more than is allowed under the cap. It’s shown in the figure as the red triangle labeled “deadweight loss”. CBO puts these losses under Waxman-Markey at 0.2-0.7 percent of GDP in 2020, 1.1 to 3.4 percent in 2050. These costs have to be set against the environmental benefits.
In addition to this overall economic cost, there’s a distributional effect. The creation of cap and trade means that emission permits command a market price, and the value of these permits — the blue rectangle — goes to someone. Under Waxman-Markey, some of it (a growing fraction over time) would be captured by the government through auctions, and used to cut or avoid increases in other taxes — in effect, recycled to consumers. The rest would be passed on to industry — but because the biggest recipients would be regulated utilities, much of this would also be passed on to consumers.
OK, now let’s send in Beck and Feldstein.
Beck got his number from someone who learned about a guesstimate of what the auction value of permits might be (way higher than current estimates, by the way), divided by the number of households, and proclaimed this the cost of the bill. In effect, he looked at a guess about the size of the blue rectangle, which does not represent an economic cost, and called that the cost to the economy.
In a way, though, what Martin Feldstein did was worse. He took the CBO’s estimate of “compliance costs”, which was $1600 per household in an early report (it’s now down to $900, but who’s counting?), and implied that this was the economic cost of the legislation. But “compliance costs” are basically the sum of the blue rectangle and the red triangle; the true economic costs are just the triangle, and are much smaller.
Another way to say this is that under the Feldstein method, any time you try to correct an externality, which necessarily means changing relative prices, all of the negative effects of the price change will be counted as a cost — but none of the positive effects will be counted as a benefit.
Bad stuff. And what you should bear in mind is that all I’m doing here is conventional neoclassical economics, quite literally basic textbook material. What does it say when the people who claim to believe in this stuff throw it out the window as soon as it leads to policy conclusions they don’t like?

[J. Fees]

Originally Posted by PETA

Environmentalism Is the New Religion - Ian Plimer

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you really buying what this guy is saying?

i do believe science is a religion that most people buy into, but they buy into through scientific proof, which cant be proven, but can be disproven, to yield results. but to say that environmentalists are the leaders of science and that they are making things up is a bit far fetched.

[PETA]

Originally Posted by J. Fees

you really buying what this guy is saying?

i do believe science is a religion that most people buy into, but they buy into through scientific proof, which cant be proven, but can be disproven, to yield results. but to say that environmentalists are the leaders of science and that they are making things up is a bit far fetched.

Sorta. I do buy that atheists often long for that deeper meaning that others find in religion. Many look to pursuing social issues to fill that longing. The no-nukes crowd morphed into greens. They often respond on faith rather than pure reason. One example: Nuclear Power. It is far less polluting than buring carbon based fuels yet they oppose new plants and espouse alternative energy sources (which we should pursue) that cannot currently replace carbon based fuels. Wind, solar, wave, hyro and hydro-thermal are not capable of replacing carbon based fuels. Nuclear can. To demand those alternatives at the expense of nuclear while still demanding an end to carbon based fuels ignores reality. They have faith that we can do it... despite the evidence to the contrary. They are willing to handicap industry to a significant degree (which would amount to a new tax on Americans of.. I forget the number but iirc it was about $1200-$1800 per american).

With AGW they take it on faith rather than science as well. They simply declare the debate over and call doubters the same holocaust deniers. (Ellen Goodman Boston Globe) That ain't rational. If you've got the science then you should be quick to demonstrate why your ideas and facts are better... they don't, for example, offer any reasonable explanation why the Roman and Midieval warming periods were both warmer than today and the dark ages and little ice age were both significantly cooler than today all without carbon... and the polar bears survived... all without government intervention. They conveniently overlook those facts as well as the correlation of those periods to solar activity/inactivity. They have faith... it must be human activity. We must be able to fix it. Never mind our relatively microscopic contribution to so called greenhouse gases. CO2 being a small component thereof.

They act and behave out of faith which is akin to religion. So, in metaphorical terms it's somewhat analogous - it is not identical.


so: global warming and cap and trade.

To buy into cap and trade you must believe that global warming is:

1) real (never mind that we've been cooling since 1998)...

2) that it is man made (never mind the hiostorical cycles we can demonstrate)...

3) that it is bad (never mind that histotically warming trends are good for people and cooling trends are bad - bringing famine, war, desertification - cooler air holds less moisture sop we get less rain)

and

4) that this bill will impact all of the above positively....


we can plot the cost of cap and trade... no one can tell you the benefit. It is a speculative futufre benefit for an extradinary present cost.