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The Left Is Still Living in a Cost Free World

Posted By Conn Carroll On November 14, 2008 @ 2:37 pm In Energy | Comments Disabled

During the Senate debate over the Lieberman-Warner cap and trade bill, the Center for American Progress published a report [1] purporting to show the ‘profits’ the federal government would create by instituting a cap and trade system for carbon. These ‘profits’ would come from the government sale of emissions permits to U.S. businesses. CAP explained: “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.”

But if carbon capping is such a surefire way to create “profits” for the government to invest, then why stop at Lieberman-Warner’s modest 18% carbon emission reduction by 2020? Why not double it to a 36% carbon emission reduction and double the government revenue? Why not set mandatory carbon reduction at 100% and quintuple the government’s take?

The answer is that carbon taxes come at a cost and all cap and trade programs are just carbon taxes dressed in drag. A tax on carbon will inevitably raise the cost of energy, and higher energy prices slow job growth. CAP never acknowledged this during the Lieberman-Warner debate and they still don’t today.

CAP scholar Robert Pollin recently published a report [2] detailing how many jobs a $100 billion in government spending on a “green economic recovery program” could create. When Heritage’s David Kreutzer pointed out that Pollin’s report did not take into account all the jobs that would be destroyed by the government taxing or borrowing to raise that $100 billion [3], Pollin fired back [4] arguing that government spending on “green investments [5]” would create more jobs than government spending on the oil industry.

This was progress for CAP: an actual acknowledgment that the government faces policy choices about how to spend scarce resources. The problem is that no one in Washington is pushing for $100 billion in government spending for the oil industry. As we pointed out [6], Pollin presented a false policy choice. Now Pollin is back [5] claiming his report does address “the fiscal constraints and consequences of our green investment proposal.” If he does so in a serious manner, we can’t find it.

He does compare his $100 billion “green investment” plan with the April 2008 $100 billion tax rebate checks, but unless Pollin also has a section in his paper where he describes how he invented time travel, this is also a false policy choice. If Pollin is arguing that his $100 billion “green investment” plan will create more jobs than $100 billion worth of President Obama’s promised tax cuts for 95% of Americans, then that is a fair debate. But we didn’t read that in his report either.

Pollin does mention that down the road he does expect a cap and trade program to raise the necessary funds, but that just puts us back to where CAP was in June. All cap and trade plans are taxes on carbon. All taxes on carbon will raise the price of energy. Higher energy costs will cause job losses. The Center for Data Analysis estimates [7] that Lieberman-Warner would cost more than 500,000 jobs a year. Pollin, and CAP, never acknowledge any of these cost. Must be nice living in their cost free world.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2008/11/14/the-left-is-still-living-in-a-cost-free-world/

URLs in this post:

[1] report: http://www.americanprogress.org/issues/2008/06/auction_revenue_report.html

[2] report: http://www.americanprogress.org/issues/2008/09/pdf/green_recovery.pdf

[3] Pollin’s report did not take into account all the jobs that would be destroyed by the government taxing or borrowing to raise that $100 billion: http://www.heritage.org/Research/EnergyandEnvironment/wm2122.cfm

[4] fired back: http://www.americanprogress.org/issues/2008/11/heritage_response.html

[5] green investments: http://www.americanprogress.org/issues/2008/11/green_investment2.html

[6] we pointed out: http://www.foundry.org/2008/11/12/the-lefts-big-deficit-less-energy-plan-for-millions-of-low-paying-entry-level-jobs/

[7] estimates: http://www.heritage.org/research/EnergyandEnvironment/cda08-02.cfm

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