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  • Time vs. Truth When it Comes to Cap and Trade

    “In fact, they’re all but lying.” Those are pretty strong words to be used in a national news source, especially one that aspires to be an arbiter instead of an advocate. So, it is disappointing that Time magazine would make that statement either in clear ignorance of the facts or as a way of bending the truth itself.

    Time’s article refers to groups whose cost estimates for the Waxman-Markey cap-and-trade energy tax exceed $175 per family per year, or roughly what government number crunchers argue it would be. Heritage is one of those groups, but our estimate of nearly $3,000 per year per family of four is a much more truthful answer to the cost question than is $175.

    Why is the $175 figure so sacred to Time? It is from a Congressional Budget Office forecast that it declares is “[a] more reliable study” since the CBO presumably is non-partisan. Let’s look at this “more reliable” study. Footnote 3 exposes its most fundamental problem:

    “The resource cost does not indicate the potential decrease in gross domestic product (GDP) that could result from the cap. The reduction in GDP would also include indirect general equilibrium effects, such as changes in the labor supply resulting from reductions in real wages and potential reductions in the productivity of capital and labor.” [Emphasis added.]

    GDP (Gross Domestic Product) is the broadest measure of national income. So, it seems, in calculating the bill’s impact on the economy, the CBO left out the part that actually measures the bill’s impact on the economy.

    The Heritage analysis estimates that the lost GDP works out to $1,889 per family of four in 2020, the year for which the CBO says the total cost is $175. Remember, the CBO explicitly left this measure of income loss out of their “more reliable” calculation. Did Time know that? If it did, would it change its mind about which groups are telling the truth? Let’s hope so.

    How did Time explain the extraordinary difference in cost to families? How does it explain the higher cost estimates? “[T]hose numbers assume that billions of tons worth of inexpensive carbon offsets won’t be available under the bill, which would significantly inflate the overall cost.” Wrong again.

    The CBO study with the $175 cost estimate is derived from a more complete study done two weeks earlier. On page 16 of that study, the CBO projects CO2 emitters will use 300 million tons of domestic offsets and 425 million tons of international offsets in 2020—a total of 725 million tons of offsets (offsets are a scheme that effectively raises the CO2 caps, thus reducing costs). Not only did Heritage recognize the availability of the offsets, we even assumed a slightly more generous use of 729 million tons in 2020. We went beyond the level assumed by the CBO.

    Our handling of offsets is clearly explained in our study. Time says that different assumptions on this critical variable led to the large differences in economic impacts. Would Time have said “all but lying” if it knew that Heritage and the CBO used virtually identical assumptions as opposed to the completely different assumptions claimed in the article? Let’s hope so.

    Time implies that the higher cost estimates come only from industry groups. However, independent think tanks on both the left and right agree that income losses from Waxman-Markey will be significant.

    The Heritage Foundation and the Brookings Institution are often viewed as counterweights on the ideological spectrum. The Brookings Institution estimates Waxman-Markey will cost about 1.8 percent of GDP in 2035 and 2.5 percent by 2050. By way of comparison the Heritage study projects a 2.2 percent lost GDP in 2035 (we do not make projections beyond 2035). The studies dismissed by Time find similar large losses in income. The loss in the CBO study works out to less than 0.2 percent of GDP—one tenth that of Brookings, the so-called liberal think tank.

    Economists from liberal think tanks, conservative think tanks, and industry associations agree that Waxman-Markey will reduce income by hundreds of billions of dollars per year. The CBO analysis purports to show an impact that is one-tenth that of these other studies. Time throws out the studies that do look at lost income, calls their authors liars, and substitutes a result from a study that doesn’t count lost income as part of an economic impact.

    Time says the CBO study is “more reliable.” Is Time ignorant or is it just lying?

    Posted in Energy [slideshow_deploy]

    15 Responses to Time vs. Truth When it Comes to Cap and Trade

    1. David Kreutzer, Ph.D. David Kreutzer says:

      Sorry, forgot to include link to the Brookings study (so far just the slides from the presentation).

      See slides 19 and 33 (labeled 18 and 32) for GDP losses.


    2. Ken St Louis says:

      I haven't raed time magazine now for years unless its lying in the Doctor or Dentists office, I don't buy manure! Of course time is lying! They are a liberals publication that would tell a lie if the truth would help! Can't imagine how they stay in business.

    3. Jerry from Chicago says:

      Hopefully, the Senate will show some guts and some wisdom and defeat this Cap and Trade nonsense. This legislation is based on a hoax that carbon dioxide emissions is causing global warmimg. It just ain't so.

      Al Gore, Nancy Pelosi and others in power have already invested in "green energy" companies and stand to profit greatly if they can bulldoze this legislation through. It will cost the average American taxpayer an additional $2,000 to $3,000 annually in increased energy costs (gasoline, natural gas, oil and electricity). It will cause the U.S. to import more foreign oil, not less and will result in more lost jobs.

    4. Bob, Hartselle says:

      The CBO and the estimated cost was $175. Did they get to check the 341 pages added in the dark of night. The CBO estimation of the health care bill was only covering the first one-sixth of the writing. Truth will not contradict.

    5. Bob McKenna, Florida says:

      It's hard to believe that "Time" and "Newsweek" are still in business. For "Time" not to be lying by calling the CBO study "more reliable" their editors would have to be willfully ignorant which, in the case of a news magazine, is as bad as lying.

    6. Keith Alexander Se says:

      We have been given a false choice.

      Global warmning or cap and trade. The major green house gas is water vapor, CO2 is almost negligible. The solution is nuclear power. No Co2, no imported oil and we will not worry about running out of oil. Issue permits for five new nuclear power plants each year for the next 20 years, or until we have so much electricity that we are the envy of the world. Choose a simple dependable design and make them all the same, like the Liberty ships of World War II. Have we already forgotten the lessons of the Greatest Generation? Build a reprocessing plant, maybe at the Yucca mountain site. This choice will create tens of thousands of high paying jobs. The French started a similar plan 40 years ago and now generate 80% of their electricity from nuclear power. It seems the French have been the visionaries. See "Discover" (June 2009 pages 54-57). Two important points, the average cost of generating nuclear energy in the United states was less than two cents per kilowatt-hour in 2006 and a number of environmentalists are throwing their support behind nuclear power because it is clear that no technology will do more than nuclear to reduce our use of fossil fuels. Everyone gains and no one need give up their energy intensive activities.

    7. Dennis Social Circle says:

      The liberals and cronnies for obama will tell lies to keep the dems and obama in power. The supposed leaders of this country, pelosi, reid, obama AND THE REST WOULD NOT KNOW THE TRUTH IF THEY RAN INTO IT. We have to get these people out of office as soon as possible.

    8. JR Brooks Gurnee, Il says:

      We are being led by the insane! Another so-called crisis that is seen as an opportunity for robbing us Chicago street thug style. Now we begin the greatest theft of our freedoms and personal wealth ever attempted by the Washington elite. This diversion by Time to call into question the truthfulness of the Heritage Foundation's serious research exposes the extent of their corruption and will hopefully hasten their demise. The loss of GDP as correctly disclosed by the Heritage study is unimaginable when coming from a single legislative act. By restricting the private sector consumption of energy, from any and all sources, there can be no economic recovery or human advancement by any measure. Not even the sacred pursuit of alternative sources of energy is possible without the tremendous consumption of energy. All this because of the fabricated assumption that micro increases in atmospheric CO2 is the overwhelming cause for rising global temperatures. In effect Congress has now decided to regulate (control and tax) our collective breathing, both to sustain life and to engage in commercial enterprise. So much for the the inalienable right to life, liberty and the pursuit of happiness – NOT IF IT EMITS CO2!

    9. Pingback: » Financial News Update - 07/01/09 NoisyRoom.net: “Extremism in the defense of liberty is no vice. Moderation in the face of tyranny is no virtue.” Barry Goldwater

    10. Dave,UK says:

      Until one goes bang or if you get lucky you have to decommission it in 50 years leaving behind a 100,000 year lethal legacy far worst for our offspring than any CO2 Molecule, the source of all food for the plant.

      Check out the story of Sellafield formerly Windscale – we had our Chernobyl/Three Mile Island back in the late 50's

    11. Dave McDuffie, Aliso says:

      The most hellish piece of legislation ever conceived since the birth of this country is about to be unleashed, by a bunch of self-legitamized crooks seaking to earn millions of our tax payer earned dollers, and even the dumbest amongst us knows global warming is an oughtright lie. In the very near future, unless Americans stand up and fight, we will wake up one morning and our dollars will be worthless, our jobs probably previously already lost, no way to buy food or gas as their price is beyond what anyone can afford, and only the extraordinarily wealthy will be able to survive. They are planning their moves right now. Who ever moves first…WINS their side. Which side are you on?

    12. Marshall Hill MI. says:

      AS California goes,so goes America!

    13. Steve, New York says:

      Breaking News: Manufacturing & Technology eJournal Poll Shows Clean Energy Act Could Force Nearly 20 Percent of Manufacturers to Close

      The cap-and-trade based system, pushed by the Obama administration and passed by the U.S. House, could cause energy costs to skyrocket and fuel more unemployment

      Read full article at http://www.mfrtech.com/articles/2293.html

    14. Barb mn says:

      We're low income (due to tax burdens), family of four, we're not paying a penny more, then $175!

      Hopefully the idiots will come to their senses and realize the corruption and that no finance from any taxpayers is necessary at all!

    15. dduck, NYC says:

      Mr. Alexander,

      I agree with you, but would like to know how far back the powers that be have dropped the ball. I'm tired of the current administration, be it Dems., or Reps. being blamed. As far as I can recollect it was only Carter who seriously pushed for NP; the rest have just blown smoke. Where has everyone been on NP and how to safely get rid of the toxic nuclear waste problem. And, why are the approval times and fees so high as to discourage new plant construction. Most of the existing plants are 40 year old, I think. If these problems had been worked on seriously for the last 40 years, we would be as smart as the French.. We aren't,and I wonder why. Is it big oil, big coal, dumb administrations and congresses, or what?

      I'm ready for a good conspiracy theory.

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