Krugman Wrong on Cap and Trade Costs
Nicolas Loris /
Paul Krugman blasted opponents of cap and trade and The Heritage Foundation in his New York Times column today, saying:
So where do the apocalyptic warnings about the cost of climate-change policy come from? Are the opponents of cap-and-trade relying on different studies that reach fundamentally different conclusions? No, not really. It’s true that last spring the Heritage Foundation put out a report claiming that Waxman-Markey would lead to huge job losses, but the study seems to have been so obviously absurd that I’ve hardly seen anyone cite it.
Krugman goes as far as saying a Treasury Department study does not exist even though the Competitive Enterprise Institute’s Chris Horner uncovered it using the Freedom of Information Act.
And if Krugman hasn’t seen anyone cite our numbers perhaps he should check: USA Today, The Wall Street Journal, The Washington Post, CNN, Roll Call, The Washington Times, The Detroit News, The National Review, The Examiner, Congressional Quarterly (9/18/09), The Chicago Sun Times, CBSNews.com, USAgNet, Denver Post, McClatchy-Tribune, Chattanooga Times-Free Press, Debeque Tribune Herald, Investors Business Daily, Greenville SC News, Richmond Times Dispatch, Charleston Post & Courier, Manchester Union Leader, Seattle Times, International Business Times, Florida Times-Union, Omaha World-Herald, Cincinnati Inquirer, The Hill, Grand Rapids Press (7/12/09), The Cleveland Plain Dealer, The Daily Independent, The Tennessean, or the National Journal – to name a few on a much more exhaustive list.
Or he should ask one of these Members of Congress who have cited our data in floor speeches or hearings: Rep. Latta (OH)7/21/2009, Rep. Lucas (KY) 6/26/2009, Rep. Pence (IN) 6/26/2009, Rep. Olson (TX) 6/26/2009, Rep. Burton (IN)6/26/2009, Rep. Calvert (CA) 6/26/2009, Rep. Sessions (TX) 6/26/2009, Rep. Mica (FL) 6/26/2009, Rep. Foxx (NC) 6/25/2009, Rep. Tiahrt (KS) 6/24/2009, Sen. Alexander (TN) 6/18/2009, Rep. Davis (KY) 6/17/2009, Rep. Latta (OH) 6/16/2009, Rep. Goodlatte (VA) 6/11/2009, Sen. Barrasso (WY) 6/11/2009, Sen. Vitter (LA) 6/4/2009, Rep. Latta (OH) 6/3/2009, Rep. Pence (IN) 6/3/2009, Rep. Latta (OH) 5/19/2009, Rep. Latta (OH) 5/13/2009, Rep. Pence (IN) 4/21/2009, Rep. Pitts (PA) 4/21/2009, or Rep. Blackburn (TN) 3/17/2009. And debate hasn’t even begun in the Senate.
Krugman admits “Saving the planet won’t come free” but he also pushes the “it will only cost a postage stamp per day” rhetoric. Interestingly, at a Heritage event this week not one presenter out of six (including three government agencies) projected a net increases in employment from cap and trade. The entire debate was over the magnitude of income, consumption and job losses. And we’re not the only ones projecting devastating economic impacts.
The Brookings Institution projects that an additional 8 percent cut in carbon dioxide emissions increases consumption costs 45 percent. GDP in the United States would be lower by 2.5 percent in 2050, and unemployment would be 0.5 percent higher (1.7 million fewer jobs) in the first decade below the baseline or without cap and trade. The total allowance revenue (tax revenue) generated by 2050 would be $9 trillion.
The National Black Chamber of Commerce found the following adverse effects from Waxman-Markey: In 2015, GDP would be 1 percent ($170 billon) below the “no cap-and-trade bill” baseline. In 2030, GDP will be 1.3 percent ($350 billon) below the baseline, and by 2050 the study projects a reduction in GDP of 1.5 percent ($730 billion). The study also projects higher job losses of 2.3-2.7 million jobs in each year of the policy through 2030—even after accounting for “green job” creation.
The National Association of Manufacturers (NAM) and the American Council for Capital Formation (ACCF) study found that by 2030, U.S. jobs decline by 1.8 million under the low cost case and by 2.4 million under the high cost case. Moreover, “Higher energy prices would have ripple impacts on prices throughout the economy and would impose a financial cost on households of $118 to $250 by 2020 and $730 to $1,248 by 2030.”
Krugman, instead, points to the Congressional Budget Office study, which is not a comprehensive study of the true costs of the Waxman-Markey cap and trade bill.
And even if, by some divine miracle, cap and trade did cost a postage stamp per day, Climatologist Chip Knappenberger projected that the Waxman-Markey cap-and-trade legislation would moderate temperatures by only five hundredths of a degree in 2050 and no more than two-tenths of a degree Celsius at the end of the century. We’d rather have a stamp.