This passage from page 7 “justifying” the tax is telling:
“Domestic policies to address climate change and the related issues of energy security and affordability will involve significant costs and potential revenues, possibly np to several percentage points of annual GDP (Le, eqnal in size to the corporate income tax), Creation of a domestic cap and trade system would require management and oversight consistent with, if not stronger, than existing markets for commodities and government securities…”
From a CEI press release Kudos to Chris Horner for making the FOI request.
by Christine Hall CEI
September 18, 2009
Global Warming Cap-and-Trade Costs Could Hit $300 Billion Annually, Cost Up to Several GDP Points, US Treasury Admits
Treasury Dept Releases Un-redacted Documents Friday Afternoon
Washington, D.C., September 18, 2009―Global warming cap and trade costs could hit $300 billion annually, the Treasury Department admitted in documents released today – late in the afternoon and on the day of the Jewish New Year celebration. The same documents had been released by Treasury earlier this week but had important parts redacted. Now, the document is available in its entirety for public scrutiny.
The new information reveals that Treasury estimates that not only could cap and trade cost $300 billion annually, “domestic policies to address climate change and the related issues of energy security and affordability will involve significant costs and potential revenues, possibly up to several percentage points of annual GDP (i.e. equal in size to the corporate income tax).”
The documents were obtained by CEI Senior Fellow Christopher Horner through a Freedom of Information Act request and revealed in a Friday afternoon release after public attention to an earlier version raised questions of what the administration was hiding.
“Today’s release explains why the administration initially sought to keep its internal aspirations and expectations from the public: The cost of a cap-and-trade plan to businesses and consumers will be enormous,” said Horner. “This candid perspective of what could prove to be the biggest tax increase in our nation’s history now must be openly debated before the American public”.
A cap-and-trade plan, as called for by President Obama, would either immediately sell all carbon dioxide emission permits or sell nearly all after a few years of giving industry most of its permits for free.
View the Treasury Department documents (PDF)
Page 4 has the relevant number
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Wow, there’s a surprise.
And you know how ‘official’ numbers always seem to be a wee bit low when reviewed with hindsight 20 years later. Often by an order of magnitude even AFTER a little bit of prestidigitation with the figures.
Here comes the Emperor now, wearing all his new finery …
I love how they imagine more tax is always equivalent to more revenue. I’m sure the 300 billion doesn’t account for all of the price increases we’ll experience.
SteveM has a cool post on CA about the Arctic paper where he shows by changing a few proxies the answer is completely different. I found that by removing only 1 – Yamal, historic temps jump over the year 2000.
http://noconsensus.wordpress.com/2009/09/19/arctic-deconstruction/
Free the code, free the data. When its all out in the public domain, then you can have a conversation. Till then, the answer must be, no way. Start with Mann’s algorithms from MBH98. If that cannot be released, there should be no discussion.
“Domestic policies to address climate change […] will involve significant […] potential revenues”
There you have it!
Disclosure. It is common for contracts to be awarded and the price and terms disclosed. In healthcare and taxation, this is a secret. My math tells me this number is very low. Direct costs may be 400 billin and indirect may be 45 cut in GDP. That means more millions laid off.
Heh heh – I wonder how this snuck out the door.
This is probably the last nail in Cap & Trade’s coffin. The senate has already said they won’t schedule it for any votes for the rest of this year. And next year being an election year, they will be running scared and won’t dare touch anything as unpopular as this. *Especially* not with a Treasury Report like this one hanging out there.
Each day this looks more and more like the Gang that Can’t Shoot Straight.
What’s really funny is that Pelosi and Emmanual got all of those congressmen to go out on a limb supporting this bill even though all it did was hand their opponents a huge club to beat them over the head with in next year’s elections – and now, thanks to the Senate, it was all for nothing. Those congressmen who took big payoffs in the bill in exchange for taking heat on an unpopular bill – heh heh, they’ve already got the heat and yet the payoff is never going to show up. oops.
That’s what you call an unforced error. Or political suicide, take your pick.
In economics we have 2 ideas. One is the money multiplier effect and the other is velocity of the turn over of money.
If we nibble 300 billion out of the GDP directly, that means that 300 gets spent less so secondary companies have 300 billion lower sales and on and on. The other is the velocity of money. If a dollar is spent, how many times is that same dollar recirculated in a year? If I have to save money to fill the tank on my car of defer purchase of a car for 2 years to buy electric, that money on the first part is delayed in spending 7 days or the second is delayed 2 years. If our money supply is a trillion and it turns 13 times a year, we can have a GDP of 13 trillion. Last years petrol high prices hurt the economy a lot. This tax will do the same.
Climate Progress will say we will save money. I realize Joe Romms boss (Podesta) is on the ACORN board and the extremists now have lost a noisy and bullying advocate due to meltdown..
If we would save money, they would not have needed a legal demand to release the numbers.
“Domestic policies to address climate change and the related issues of energy security and affordability”
affordability????????? how does making something more expensive make it more affordable?
The costs are much higher.
We will loose our freedom and risk war.
http://heliogenic.blogspot.com/2009/09/parallel-from-history.html
Cap & Trade has suffered it’s own form of climate change.
The CC trading pond is icing over.
Richard Heg (10:05:49) :
“Domestic policies to address climate change and the related issues of energy security and affordability”
affordability????????? how does making something more expensive make it more affordable?
good point. It is called rationing. Study Cuba. To clash with the “Phillips curve” and lower price you have to force demand lower also. That means quotas. Now we have ‘affordibitity”
Senator Obama got 50 million to indicted A Rezco for housing. They lowered gas consumption by shutting off gas supplies to apartment buildings in the winter.
My estimate of the investment which would be required on the part of utilities, manufacturing industries, businesses and consumers to actually reduce US carbon emissions by ~2% per year through 2050 is ~$700 billion per year, or a total of ~$30 trillion.
The investors who provide the capital, either as equity or as debt, would likely require a return on investment of ~10%, or ~$70 billion per year per year over the 40 year period, less the impact of cumulative depreciation on the relatively long lived assets.
Assuming a 40 year depreciable life for the average investment, the net investment in 2050 would be ~$15 trillion; and, the annual return requirement ~$1.5 trillion, all in constant dollars. If we then assume continued population growth at current rates, the US would have ~150 million households and the average annual cost of the return on the residual investments would be ~$10,000 per year per household in 2050, again in constant dollars.
Further assuming a “clean” declining cap and an unconstrained ability to trade, ~60% of this investment would be for the timely, end-of-life replacement of fully depreciated assets, though at substantially higher investment than the facilities being replaced, due only to the substantially higer investment requirements of the low/no carbon emission facilities, equipment and processes.
I acknowledge that the estimates above are “SWAGS”, but I have more confidence in them that in the “political” numbers.
THE REVENUES RAISED FROM EMISSION PERMITS WOULD BE RETURNED TO CONSUMERS
The reporting of the Treasury analysis is flat out wrong. Treasury’s analysis is consistent with public analyses by the EIA, EPA, and CBO, and the reporting and blogging on this issue ignores the fact that the revenue raised from emission permits would be returned to consumers under both administration and legislative proposals. It is time for an honest debate about how to solve a long-term challenge and deliver comprehensive energy reform – not for misrepresentation of the facts.
Alan Kruger, Assistant Treasury Secretary
Francis (10:43:40) :
See comment immediately above. The allowance sales revenues are a small quantity of “yellow snow” in a field of the white variety.
Francis (10:43:40) :
Can I see a show of hands? Who believes that? Bueller? Anyone?
Didn’t think so.
Revenues Raised??
I see a bill, and the price tag on that bill are yet more jobs lost.
The only thing returned to the consumers are pink slips.
you are fortunate. France has just announced a carbon tax at 14€ a tonne starting 2010. They claim it will be tax neutral LOL. No tax has and ever will be neutral because some of it will be lost in its admin and the rest will go into the pockets of the cheats at the EU. The auditors have refused again this year and every year since the EU began, to sign of their expenses audit.
There is still the EPA rules and proposed regs to be dealt with. Those are due to take effect without any Congressional action whatsoever, unless somebody puts a cork in it, and they could be just as draconian. http://yosemite.epa.gov/opa/admpress.nsf/bd4379a92ceceeac8525735900400c27/522d0a809f6b7f9c8525763200562534!OpenDocument
In addition, there are many “back-door” bills waiting in the wings that have climate and CO2 regulation incorporated in them. Don’t be fooled. This is far from over. Search http://thomas.loc.gov/home/c111query.html for the applicable key words and you’ll see what I mean.
Wow. The more we learn, the worse it gets for those without safe seats who voted for this in the House. Sure, Henry Waxman probably doesn’t care, but there are a lot of members who must be, shall we say, boiling hot over this issue at this point. Every time we hear something like this, cap-and-trade loses another few votes in the Senate. There really is no chance of anything close to Waxman-Markey passing.
the Treasury Department admitted in documents released today – late in the afternoon and on the day of the Jewish New Year celebration…. Now, the document is available in its entirety for public scrutiny.
It is no accident that this was released on a Friday late in the afternoon when everyone is thinking about getting out of work early for the weekend. And on a holiday to boot, albeit not a major U.S. holiday. These type of stories are always released when there will be minimal press coverage. Sure it is now open for public scrutiny. But how much of the public knows about it?
If this story was released on a slow news day Tuesday, in the morning, then the public would know about it… I think.
Here is Co.Peter DeFazio D-Or. on Cap’n Tax:
http://www.defazio.house.gov/index.php?option=content&task=view&id=477
Not all Dems think it’s a good idea-I disagree with Pete, but he’s also a guy
who is not a conventional thinker.I agree this is a bad idea,he’s claiming
“Green Bubble!”-in interviews on Radio and Televison.
BTW the Beach in his picture is Battle Rock Beach in Port Orford. The Lumber
carrier that my home there was bulit from-the Cottonevea- was wrecked on those rocks in’38.Miss Port Orford and the way it used to be…
Henry chance (09:59:05) : Climate Progress will say we will save money. I realize Joe Romms boss (Podesta) is on the ACORN board
I did not know this. Now I am wondering if the money for Joe Romms web sites comes from ACORN and if Climate Progress is nothing but a propaganda vehicle for far left politics.
If this has already been discussed in a thread my apologies now for missing it.
Douglas DC (11:29:14) : “Green Bubble!”
He’s right.
….a groundbreaking new commodities bubble, disguised as an “environmental plan,” called cap-and-trade….The new carboncredit market is a virtual repeat of the commodities-market casino….
http://www.rollingstone.com/politics/story/29127316/the_great_american_bubble_machine/7
Kirk W. Hanneman (11:22:18) :
Kirk,
Wouldn’t it be nice if all we heard from politicians right now is what they are doing to create jobs and to cut spending?
<i.Creation of a domestic cap and trade system would require management and oversight consistent with, if not stronger, than existing markets for commodities and government securities…
The whole point of cap and trade is to put the United Nations in control of an international system of wealth transfer based on trade in carbon credits.
Simply taxing fuels based on their CO2 emissions is a far more efficient and effective system on a national basis. The problem for the UN is revenues remain with individual countries.
Anyone who thinks the UN can (or wants to) implement management and oversight consistent with, if not stronger, than existing markets for commodities and government securities is living in a fantasy world.