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
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.
Sarkozy, Merkel want carbon tax on imports
PARIS (AFP) – The leaders of France and Germany called Friday for the United Nations to support a carbon tax on imports from countries who fail to back international efforts to fight global warming.
French President Nicolas Sarkozy and German Chancellor Angela Merkel wrote to UN Secretary General Ban Ki-moon arguing that states that fail to back a deal at a climate summit in Copenhagen in December should be held accountable.
Damned if you do damned if you don’t.
Gene Nemetz (11:24:50) – I believe Chris Horner/CEI released this inthe form of a memo gotten via FOI earlier this week . Treasury may have “officially” released it Friday (under pressure) . I seem to recall Fox carrying this story a few days ago , but am not sure of the day , but I was surprised that WUWT didn’t latch onto it immediately .
Why do politicians think the solution to every problem is a tax?
Just askin’…
OK , Treasury released the unredacted documents Friday . Horner got redacted documents through FOI last week .
Quoting H.R.:
“Why do politicians think the solution to every problem is a tax?”
Commenting:
There is a saying: “To a carpenter, every solution looks like a nail.”
I don’t know who came up with this, but it is priceless.
Sarkozy knows that most of France’s electricity comes from Nuclear Power.
His consituents won’t pay much of a carbon tax.
nice trick – call for taxes on everyone else, but not on your own countrymen.
But to his credit, and unlike our own idiots, at least he remembers who voted for him. And why.
If you read this article:
http://climaterealists.com/index.php?id=4044&linkbox=true
you will find out that the Chinese have figured out the true intention of the C&T policies.
C&P is a break on economic development.
If you intend to live in a country that is tuning down it’s economic development you have to fight it or move to another part of the world where Governments are not as stupid as the ones we have in power today.
Signs of US decline:
http://factsnotfantasy.blogspot.com/
Tes, the President is lying:
http://www.iceagenow.com/Yes_the_President_is_lying.htm
Francis (10:43:40),
To which consumers will these revenues be given? For that matter, to which consumers will revenues from higher taxes on health insurance companies go? This is nothing more than populist income redistribution and the folks that are going to take the biggest hit are the middle-class.
Socialist policies depend on tapping the capitalist economy dry. When there is nothing left we will all be equally poor, though some will always be more equal than others.
It troubles me deeply that we are now faced with economic ruin caused purely by policy. This recession was setup by policy, triggered by policy (timed for the election) and maintained by policy.
When will the mainstream of the Democratic Party wake up and see that this has gone far past simple party gamesmanship? Have we progressed from the October Surprise to the October Revolution?
On April 28, 2009, the U.S. Department of Agricultural signed contract number AG3J141202971961 with Clougherty Packing, LLC of Los Angeles in the amount of $1,191,200 to purchase 760,000 pounds of frozen sliced ham (in 2 pound packages) to be distributed to local organizations that assist the needy such as food banks, food pantries, and soup kitchens. This works out $1.567 per pound. On the day that the widely read web site Drudgreport.com made note of this contract, that source documented similar products selling for 79 cents a pound at Food Lion supermarket.
The Secretary of Agriculture’s own press release defending the contract ended by highlighting what he thought was most important aspect of it: “While the principal purpose of these expenditures is to provide food to those hardest hit by these tough times, the purchases also provide a modest economic benefit of benefiting Americans working at food retailers, manufacturers and transportation companies as well as the farmers and ranchers who produce our food supply.” No mention of how much wealth was destroyed in the process of using government to provide a “modest economic benefit” to so many Americans. (compare to previous mentions that all parties benefit in a free exchange)
This “pork” is a great metaphor for exactly what will happen to the $300 billion this tax will squeeze out of our economy. It will be used to buy 79 cents worth of ham at a cost of $1.57. Further, government bureaucrats and politicians will issue press releases telling us what a great job they are doing for the economy and for protecting the planet.
The median family income in 2008 was $50,233. For every billion of waste, we can kiss the entire income from 20,000 families. This is yet another scheme to spend ourselves into prosperity that only benefits the supporters of big and Bigger government.
A child –
“THE REVENUES RAISED FROM EMISSION PERMITS WOULD BE RETURNED TO CONSUMERS”
An adult –
‘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’
At any rate, “returned’ is the wrong word. Money will be taken from people who create wealth and given to those that don’t in return for their votes. The people who have the money taken from them won’t ever see it return. It is not greed that makes people object to this, contrary to the Red’s assertion, rather it is the fact that a system like this destroys the wealth producing engine of an economy. It always has and it always will.
Jeff Id (09:33:01) : I love how they imagine more tax is always equivalent to more revenue.
rbateman (11:04:57) : pink slips
I agree Jeff; the way to raise revenues would be to cut taxes—something that is counter intuitive to a politician.
And I agree rbate; there would be more job loses.
It looks like Americans are doing something about the current crop of politicians. The ~1.5 million in Washington at 9/12 Rally tells me so.
There’s a simple way to get rid of the current crop of politicians : don’t vote for them.
Peter Schiff announced that he’s running for Senate. If he can become the Republican nominee in his State he will face Chris Dodd, yes, that Chris Dodd. Having Chris Dodd out of Washington would be a huge step toward fixing Washington.
Peter Schiff announcing his run :
I haven’t read all the posts. I will, but not right now. But at about 300 million people in the US that is $1000 each per year. The math isn’t very hard
Gene Nemetz (11:47:39)
Gene, “cut” spending? Ho ho, you do make me laugh though.
Well, I’ve spent 10 minutes looking for a citation but can’t pull one up. Guess my “Google Mojo” is off tonight…
At any rate, I’m certain I saw an interview with Meg Whitman (on Fox?) as she announced for Governor of California that stated she intended to push for a repeal of the California version of Cap & Tirade as it is a jobs killer. (And California is now over 12% unemployment and still rising…)
A view of the future? One can only hope so.
California is an existence proof of what will happen globally. Back Cap & TAX, jobs and manufacturing flee, unemployment rises until such time as “politicians see the light by feeling the heat”, then a movement will rise to repeal it.
So I think that $300 B is “way low”. It does not allow for all the jobs that will bail for better climate (financial that is…).
But at the end of the day, economic collapse leads to political revolt.
Watch California. It’s starting now.
California is at the point where the most radically positive pro-growth and anti-recessionary agenda would be to simply repeal all state centered environmental legislation.
Mr Smith, nice to hear from you again.
Near the end of the /u-s-treasury-the-costs-of-cap-and-trade-1761-per-year-per-household/ thread, I responded to your last exchange with me. I even offered to pay you for your skills in economics.
As my comment directly relates to the other side of the economic coin of this thread (economic savings from the benefits of increased CO2 verses the cost of regulating CO2) I have copied it here to save you the time of going back to that thread…
Dear Mr. Smith, thank you for your detailed response. I knew I could count on you to provide greater insight. I purposely understated the numbers in regard to increased biomass growth because when I guesstimate I like to understate.
To the basic assumptions you stated we would have to assume that without the benefit of the increase in CO2 the cost of every food would be greater then it is currently due to the law of supply and demand. This would, I think, add significantly to your numbers and would increase the price of every commodity in every part of the economy that uses resources that are also used in farming. Your point that this increased production very likely has prevented more then one war is of course extremely valid.
Of course we have to (if we are pro carbon tax) add the value of millions of tons of carbon that are absorbed by this increased biomass. (A negative feedback rarely calculated) We would have to include the carbon storage of the increased biomass in the oceans also. As mentioned the benefit will continue to increase while the warming decrease.
Yes indeed, you should be well paid to provide a detailed report on this. Unfortunately I (ex-wife, four children) could afford no more then a domestic beer. (-: Hum? Perhaps Mr Mckitrick could encourage a graduate student to do a thesis on this. Do you have his number?
Seriously such a study would generate a lot of publicity. Money still talks in the US of A.
Ok, so I did not offer you much, if I were wealthy I would commision such a study
Thanks,
Mr Anderson
So it’s not $1,761 per American household per year as earlier reported.
$300 billion per year divided among some 103 million households (310 million population with 3 members/household average?), that’s $2,903 per household per year, and that’s for federal carbon taxes alone! If you include carbon taxes by states, counties and cities, an average American household shold be paying extra taxes of more than $3,000 per year!
I doubt that Obama’s cap and trade bill will pass to become a law.
When I was in college there was an interesting study on environmental costs. Can’t post source since this was in the day of libraries. The study was about the predicted costs versus the actual costs after an environmental project or initiative was completed.
The study found some interesting relationships. The first was that businesses did the best job estimating actual costs. The worst were the environmental activists, followed by governments. The numbers were businesses overestimated the costs or underestimated the benefits by a factor of 2 to 3 to the actual cost/benefit determined. Governments underestimated the cost or overestimated the benefits by a factor of 3 to 5 to the actual costs/benefits. Environmental activists underestimated the cost or overestimated the benefits by a factor of 5 to 10 to the actual costs/benefit.
Since this cap and trade has both cost and benefit, you should take the $1500 to $1800 estimate and multiply by about 5 resulting in a $7500 to $9000 close estimate to the previous post of about $10,000. You will also see that the environmental activists are about at their factor 10 off or worse. I have seen their estimates, based on EPA and others; it was at Joe Romm’s, $80 to $175.
Let’s get real, if it only cost a person $100 to $175, much less this figure for a household, then why would we need to be rushed into doing anything at all for decades? Joe needs to do some basic thinking. It either means the proposed cap and trade is worthless and ineffective, or we shouldn’t be doing anything for decades. Which is it? Probably both based on the numbers.
The difference is about what has been proposed that “will make a difference” and what the House bill actually contains. This bill needs to be round filed. As far as it being a moral stance, if the cost estimates are true, the moral of the story is that it was done on the “cheap.”
There isn’t a chance in this world that the revenues would be returned to the taxpayers — and it doesn’t matter what concessions were in the house bill. When this makes it to conference, the democrats would see to it that these revenues go into federal coffers and stay there until spent on federal projects such as health care. They need the money, and this is a cash cow.
Statements that the revenues would be returned are as believable as we will realize $xxxB (put any figure here) through new efficiencies in medicare.
I hope that wws is right about the prospects of passage in an election year. Cap and Trade is likely more toxic to politicians’ futures than CO2 is to planet earth.
Moderator, please delete last post and substitute: I guarantee that any estimates of government revenues from this scam would be way too high, since they presume a functioning economy that we would no longer have. I also wonder why they bother to do the typical Friday afternoon “document dump” anymore, since most media ignore any data that conflicts with the environmentalist movement’s dogma anyway.
WestHoustonGeo (13:21:46) :
_________
Quoting H.R.:
“Why do politicians think the solution to every problem is a tax?”
Commenting:
There is a saying: “To a carpenter, every solution looks like a nail.”
I don’t know who came up with this, but it is priceless.
_____________
Love the thought, but let me improve that saying a little bit:
“To a man with a hammer, every problem looks like a nail.”