As the American Clean Energy and Security Act moves to the Senate, some have serious doubts that the bill will pass as lawmakers and media alike look harder at the economics behind such a bill. What may have arguably been the boost that won the bill its narrow approval is a report releases by the Congressional Budget Office that stated that the climate bill would cost the average American Household about $175 a year. While this figure has been bandied about on the floor at capitol hill and on blogs across the internet, conservative analysts pointed out parts of the non-partisan CBO report that they felt created an incomplete assessment of the legislation's total cost.
The popular $175 per household figure is a one year estimate taken at the year 2020. As the table demonstrates, the restrictions are set at a staggered interval, growing more and more taxing as time goes by. Under the intentions of the plan, carbon credits will be depleted in an effort to get companies to change their polluting ways. When these carbon credits are depleted under the plan, some, including the Wall Street Journal, predict that the actual cost of the bill will "skyrocket" above the fixed figure of $175 per household. According to the bill passed recently by the house, the allowable emissions will decrease about 1% during the first six years of the legislation, but the cap will decrease by 22% between the sixth and twelfth year, 2026.
In addition, the CBO report acknowledges in a footnote that "The resource cost does not indicate the potential decrease in gross domestic product (GDP) that could result from the cap." This means that the $175 figure assumes that the increased price of electricity and fuel does not hamper profit margins, raise the price of consumables, move jobs overseas, freeze or shrink wages, or lead to a decrease in consumer spending. The Republican-backed Heritage Foundation did a similar analysis, this time including GDP factors and a time line of the regulation's tightening. Their results show an increase in living expenses of $1,870 by 2020, over ten times the number cited from the CBO report. In 2035, the Heritage Foundation estimates ACES will cost the average American home $6,800.
These figures represent the county as a whole. The full report from the Heritage Foundation shows that manufacturing states like Texas will be hit harder than service states like Florida. Three Republican-sponsored amendments to keep the legislation in check were all defeated: One to suspend the program if gas prices exceeded an average of $5 nationwide, another to suspend the program if energy prices rose more than 10%, and another to suspend the program if unemployment hit 15%.
The Democrat-backed National Resource Defense Council argues that the climate bill will actually save Americans money, as the on-road efficiency of all major manufacturer fleets will be regulated to increase by 25%, leading to a theoretical drop in gas prices if Americans choose to drive fuel-thrifty cars. The NRDC also states that American households will save about $6 a month on their electricity bills thanks to tighter energy efficiency standards for home appliances and office equipment.
The NRDC also released a study showing that the Climate bil can, with the help of a $150 billion investment to clean energy, create 1.7 million jobs, many of them open to low-income families. The report contends that reducing our need for foreign oil and the creation of green-collar jobs will move opportunities and income to "low-income communities and communities of color." Dubbed the green prosperity report, the NRDC contends that the passage of ACES would bring national unemployment down by as much as 1 percentage point and reduce the national deficit by almost 10 trillion by 2050.
Today in the news there are many more headlines attacking the bill than there are those supporting it. All-in-all, there are seemingly more conservative websites and online publications piping up about this bill than there are moderate and liberal voices. There are also environmental groups who have grown dissatisfied with the bill claiming that too many compromises have left the bill as an unrealistic attempt to offer the Americans and the world real climate change solutions.
Thomas Friedman, triple winner of the Pulitzer Prize and a columnist for the New York Times writes about the politics surrounding the Clean Energy Bill and for all the failings he sees in it, Friedman argues, "let’s get it passed in the Senate and make it law. Why? Because, for all its flaws, this bill is the first comprehensive attempt by America to mitigate climate change by putting a price on carbon emissions. Rejecting this bill would have been read in the world as America voting against the reality and urgency of climate change and would have undermined clean energy initiatives everywhere."
Like Obama, Friedman seems to believe that America will rise to the occasion using American brand ingenuity to pave the way to profits, "And weaving carbon emissions into every business decision will drive innovation and deployment of clean technologies to a whole new level and make energy efficiency much more affordable," Friedman adds.
Also writing for the New York Times, David Brooks writes, "There is legislative pragmatism — writing bills that can pass. Then there is policy pragmatism — creating programs that work. These two pragmatisms are in tension, and in their current frame of mind, Democrats often put the former before the latter."
Another voice, Gabriel Voiles offers the headline, "Climate Bill Damned but Military Budget Untouchable" in Fair and Accuracy Reporting (FAIR) and cites American macroeconomist Dean Baker (ZNet, 7/1/09) as saying, "In short, the economic harm projected from high levels of military spending is far larger than the damage projected from the Waxman-Markey bill. Given this situation, we should expect that all the oil and coal industry folks who are now so concerned about the average family's well-being would have been screaming about the economic pain that would result from sustaining the Iraq War levels of military spending."
In his same ZNet article, Baker makes another claim, applying the guns-v-butter analogy to the Middle East conflict and measuring it against the heavily slammed CBO report. Baker writes that "After 20 years (2021 if defense spending stays high), GDP would be down by more than $60 billion from baseline levels, approximately three times CBO's projection of the cost of Waxman-Markey bill."
If he does have a point, may Republicans and Democrats might remember how vigorously President Bush and his supporters successfully resisted the Democrats for several years regarding any commitment to redeploy troops from Iraq. The major contender for the White House this past election, Senator John McCain road on the belief that committing to a quick withdraw of troops in Iraq was unrealistic. Once answering a man who suggested President Bush had said the United States could be in Iraq for fifty years, McCain quickly added, "Maybe a hundred," something opponents had attacked on the basis of several points, one of them being the strain on the economy.
Sorting news to gain a clearer perspective has become very difficult for Americans. Conservatives appear to be hitting back hard this week with some moderates and liberals joining in on condemning the bill. One thing is certain, if the Democrats want to pass this bill, they are probably going to have to turn up the heat and state their case loudly, especially if they are looking for the support of the American people. The President may also need to get more involved if he really wants to see this bill through as well.
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