As discussed last week, Planet Gore’s Sterling Burnett was upset with the media for supposedly ignoring “the recent reports by MIT and the CBO [PDFs] detailing the substantial costs and regressive nature of the costs that are estimated to arise if any of the current domestic proposals restricting carbon emissions to combat global warming are enacted.”
Given that the MIT report in fact concluded the exact opposite of what Sterling claimed — and given the fact that the National Review typically doesn’t complain about the regressive nature of, say, tax cuts for the wealthy — I’m guessing you won’t be surprised to learn that the CBO report also comes to a different conclusion than Sterling claims.
I should also point out that, as a minor instance of disinfotainment, the CBO report does not in fact look at the “costs that are estimated to arise if any of the current domestic proposals restricting carbon emissions to combat global warming are enacted.” No, it merely looks at the impact of various ways of implementing a 15% cut in carbon dioxide emissions in 2010 — which is part of no current proposal.
This may seem like a tiny mistake by PG but it isn’t really, because the entire point of the CBO analysis is not to judge existing proposals but rather to show that choices about how a cap & trade system is set up have a big effect on a proposal’s impact on the economy and regressivity. An unintelligent system would be somewhat regressive, since “lower-income households tend to spend a larger fraction of their income than wealthier households do and because energy products account for a bigger share of their spending.”
You could actually make the entire system progressive by auctioning off the carbon dioxide permits and using the proceeds to make a lump-sum payment of equal size for all households. Somehow I can’t really imagine Planet Gore would endorse such a strategy.
In practice, the system doesn’t need to be progressive, it should just be designed not to be regressive, so an ideal proposal might use some of the auction proceeds for a payment to the poorest of households, some of the proceeds for reducing taxes for all households, and some of the proceeds for clean energy technologies.
The fact that PG can’t envision a well-designed cap-and-trade system is probably not a surprise, certainly not to regular readers of PG (a point I will discuss in a later post). What is surprising is that they don’t even seem to bother to read the studies that they cite.