No, Washington Times: New Brookings study finds strong climate action would NOT hurt the economy
Less than a postage stamp a day. That’s what it will cost the average American to cut US greenhouse gases 83% in four decades and give the world a chance of avoiding catastrophic global warming while jumpstarting the transition to a clean energy economy.
The right wing likes to take economic analyses that don’t model the House clean energy and climate bill and then misrepresent the results to attack the bill – see, for instance, Exclusive: MIT Professor says GOP, Weekly Standard “misrepresentation” of his April 2007 study to project costs for Waxman-Markey is “inappropriate,” “silly” and “just wrong.”
The latest hit job is by The Washington Times, which abuses a new study by Brookings in a piece whose headline is exactly backwards, “Study: Cap and trade would hurt economy.” You can see for yourself the devastating economic harm that Brookings projects strong climate policy would cause:
Yes, you need a magnifying glass to find any impact on GDP growth for decades.
Now, Brookings could not be clearer that the study doesn’t model Waxman-Markey. Note the very first bullet point of its presentation on the study Monday (here):
Not an analysis of particular bills.
The study models a variety of scenarios, centered around a 20% cut in U.S. energy-related carbon dioxide emissions by 2020, 40% by 2040, and 83% by 2050
But it doesn’t look at the various clean energy provisions in the bill (or in the stimulus, for that matter). It doesn’t model any of the cost containment provisions of the bill. It just looks at brute-force emissions reductions over time similar to what Obama and Waxman-Markey propose. And that’s probably why Brookings predicts a rather absurdly high price for CO2 permits in 2020 – $50 a ton, which is double CBO’s projection and triple EPA’s!
Even so, as the Brookings graph above shows that the bill’s impact on the economy is negligible – and Brookings assumes no offsets whatsoever. The 83% reduction by 2050 is achieved through domestic emissions reductions and with no noticeable economic impact.
But how does The Washington Times spin this as harmful to the economy? Here is their lede paragraph:
The Brookings Institution on Monday said cap-and-trade legislation to reduce carbon dioxide emissions would lower the nation’s gross domestic product in 2050 by 2.5 percent, compared with levels it would reach if the legislation is not implemented.
Well, yes. But that is the entire impact cumulatively in four decades.
If we do nothing, GDP in 2050 will rise from some $13 trillion today to some $28 trillion in 2050. If we eliminate the overwhelming majority of carbon dioxide emissions from the US economy in four decades, GDP will “only” be about $27.2 trillion in 2050. The country will still be twice as wealthy. We’ll just have to wait until 2051 to be as wealthy as we would have been in 2050 without the bill.
The Washington Times analysis is so bad – so biased for the status quo and against smart action – that for a minute I thought I was reading the Washington Post editorial page. [Sorry, couldn’t resist.]
The Brookings analysis is completely in line with every major independent economic analysis (see “Introduction to climate economics: Why even strong climate action has such a low total cost – one tenth of a penny on the dollar“). Indeed, the study finds the total hit to “present discounted personal consumption” from 2010 to 2050 is about 0.4% (using a 4% discount rate) – or roughly $100 per person per year, a postage stamp a day.
And it is avowedly “Not a cost-benefit analysis.” It never examines the tremendous economic benefit from jumpstarting the transition to a clean energy economy and joining the nations of the world sharply reduce greenhouse gas emissions and avoid catastrophic global warming.
A report issued by the left-leaning research organization said that if Congress passes something similar to President Obama’s or the House’s proposed plan, the economy would take the biggest hit around 2025.
Sorry, but you need a magnifying glass to find an economic hit by 2025 in the Brookings Study – and again, that’s using permit prices that are almost certainly 2 to 3 times higher than is actually going to happen.
Finally, Brookings over the years has become a very centrist organization, which is no doubt why they have put out a very middle-of-the-road analysis that seems to utterly ignore the various clean energy strategies advanced by President Obama and the “left leaning” Congress.