Hannity continues to push debunked cap and trade cost figure
SUMMARY: Sean Hannity again repeated the Republican claim that President Obama's energy proposal would cost as much as $3,000 per family. But that figure is based on a distortion of an MIT study, and a CBO analysis of a version of the bill passed by a House committee estimated that the net impact to households would be significantly lower.
During the June 26 edition of his Fox News program, referring to the American Clean Energy and Security Act -- which passed the House earlier that day -- Sean Hannity stated: "Most Americans don't know that we're going to lose two-and-a-half million new jobs and that your electricity bills, as a result of this vote tonight, will go up maybe as high as $3,000 per family." But the $3,000 per family figure -- which Hannity has cited before -- is based on Republicans' distortion of a 2007 study by the Massachusetts Institute of Technology (MIT) and has been discredited by one of the study's authors. In contrast to the figure Hannity cited, the Congressional Budget Office estimated in a June 19 analysis of the version of the bill that passed the House Energy and Commerce Committee that in 2020, the bill would have an average cost of $175 per household per year. And the EPA estimated in a June 23 analysis of the bill that the average cost to households averaged over the years 2010 to 2050 will be between $80 and $111.
According to a May 28 FactCheck.org article, "Leading Republicans are claiming that President Obama's proposal to curb greenhouse gas emissions would cost households as much as $3,100 per year. The Republican National Committee calls it a 'massive national energy tax.' But the $3,100 figure is a misrepresentation of both Obama's proposal and the study from which the number is derived."
From the FactCheck.org article:
How do Republicans figure American households will be out $3,100? The figure is based in part on a 2007 study by the MIT Joint Program on the Science and Policy of Global Change. The study estimated that a cap-and-trade market for 2015 would be worth $366 billion in revenue. Republicans, figuring that that amount would be passed from the energy companies to consumers, calculated the average cost per household by dividing $366 billion by 117 million households (a population of 300 million divided into households of 2.56 persons) to get $3,128, or roughly $3,100.
However, one of the authors of the MIT study disputes that figure.
In a letter sent to House Minority Leader John Boehner (R-Ohio) on April 1, John Reilly, associate director for research at the MIT Joint Program on the Science and Policy of Global Change, said that the study he coauthored had "been misrepresented in recent press releases distributed by the National Republican Congressional Committee." He said the GOP's calculation fails to account for Obama's stated intent to provide rebates to consumers to cushion the effect of increased prices: "[M]any of the proposals currently being considered by Congress and as proposed by the Administration have been designed to offset the energy cost impacts on middle and lower income households and so it is simplistic and misleading to only look at the impact on energy prices of these proposals as a measure of their impact on the average household."
Reilly at first estimated the average annual cost of implementing a cap-and-trade program to each household to be about $340, but he later wrote a follow-up letter to Boehner on April 14 correcting what he said was an error in his calculations and increasing his estimate to about $800. He said his corrected estimate "includes the direct effects of higher energy prices, the cost of measures to reduce energy use, the higher price of goods that are produced using energy, and impacts on wages and returns on capital."
Nevertheless, as Media Matters for America has repeatedly noted, numerous cable news programs and conservatives in the media have seized on the number, reporting it as fact even after it was discredited. On the May 20 edition of his show, Hannity stated that "cap-and-trade will add $3,000 in a new tax to the average American family."
From the June 26 edition of Fox News' Hannity:
HANNITY: Dick, why is it -- and I understand the coverage of Michael Jackson. We spent a lot of time on it tonight. And we spent a lot of time on this bill and on nationalized health care leading up to this.
Most Americans don't know that we're going to lose two-and-a-half million new jobs and that your electricity bills, as a result of this vote tonight, will go up maybe as high as $3,000 per family.
MORRIS: You know, in researching the book, Catastrophe, I did a good interview with John Bolton, and he made -- former UN ambassador -- and he made the point that this is a massive, massive transfer of wealth from the Northern Hemisphere, the developed countries, to the Southern Hemisphere, the underdeveloped countries. Because, basically, the utility -- you know, it's like the old papal indulgences.
HANNITY: Yeah.
MORRIS: They have to pay for the right to sin --
HANNITY: Right.
MORRIS: -- to pollute. And the people that get the money are in Africa.
Hannity is so much better qualified to discuss mathematics and science than anyone from some damned collidge.
I can assure you that there will be some coal fired power plants that get a sweetheart deal buried deep in the last minute negotiations.
That's a good encapsulation of the con attitude. Facts are their enemy.
Overall, there are a number of basic problems with CBO’s analysis:
• Their allowance cost numbers don’t add up.
• They assume that spending/distribution of allowance revenue is dollar-for-dollar equivalent to a direct cash rebate to energy consumers.
• “The resource cost does not indicate the potential decrease in gross domestic product (GDP) that could result from the cap. The reduction in GDP would also include indirect general equilibrium effects, such as changes in the labor supply resulting from reductions in real wages and potential reductions in the productivity of capital and labor.”
That’s a pretty big chunk of change to ignore. In The Heritage Foundation’s analysis of the Waxman-Markey climate change legislation, the GDP hit in 2020 was $161 billion (2009 dollars). For a family of four, that is $1,870 that they ignore.
It’s also worth noting that 2020 had the second lowest GDP loss of the 24 years we analyzed. For all years the average was $393 billion or over double the hit in 2020. In 2035 (the last year analyzed by Heritage) the lost GDP works out to $6,790 per family of four and that is before they pay their $4,600 share of the carbon taxes (again, costs are adjusted for inflation to reflect 2009 prices).
http://blog.heritage.org/2009/06/22/cbo-grossly-underestimates-costs-of-cap-and-trade/
After explaining that some government benefits are indexed to the Consumer Price Index, which means that federal spending will have to increase owing to Waxman-Markey’s energy price hikes, the CBO study points out the silver lining:
Because the federal income tax system is largely indexed to the consumer price index, an increase in consumer prices with no increase in nominal incomes would also reduce federal income taxes. That effect would increase households’ after-tax income but would also add to the federal deficit. In combination, the effect of price changes on the government’s indexed benefit payments and income tax receipts would convey an estimated $8.7 billion to households. (p. 7)
Beyond the absurdity of translating rising prices into a benefit for households—on the basis that poorer people pay less in taxes—the CBO’s treatment of income tax revenues is inconsistent with its treatment of carbon allowance auction receipts. The CBO study acknowledges that households will pay higher energy prices partly because businesses will “pass on” the cost of buying emission allowances. But CBO didn’t include this component as a net cost to households, because the government could spend the auction receipts and thus recycle some of the money back into households.
http://www.instituteforenergyresearch.org/2009/06/24/enron-accounting-cbo-epa-cooked-the-books-on-cost-estimates-for-waxman-markey-energy-tax/
I think Heritage is probably known to most as a hilariously unreliable source. His second parrot-post is from The Institute for Energy Research.
The IER's President was formerly Director of Public Relations Policy at Enron.
Crt + V
Kind of like the current GOP.
HA! Hannity is always beating the dead horse no matter the subject.