Hannity ignores CBO to attack cap and trade as regressive
SUMMARY: Sean Hannity hosted Ralph Reed, who cited a study by the Tax Foundation, which, he said, "shows" that "the cap-and-tax burden falls heaviest on the poor and the lower middle class." However, the study did not consider the effect of the government's distribution of revenue generated by a cap-and-trade system to lower-income households.
During the July 1 edition of Fox News' Hannity, Ralph Reed, chairman of the Faith and Freedom Coalition, stated that "[t]here's a new study from the Tax Foundation that shows, by a margin of 5-to-1, the cap-and-tax burden falls heaviest on the poor and the lower middle class." Host Sean Hannity added: "Poor, elderly, farmers." But the Tax Foundation's study did not consider the effect of the government's distribution of revenue generated by a cap-and-trade system to lower-income households. Additionally, Hannity and Reed ignored the Congressional Budget Office's (CBO) June 19 analysis of the version of the American Clean Energy and Security Act that passed the House Energy and Commerce Committee, which found that households in the lowest income quintile would see an average net benefit of about $40 per year.
The Tax Foundation's most recent analysis of a cap-and-trade system, a March 2009 "Working Paper No. 6," which the Tax Foundation described as a "new study" in its Summer 2009 newsletter, considered "a typical cap-and-trade system," not the system detailed in the House committee's version of the energy bill. The study found that the lowest income quintile would bear a burden of $617, or 6.2 percent of income under a typical cap-and-trade system, while the top quintile would bear a burden of $2,091 or 1.4 percent of income. But the Tax Foundation analysis specifically stated that it did not consider how the revenue generated by a cap-and-trade program "may be disposed by lawmakers in various ways that may affect these household burdens":
In this analysis we focus primarily on the burden of cap and trade to households in the form of higher consumer prices. As noted above, cap and trade also generates government revenue that may be disposed of by lawmakers in various ways that may affect these household burdens. Because of uncertainty about how lawmakers may or may not dispose of future cap-and-trade revenue, we present only household burdens from higher consumer prices throughout the body of the study.
According to the CBO analysis, the "net impact" of the energy act's cap-and-trade system "would reflect both the added costs that households experienced because of higher prices and the share of the allowance value that they received in the form of benefit payments, rebates, tax decreases or credits, wages, and returns on their investments." CBO also stated that the distribution of revenue under the legislation would offset much of the cost of the bill to households. In its June 19 analysis of the energy act, CBO stated that "[i]n the aggregate, most of these [higher consumer] costs would be offset by income or other benefits provided to households as a result of the distribution of the value of the emission allowances."
From the CBO analysis:
The GHG cap-and-trade program established under H.R. 2454 would impose costs on U.S. households and provide some financial benefits, as well as the benefits associated with any changes in the climate that would be avoided as a result of the legislation. (This analysis addresses only those financial benefits.) The costs would be incurred through higher prices for the goods and services that households consumed, and the incidence of those costs would be determined primarily by households' consumption patterns. In the aggregate, most of those costs would be offset by income or other benefits provided to households as a result of the distribution of the value of the emission allowances.
CBO provided the following chart breaking down the cost of the bill by income quintile:
From the July 1 edition of Fox News' Hannity:
RALPH REED (chairman of the Faith And Freedom Coalition): Yeah, look, the fact of the matter is the Democratic brand is starting to lose a lot of its shine, because this is a president who ran promising hope and change, saying he wouldn't be an old-style Democrat, saying we weren't going to re-fight the battles of the 1990s, saying he didn't have, you know, a stake in the fight in the 60s in the culture wars.
And what we've gotten, Sean, is classic liberal, big bureaucracy, big government, massive tax increases. Under cap and tax, electric utility bills are going to go up 90 percent --
HANNITY: Nationalized health care.
REED: -- the price of a gallon of gas is going to go up 74 percent.
And here's the tragedy. He promised that no one making less than $200,000 a year would see a dime in a tax increase. And --
HANNITY: And he said it over and over again.
REED: -- and let me finish this point. There's a new study from the Tax Foundation that shows, by a margin of 5-to-1, the cap-and-tax burden falls heaviest on the poor and the lower middle class.
HANNITY: Poor, elderly, farmers.
REED: It's a highly regressive tax that falls hardest and punishes those least able to pay.
HANNITY: All right. Here's --
POWERS: Can we just get back --
HANNITY: Go ahead.
POWERS: -- to this idea, though, that the Democrats are unhappy with Obama? I mean, that's just not reality.
The man looks so scary a Cop would be afraid to use mace.
When i look at him i think of the movie "The Omen"
I bet he has to shave his horns each morning.
Speak truth to power.
Mr. News
Footnote three on page four reads, "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."
The Heritage Foundation has calculated that amount of lost revenue in 2020 to be $161,000,000,000.00. For a family of four, that is $1,870 that the CBO ignores.
In 2035 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.
In fact, the CBO counts lower wages as a net plus because by reducing incomes taxpayers will pay less tax. That forgone tax is calculated as savings to the taxpayer! How crazy is that?
In addition, the CBO uses inflation to mask the amount of dollars each family will have to pay.
On page 5 the report says, "The distribution of the gross cost of complying with the policy would be quite different if the price level did not increase as a result of the cap—if, for example, the Federal Reserve adjusted monetary policy to prevent such an increase. In that case, the compliance costs would fall on workers and investors in the form of lower wages and profits.”
Higher energy costs will significantly slow the economy.
Estimates are that by 2035, a projected 2.5 million jobs are lost below the baseline (without a cap and trade bill).
The average Gross Domestic Product (GDP) lost is $393 billion, hitting a high of $662 billion in 2035.
The negative economic impacts accumulate, and the national debt is no exception. The increase in family-of-four debt, solely because of Waxman-Markey, hits an almost unbelievable $114,915 by 2035.
The CBO report is deeply flawed and nobody should take it seriously. It misrepresents the true cost of cap and trade.
http://blog.heritage.org/2009/06/22/cbo-grossly-underestimates-costs-of-cap-and-trade/
(From link to Sourcewatch);
"Knappenberger... worked ...on the Independent Commission on Environmental Education (ICEE), a now-defunct K Street project ... of the George C. Marshall Foundation (AKA George Marshall Foundation or Marshall Foundation).[5]
...
The George C. Marshall Foundation ... has long been a vocal opponent of the existence of global warming and/or the existence of any significant contribution to GW from mankind. Their funding comes from ExxonMobil... two of the Scaife Foundations, the Earhart Foundation, John M. Olin Foundation and the Lynde and Harry Bradley Foundation, which support a fairly wide variety of hard-right causes."
By 2035 taxes on this alone will have increased to $1,241.
Prices for energy and gasoline will go up. That is a regressive tax.
The purpose of the bill is to raise prices for energy!
The Democrats defeated amendments to this bill that would have suspended the law should gasoline surpass $5 per gallon or electric rates rise 10% -- or if the unemployment rate hits 15%.
Can you imagine the devastating economic impact of this bill?
And the cost offsets by selling the energy credits will not go back evenly to the taxpayer, they will be paid back to a relative few who will make millions. But those figures are added in by the CBO to bring down the average cost.
The CBO is an accounting model that makes certain assumptions and leaves others out. By nature it is a static projection. In other words, it does not attempt to measure the economic turmoil that will accrue. For example, it does not measure the higher price of food due to the higher price of gasoline needed to process the food by farmers and get the food to market by distributors. Who do you think will pay for that? Do you see those figures in the CBO report?
Just because there are two CBO reports does not make either report invalid for camparison purposes.
Do you have a link to both reports. I'd like to check out whether the CBO did not adjust for inflation in either report.
Personally I do not see your reply as proving your point. Perhaps you could provide the link that supports your claims?
You can believe the CBO if you want. Do you realize though, that the CBO estimate is a one-year snapshot of taxes that will extend to infinity. The CBO's analysis looks solely at the year 2020, before most of the tough restrictions kick in. As the cap is tightened and companies are stripped of initial opportunities to "offset" their emissions, the price of permits will skyrocket beyond the CBO estimate of $28 per ton of carbon. The corporate costs of buying these expensive permits will be passed to consumers.
he CBO analysis is an average for the country as a whole. It doesn't take into account the fact that certain regions and populations will be more severely hit than others -- manufacturing states more than service states; coal producing states more than states that rely on hydro or natural gas. Low-income Americans, who devote more of their disposable income to energy, have more to lose than high-income families.
I'm not sure which parts of AA's posts are plagiarized and which are paraphrased from Heritage, but both are built on a combination of facts (snippets from the bill, for example), falsehoods ( the fictional people who pay no taxes)fuzzy unseen math, and a lot of unsubstantiated speculation presented as fact.
You can't really check most of the "facts" from heritage. Thyey're mostly fictional.
9.5 Unemployemnt, the worst in 26 years
You would think with all the Czars being hired the unemployment would have gone done. The more this guy sits in the office the worse it gets. Well, you all voted for change, guess you are getting it.
We are desperately trying to sell our house before we go into foreclosure. If this passes, we will foreclose. We are poor. We do not have one dollar to invest in new windows for an old house we can't afford anymore. This administration does NOT care about the poor.
You're lying.
I'd recommend reading it again, especially section 202 (pp 324-346) titled Building Retrofit Program, which describes, oddly enough, the Building Retrofit Program.
Let us know what you find out.
You really don't believe that we can sucessfully reduce to miniscule amounts our hydrocarbon burning and maintain any semblance of a healthy economy?
You have that little faith in your fellow citizens abilities and will to suceed?