On the April 20 edition of CNBC's Power Lunch, co-hosts Sue Herera, Michelle Caruso-Cabrera, Bill Griffeth, and Dennis Kneale all failed to challenge Rep. Mike Pence's (R-IN) debunked claim that the Obama administration and Capitol Hill Democrats are planning to introduce cap-and-trade legislation “which literally could see the utility rates of every American household go up by more than $3,100 per year.” Pence's assertion echoes a claim by the House Republican Conference that the administration's FY 2010 budget included “a light switch tax that would cost every American household $3,128 a year”; the conference's staff reportedly pointed to a 2007 study by the Massachusetts Institute of Technology (MIT) to support its claim. But MIT professor John Reilly, one of the authors of the study, has disputed the GOP's calculation, stating that his study “has been misrepresented” and that the Republicans' claim of an average household cost of $3,128 is “nearly 10 times the correct estimate” based on his study's cap-and-trade model.

On April 1, Reilly wrote a letter to House Republican Leader John Boehner (OH) (which Think Progress posted on its website) stating that there were “several things wrong with [the Republican] calculation,” that Republicans' methodology was flawed, and that the study “has been misrepresented.” Reilly wrote that this talking point “claims our report estimates an average cost per family of a carbon cap and trade program that would meet targets now being discussed in Congress to be over $3,000, but that is nearly 10 times the correct estimate which is approximately $340.” Reilly then detailed several reasons why the Republican conclusion was flawed.

Reilly further wrote that in arriving at their estimate, the study's authors “assumed in the analysis we did that the revenue is returned to households” and that "[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." According to Obama's fiscal year 2010 budget proposal, from 2010 to 2019, $120 billion of the revenue collected from his cap-and-trade proposal would be "[d]edicated to climate policy (clean energy technologies)," while $525.7 billion would be "[d]edicated to Making Work Pay," indefinitely extending that refundable tax credit for workers and their families that was first implemented in the American Recovery and Reinvestment Act. Further, as detailed in footnote 5 of the budget proposal's table on Mandatory and Receipt Proposals, "[a]ll additional net proceeds will be used to further compensate the public."

From the April 20 edition of CNBC's Power Lunch:

KNEALE: Let's talk cap-and-trade.

PENCE: Yeah.

KNEALE: I'm really alarmed and worried about this EPA action where just overnight they decided that pollutions and carbon dioxide that I breathe out of my mouth -- a lot of hot air -- are now hazardous to your health. What do you think?

PENCE: Well, we're very concerned about it. And we commented on this, you know, abrupt decision last Friday, which seems to many of us on Capitol Hill to be a precursor to a massive national energy tax. Now you've got the EPA essentially saying that carbon dioxide represents, you know, a threat to the environment. And that's going to set into motion Democrats on Capitol Hill and in this administration bringing forward a cap-and-trade bill which literally could see the utility rates of every American household go up by more than $3,100 per year. I've been asked to lead a working group among Republicans to come up with alternatives to the cap-and-trade deal. Look, we all want cleaner air --

GRIFFETH: Can you give us a for instance?

PENCE: Well, I don't want to get ahead of our team, but I'll tell you, we really, you know, we're for cleaner air. We think you can -- you can pursue policies that'll promote clean air technologies without passing, essentially, a national energy tax, that -- let me tell you, being from Indiana, guys, you know, when you look at the details of this cap-and-trade proposal and you realize that the majority of the financial impact is going to be borne in the Midwest where I'm from, this amounts, literally, to, you know, an economic declaration of war by the West Coast and the East Coast on the Midwest.

Republicans are determined to offer positive alternatives to this cap-and-trade bill, but the first thing we're going to is not allow liberals on Capitol Hill and in this administration to raise a national energy tax that falls principally on the industrial Midwest that relies so much on coal.

KNEALE: Which could least afford it.

GRIFFETH: I wish we had more time. Congressman, thank you for joining us today.