Thursday, June 25, 2009

CBO Grossly Underestimates Cost of Cap and Trade


by David Kreutzer, Ph.D., Karen Campbell, Ph.D. and Nicolas Loris | Heritage Foundation | June 24, 2009

Last week, the Congressional Budget Office (CBO) released their analysis of the Waxman-Markey climate change bill that had proponents of the bill claiming Americans could save the planet for just $175 per household. That was the figure CBO estimated cap and trade would cost households in 2020 alone.[1]

Both the CBO's analysis and the subsequent legislation are troubled: The analysis grossly underestimates economic costs while the legislation will have virtually no impact on climate. Overall, there are a number of basic problems with CBO's analysis:

* Their allowance cost numbers do not add up;
* They ignore economic costs such as the decrease in gross domestic product (GDP) as a result of the bill; and
* The analysis is an accounting analysis, not an economic analysis.

read the whole thing

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