The fact checkers:
Catharine Richert: writer, researcher
Bill Adair: editor
I will emphasize from the outset that the impact of cap and trade is a complicated issue. Fortunately, determining whether representations of the impact of cap and trade are misleading is rather less complicated.
Catharine Richert's piece deals with a statement from the Committee on Energy and Commerce which included specific statements from Rep. Henry Waxman and Rep. Edward J. Markey. The statement opens like so:
Chairmen Henry A. Waxman and Edward J. Markey, co-authors of the Waxman-Markey American Clean Energy and Security Act (H.R. 2454) said that a new analysis of the bill by the Congressional Budget Office (CBO) shows the that the net annual cost of the legislation would be approximately $175 per household in 2020. This analysis comes on the heels of a new study that found 1.7 million jobs would be created by the clean energy legislation.Before proceeding, we should take careful note of the spin coming from the committee. The analysis from the CBO places considerable emphasis on the net cost of bill. If we were to handle the accounting for the federal government this way, the net cost of government would equal the amount of the annual budget deficit for a given year. And, if the government balanced its budget, one could claim that the government incurred no net cost.
Taking this concept down to the level of a bill, suppose we create the Bryan White Benefits Bill of 2009. This bill charges every person living in the United States $1, and the entire proceeds are given to Bryan White via direct deposit. The net cost of this excellent law? Zero. The benefits paid out by the government to Mr. White precisely equal the costs incurred by the bill (not counting administrative costs, of course).
Probably the CBO was asked to produce a report emphasizing the net costs, and if so that request by itself constitutes a certain degree of spin on the issue.
Now to the specific statement from Rep. Markey:
"Americans know that building a clean energy economy has real value, and this CBO analysis proves it," said Rep. Markey. "Low-income American families will see a $40 benefit from using more wind and solar energy and less foreign oil. And for the cost of about a postage stamp a day, all American families will see a return on their investment as our nation breaks our dependence on foreign oil, cuts dangerous carbon pollution and creates millions of new clean energy jobs that can't be shipped overseas."Truly, Markey has uttered a mouthful. His brief statement is chock full of questionable claims. PolitiFact, however, is interested only in whether Markey is accurate in saying that the program will cost about a postage stamp per day according to the CBO.
Indeed, the report cited by Markey and Waxman predicts the bill would have a net annual economywide cost of $22 billion — or about $175 per household — in 2020. Divide that number by 365 days, and you get about 48 cents. A first-class stamp costs 44 cents, so Waxman is close.There's that word "net" again.
Recall that, by analogy, the net cost of taking one dollar from every American and giving it all to one American is zero.
If the bill were to go into effect, the revenues from it would subsidize the lowest quintile families. Families in the other four quintiles would supposedly have their costs mitigated by factors such as the sale of carbon credits distributed at no cost by the government.
The committee statement obscures the fact that the CBO anticipates increased costs to the government (and the taxpayers) through indexed cost of living increases to Social Security recipients and the like. Additionally, the report forecasts that taxable income will decrease as a result of the cap and trade bill. So the bill will have a net increase on government expenditure and apparently a net decrease on government revenue.
How do we make up the growing difference? The CBO report doesn't say, and Waxman and Markey follow their lead. This constitutes a hidden cost of the bill.
So what about the accuracy of Markey's statement? I admire Richert's surgical skill in picking out the postage stamp cost while trying to leave undisturbed his claims about the bill's supposed benefits.
Even with the stubborn tunnel-vision focus on the average (net) cost, Richert can't properly rehabilitate either Markey or Waxman:
Waxman and Markey are clear about these variables and omissions in their press statement. They note that the poorest people will gain from the bill, and point out that the study does not include every element that could contribute to cap-and-trade's cost.This statement from Richert is simply false.
The committee statement does not at all acknowledge variables, omissions or additional costs.
See for yourself:
Chairmen Henry A. Waxman and Edward J. Markey, co-authors of the Waxman-Markey American Clean Energy and Security Act (H.R. 2454) said that a new analysis of the bill by the Congressional Budget Office (CBO) shows the that the net annual cost of the legislation would be approximately $175 per household in 2020. This analysis comes on the heels of a new study that found 1.7 million jobs would be created by the clean energy legislation.
"This analysis underscores that this legislation is effective and affordable," said Rep. Waxman. "It sets America on a course of energy independence while taking significant steps to reduce dangerous global warming pollution."
"Americans know that building a clean energy economy has real value, and this CBO analysis proves it," said Rep. Markey. "Low-income American families will see a $40 benefit from using more wind and solar energy and less foreign oil. And for the cost of about a postage stamp a day, all American families will see a return on their investment as our nation breaks our dependence on foreign oil, cuts dangerous carbon pollution and creates millions of new clean energy jobs that can't be shipped overseas."
CBO estimated the costs of H.R. 2454, the American Clean Energy and Security Act of 2009, to ascertain the average cost per household that would result from implementing the provisions that cap carbon emissions, as well as how the costs would affect different levels of household income.
CBO states "the Congressional Budget Office estimates that the net annual countrywide cost of the cap-and-trade program in 2020 would be $22 billion - or about $175 per household."
CBO specifically notes that this figure "does not include the economic benefits and other benefits of the reduction in GHG [greenhouse gas] emissions and the associated slowing of climate change." In particular, CBO did not analyze the energy efficiency improvements and resulting savings in energy costs that will result from the ACES Act's investment of over $60 billion in the next ten years in energy efficiency and required improvements in energy efficiency. One outside group, the American Council for an Energy Efficient Economy (ACEEE), has estimated that the benefits of the energy efficiency provisions in ACES, which generally were not included in the CBO estimate, will save consumers $22 billion in 2020 alone, with cumulative savings of $3,900 per household by 2030.
In addition, CBO found that households in the lowest quintile would see an average net benefit of $40 in 2020. And overall net costs would average 0.2 percent of household after tax income.
The first five paragraphs emphasize only how the CBO study supposedly shows what a great bill it is. The closest we get to a hint of other factors comes from the mere use of "net" in the opening paragraph.
Richert apparently assumed that the sixth paragraph takes other factors and costs into account. But on the contrary, the sixth paragraph only makes it appear that the CBO study failed to take into account additional benefits to consumers. I exaggerate not. Go back and read it again.
This is a mind-boggling oversight/mistake. Richert goes beyond offering benefit of the doubt to Waxman and Markey to the point of covering up an obvious failure to provide full disclosure.
After overlooking the obvious, Richert grades Markey "True."
Catharine Richert: F
Bill Adair: F
As fact-checking, this entry was a sham. It qualifies for the special tag of "journalists reporting badly."