True or False? Cap-and-Trade Will Cost You $3,000

True or False? Cap-and-Trade Will Cost You $3,000

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Widely reported estimates for how much a so-called "light switch tax" would cost the average American household are grossly inflated. Here's why.

It sure ain't the "death tax," but you have to give Rep. John Boehner points for using the phrase "light switch tax" in attacking cap-and-trade legislation.

Of course, it would be nice if Boehner and Sen. Mitch McConnell weren't insisting on the existence of a non-existent MIT study showing that cap-and-trade legislation will increase your energy taxes by more than $3,000.

It all started with this bullet in a fact sheet from notorious global warming denier Oklahoma Senator Jim Inhofe:

"An MIT study of a similar cap-and-trade proposal as the President's indicated revenues of $366 billion in a single year. That amounts to about $3,000 in new energy taxes per household. (This does not include the economic damage that cap-and-trade would cause. ..."

Turns out that when you go to the MIT study (pdf) in question the $3,000 figure in question is a disbursement - not a tax:

Uh, talk about getting it 100 percent wrong!

As our friends at Think Progress explain it:

"Think Progress previously reported the outright lie being told by Republicans that the green economy legislation before Congress would 'cost every American family up to $3,100 per year in higher energy prices.' GOP leaders apparently arrived at this number by intentionally misinterpreting a 2007 study conducted by MIT.

PolitiFact interviewed John Reilly, an MIT professor and one of the authors of the study, who explained he had spoken with a representative from the House Republicans on March 20, and that he had clearly told them, 'why the estimate they had was probably incorrect and what they should do to correct it.' Nonetheless, Rep. John Boehner (R-OH) and Sen. Mitch McConnell (R-KY) decided to use the $3,100 figure to attack cap-and-trade, while the National Republican Campaign Committee blasted dozens of press releases like the following on March 31:

"As Congress takes the President's federal budget under consideration, North Carolina families deserve to know if Rep. Larry Kissell (D-NC) would support such a devastating energy tax proposal. [...] MIT researchers released an 'Assessment of U.S. Cap-and-Trade Proposals,' which shows that the increase would be an increase of more than $3,000 a year for each household."

Today, Professor Reilly sent a forceful letter (pdf) to Boehner and the Select Committee on Energy Independence and Global Warming to denounce this blatant distortion being told by Congressional Republicans. Reilly noted that $3,100 was actually '10 times the correct estimate which is approximately $340' and that the costs on lower and middle income households can be "completely offset by returning allowance revenue to these households":

"It has come to my attention that an analysis we conducted examining proposals to reduce greenhouse gas emissions, Report No., 146, Assessment of U.S. Cap-and-Trade Proposals, has been misrepresented in recent press releases distributed by the National Republican Congressional Committee. The press release 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. [...] Our Report 160 shows that the costs on lower and middle income households can be completely offset by returning allowance revenue to these households."

Professor Reilly then reaffirmed the urgency of enacting green economy legislation, declaring, "It will take efforts in the US and abroad to reduce emissions substantially to avoid the most serious risks of climate change. [...] 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."

These distortions on cap-and-trade taxes are so bad that the the St. Petersburg Times gave them the "Pants on Fire" rating on the PolitiFacts Truth-o-Meter saying:

"If Boehner and McConnell had simply misstated the results of the MIT study, the Truth-O-Meter would have been content giving this one a False. But for them to keep repeating the claim after the author of the study told them it was wrong means we have to set the meter ablaze. Pants on Fire."

Well, we'll see what happens. Some folks just don't care how hot it gets.

- Frances Beinecke
NRDC President
Originally published in NRDC's Switchboard blog.