It's one thing for House Republicans to estimate the cost of cap-and-trade legislation based on a report from the Joint Program on the Science and Policy of Global Change at the Massachusetts Institute of Technology.
It's quite another thing to stand by the estimate when you're told by one of the report's authors that you have it wrong.
House Republicans, citing the MIT study, said that a cap-and-trade bill proposed in 2007 -- and any similar cap-and-trade bill would cost every American household $3,128 a year.
The Republicans arrived at the figure by taking estimates in the MIT report that the bill, S. 309, would generate $366 billion in revenues in 2015; and dividing that by the number of US households (assuming a population of 300 million and an average household size of 2.56 people, yielding 117 million households); which works out to $3,128.
But in a letter to House Republican leader John Boehner, Ohio, John Reilly, an MIT professor and one of the authors, said the Republican figure "is nearly 10 times the correct estimate of approximately $340."
Reilly said the analysis in the report "assumes that the revenue is returned to households." Depending on individual household circumstances and locations, energy costs will vary, he wrote. Higher energy prices encourage reductions in energy use by increasing the payback on improvements in energy efficiency "and through such investments households can avoid paying for more energy."
The average annual net present value cost per family of four (applying an economic discount rate of 4%), of $340 includes the direct effects of higher energy prices and the cost of measures to reduce energy use. The study also assumes that the price of alternative fuels would decrease over time.
But the Republicans would have none of it. Reilly makes assumptions "that are factually inaccurate," Boehner said in a "Leader Alert." Moreover, Reilly claims "government rebates to consumers' must be factored in, but we all know that Democrats have no intentions of using a cap-and-trade system to deliver rebates to consumers. They want the tax revenues to fund more government spending."
Actually, we don't all know that. The debate over cap-and-trade legislation is just getting under way in Congress, and previous cap-and-trade proposals have provided mechanisms to offset higher energy costs to consumers.
Politifact, a project of the St. Petersburg, (Florida) Times, which seeks to ferret out the truth of statements by Washington officials of all political stripes and rates the claims and attacks on a "Truth-O-Meter," said this about the Republican claims:
"If Republicans 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."
Which on the Truth-O-Meter means: "The statement is not true and makes a ridiculous claim."
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