Claim:

The American Clean Energy and Security Act is the "largest tax increase in American history under the guise of climate change legislation … there is no debate that this legislation will cost millions of American jobs." – Rep. Mike Pence (R-IN), 6/26/09

Truth:

On the first point … sigh … here we go again.

The Environmental Protection Agency and the Congressional Budget Office each analyzed the American Clean Energy and Security Act separately. The EPA found a carbon cap would cost the average American household as little as $88-$140 per household per year over the life of the program – or about a dime a day per person.

The CBO got similar results; it found we could get all the benefits of a carbon cap for less than the cost of a postage stamp per day per household. Anyone who thinks that's the biggest tax increase in America's history needs to brush up on their history.

On the second point … the one about costing jobs … how about it will create jobs. Today, trailblazers in the renewable energy, energy efficiency and manufacturing sectors are already operating in every state in the U.S. Those companies are poised to grow — and create jobs – when ACES passes.

To see a snapshot of the huge economic opportunities, check out www.LessCarbonMoreJobs.org, an innovative online map that shows over 2,000 clean energy companies in 20 states.

Claim:

The American Clean Energy and Security Act is "a new tax that will cost every American $1,500-3,000 a year." Jeb Hensarling (TX-R), 6/26/09

Truth:

How many times do we have to say it? The misquoted, misconstrued $3100 number is wrong. So wrong the author of the MIT report (where the NRCC got their numbers for their calculations) said the math is: "just wrong. It's wrong in so many ways it's hard to begin."

The continued use of this wrong information at this point is nothing less than a deliberate lie to the American people.

Once again, let’s look at more accurate report. The EPA and the CBO both reported a carbon cap would cost less than the cost of a postage stamp per day per family.

It’s time to be honest with the American people.

Claim:

The American Clean Energy and Security Act "would be the biggest tax in American history" – Rep. Pete Sessions, R-TX, 6/26/09

Truth:

Wrong. The Environmental Protection Agency and the Congressional Budget Office each analyzed the American Clean Energy and Security Act separately.

The EPA found a carbon cap would cost the average American household as little as $88-$140 per household per year over the life of the program – or about a dime a day per person.

The CBO got similar results; it found we could get all the benefits of a carbon cap for less than the cost of a postage stamp per day per family. Anyone who thinks that's the biggest tax increase in America's history needs to brush up on their history.

The Wall Street Journal mistakenly accused the CBO of not considering the full range of costs to the economy, but all the costs they cite as missing were fully taken into account by the study.

What's more, neither study looked at the costs of inaction — the astronomical costs of fixing the damage that will be caused by unchecked climate change.

In Criticizing CBO’s Analysis of Climate Legislation, Heritage Foundation Reveals Its Own Ignorance of Economics

The Congressional Budget Office — the nonpartisan Congressional agency charged with reviewing legislation and budgets — recently completed an analysis of the American Clean Energy and Security Act (ACES). CBO estimated the cost of ACES to American households in the year 2020, and found that the number would be just $175 per year — or just two-tenths of a percent (0.2%) of after-tax income.

Not surprisingly, the well-funded supporters of the status quo are trying to discredit the CBO's work. A case in point is the recent "Web Memo" and accompanying blog post written by the Heritage Foundation, titled "CBO Grossly Underestimates Costs of Cap and Trade."

Needless to say, Heritage's arguments fail to hold up under examination. Their analysis once again shows just how much biased economics, empty rhetoric, and gross exaggeration a pile of right-wing money can buy. But it tells us little about climate legislation.

– Heritage claims that the allowance cost numbers don't add up. FALSE.

It's Heritage that gets the math wrong. Too lazy to model the actual legislation, Heritage simply multiplied the number of emission allowances available in the 2020 by the CBO's estimated allowance price, to get $141 billion. That's larger than CBO's estimate of total allowance cost, which is $94.1. But the difference is not hard to understand — in fact, CBO explains it quite clearly.

The beauty of a cap-and-trade program is that it gives firms flexibility: the flexibility to reduce emissions by more than necessary, in order to build up a bank of allowances for later use; and the flexibility to buy high-quality offset credits for verified emissions reductions from sources outside the cap. That's why CBO also includes in its estimate of gross cost the estimated costs of purchasing those offsets — something Heritage completely ignores. The bottom line is that the flexibility of the market lowers the gross cost of compliance.

– Heritage claims that CBO omits "economic damages from restricting energy use." FALSE.

Heritage seems to be confused by the fact that CBO does not include an explicit GDP forecast. But that doesn't mean the CBO's analysis is not comprehensive. In its analysis of ACES, CBO estimates the full range of gross compliance costs to the economy, including the real economic costs of the program — that is, the resource costs associated with cutting pollution and moving to a clean-energy economy. Those costs are fully taken into account in the $175 figure cited above.

CBO's analysis focuses on household-level costs. That's because CBO, by custom, always holds economic output constant when it analyzes legislation. Instead of using a "general equilibrium model," CBO relies on a survey of other models to estimate an allowance price, and then uses detailed data on production and consumption patterns to model how that allowance price would spread throughout the economy as currently structure.

For macroeconomic GDP impacts, we can look to the analysis of the legislation released by EPA. In 2020, EPA's modeling of GDP impacts in its core policy scenario ranges from a reduction of 0.6% to an increase of 0.1%.

– Heritage claims that CBO’s analysis is an "accounting analysis, not an economic one." FALSE.

The argument here is basically the same one as in the point above. While it is true that CBO does not employ a dynamic general equilibrium model, it is completely false to suggest that CBO's analysis is not an economic one. Rather than using its own model, CBO surveys a wide range of dynamic general equilibrium models and comes up with a parameter that estimates the allowance price needed to achieve a given pollution reduction. As explained above, that allowance price is then fed through detailed data on production and consumption to estimate household impacts.

The Heritage analysts seem have made the elementary mistake of confusing the CBO's earlier "scoring" estimate of the legislation — which is an accounting exercise — with the estimate of the costs of climate legislation — which is a full-fledged economic analysis.

The key point here is that CBO's study does estimate the real economic costs of reducing global warming pollution. And it still finds those costs to be tiny — less than 50 cents a day per household.

– Finally, in its ill-founded attack Heritage continuously refers to its own modeling of the economic impacts of ACES. Their analysis is based on unrealistic assumptions, some of which are completely contrary to the actual provisions in the bill, resulting in an ungrounded analysis that does not accurately model what the effects are likely to be.

Let's take a look at the facts. The CBO concluded that the net annual economy-wide cost of the cap-and-trade program in 2020 would amount to about $175 per household (which includes all the costs of the policy). What's more, CBO predicts that households in the lowest income quintile will see an average net benefit of about $40 in 2020.

And the CBO isn't the only one that predicts low costs for ACES. The EPA, which sets the gold standard in terms of peer-reviewed, transparent analysis, concluded that over the entire life of the legislation, the costs of cutting carbon pollution under ACES would only be about $80 to $111 per year for the average American household. That's about a dime a day per person.

And remember: all of these cost estimates are only looking at one side of the ledger—they don't incorporate the benefits of addressing the climate crisis.

In a June 24 letter, the Congress on Racial Equality (CORE) claims that the American Clean Energy and Security Act (ACES) would harm poor and working-class families.

CORE, which has reportedly received funding from ExxonMobil, cites no basis for its extreme assertions, and completely ignores the objective analyses of ACES showing that the bill would benefit low-income consumers and populations:

1. Analysis of ACES by the Congressional Budget Office shows that  "households in the lowest income quintile would see an average net benefit of about $40 in 2020" under ACES.
2. As CBO explicitly notes, that 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." According to the Congressional Black Caucus Foundation, “the African American community will disproportionately benefit from climate policies that slow climate change,” in part because “African Americans are already disproportionately burdened by the health effects of climate change, including deaths during heat waves and from worsened air pollution.”
3. The Center for Budget and Policy Priorities, one of the nation’s premier policy organizations working on public policies that affect low- and moderate-income families and individuals, just released a new report, “New EPA and CBO Estimates Refute Claims That House Climate Bill Would Impose Large Costs on Households and the Economy.”  The name says it all.

No Change to Consumer Assistance in Revised American Clean Energy & Security Act, H.R. 2454

On June 24, Republican members of the House Ways & Means Committee circulated yet another false claim about the pending clean energy bill, H.R. 2454. In an inflammatory email today, they claim that a new version of H.R. 2454 supposedly "yanks middle class tax relief" from the bill.

That's completely false. Here are the facts:

1.    The bill was – and still is – loaded with relief for consumers.

2.    For starters, H.R. 2454 protects everyone who uses electricity by providing free allowances – worth hundreds of billions of dollars – that must be used to protect ratepayers.

3.    To further benefit American consumers, the bill provides $250 billion (in present value) of tax refunds for every taxpayer in the country, starting in 2020.

4.    Finally, to address the special needs of low-income families, the bill goes even further and provides extra relief for these households.

5.    It's only this third type of consumer relief, directed at low-income households, that has changed at all in the new version of the bill. Even there, the amount of assistance hasn't changed one cent. The only difference is a technical change in how that assistance would be delivered — from a tax credit to a refund.

In short, clean energy opponents' attack machine has misfired again.

Claim:

"Christopher C. Horner, author of the book 'Red Hot Lies: How Global Warming Alarmists Use Threats, Fraud and Deception to Keep You Misinformed' noted that it was Enron that invented the concept of cap and trade and then profited off it until it collapsed in disgrace. He said that Waxman-Markey would bring about 'Soviet-style planning.'"

– From "Hoosier GOP Sound Alarm Over Cap & Trade" by Brian A. Howey, editor of the Howey Politics Indiana blog, May 27, 2009.

Truth:

Let's set aside the fact that Christopher Horner is a senior fellow at the Competitive Enterprise Institute, which has received more than $2 million in funding over the last decade from ExxonMobil, arguably the number one corporate opponent of any climate action over the last 20 years.

Let's also set aside the fact that Christopher Horner is also counsel to the Cooler Heads Coalition, a global warming skeptics group that exists for the express purpose of questioning global warming science and blocking climate action.

Let's deal with the claim straight up.

Enron did not invent cap and trade. Not by any stretch of the imagination.

For one thing, Enron didn't exist until the late 1980s after the merger of InterNorth and Houston Natural Gas. By that time, the concept of cap and trade as a policy to cut pollution had been debated for more than a decade.

Cap and trade was later codified in U.S. law in the 1990 Clean Air Act to reduce America's acid rain pollution. The Economist crowned the acid rain cap and trade policy "probably the greatest green success story of the past decade." (July 6, 2002).

EDF played a leading role in promoting the acid rain pollution cap, and take it from us Enron played no role in the debate what-so-ever.

As for "Soviet-style planning" – the dictionary defines HYPERBOLE as an "obvious and intentional exaggeration." Perhaps we should amend it to include Mr. Horner's statement.

Mr. Horner either doesn't know what he's talking about or is dissembling. Far from a command and control program, cap and trade is a market-based policy designed to unleash investments in the clean energy economy. By definition, it is the opposite of letting the government pick winners and losers.

In fact, the first President Bush — not exactly a promoter of Soviet style economics — signed the 1990 cap and trade law because it was a centrist, efficient way to effectively cut pollution. And it still is.

There is much to debate when it comes to how to solve global warming. We welcome Mr. Horner to the debate, but would urge him to do his homework and get his facts straight.

Claim:

"Cap and trade legislation fails the test of government that works. The cost of this policy will be certain, massive and immediate. The benefits of these policies will be dubious, miniscule and decades in the distance. I really do believe that before we take a plunge of this magnitude, people should talk it over, think it through, take a deep breath and consider whether there’s a better way to achieve goals we all agree on."

– Indiana Governor Mitch Daniels speaking at an energy summit in Indianapolis, IN, May 27, 2009.

Truth:

First of all, cap and trade has already been proven as successful government policy. It was used in the 1990 Clean Air Act to reduce the pollution that causes acid rain.

The results? Well, the sulfur dioxide cap worked so well that The Economist crowned it "probably the greatest green success story of the past decade." (July 6, 2002).

In the 1990s, the acid rain cap and trade program achieved 100% compliance in reducing sulfur dioxide emissions. In fact, power plants participating in the program reduced SO2 emissions 22% — 7.3 million tons — below mandated levels.

All this has been achieved at a fraction of the cost estimates. Prior to the launch of the program, costs were estimated to run from $3-$25 billion per year. After the first 2 years of the program, the costs were actually $0.8 billion per year and the long-term costs of the program are expected to be around $1.0-$1.4 billion per year, far below early projections.

The doom-and-gloomers were wrong then. And they're wrong now.

As for taking a deep breath and talking it over, Governor Daniels may be new to the debate, but global warming has been a known and serious problem for decades.

Environmental Defense Fund first starting working on the threat of global warming in Reagan era. The Kyoto Protocol was negotiated more than 10 years ago. The McCain-Lieberman Climate Stewardship Act was first introduced in 2003. And there have been three votes in the Senate on moving forward on a cap and trade bill.

We've had ample time to debate the pros and cons. Governor Daniels may not want to move forward on this policy. That's his right. But, he owes it to his constituents and the American people to base his arguments on facts, not misleading and baseless hyperbole.

The House Energy and Commerce Committee is holding hearings this week on landmark climate and energy legislation.

We are launching a regular Fact Check series to correct the record on false and misleading statements from climate action opponents.

The Waxman-Markey bill will give business incentives to close up shop and move to China. – Fred Upton (R-MI)

Investing in the clean energy of the 21st century will create jobs here in America – especially manufacturing jobs at companies across the country that are poised to make the nuts and bolts of clean energy technologies. For instance, one wind turbine requires 250 tons of steel and more than 8,000 parts – all of which can best be built by skilled U.S. workers and assembled, run, and maintained here on U.S. soil. EDF has created a map detailing where a carbon cap will create jobs in 14 states – go to www.lesscarbonmorejobs.org.

China is also already doing a great deal to reduce greenhouse gas emissions. China has stricture fuel economy standards for automobiles, for example. China will not take other important steps, however, until the U.S. – historically the largest emitter and the world's largest economy – moves first to cap its own emissions.

We shut down our domestic nuclear industry. – Fred Upton (R-MI)

No new nuclear power plants have been built in the U.S. for two decades.  This is not because the U.S. has in any way forbidden the building of new plants.  It’s because no utility has proposed one, because they have become so expensive, despite extensive federal subsidies.  Nonetheless, according to the Nuclear Regulatory Commission, U.S. electric utilities are planning to apply for licenses for 35 new nuclear power units.

The Waxman-Markey bill will cost each American family $4,800 per year. – Ralph Hall (R-TX)

 According to a new EPA analysis of the Waxman-Markey climate bill (the American Clean Energy and Security Act), a well-designed  cap on carbon pollution can be met for as little as $98 per household per year over the life of the program – or about a dime a day per person.

In the early years the costs are even lower:  Before 2012 it is zero – because the bill won’t have taken effect. By 2015, the costs “skyrocket” to 2 cents per person. Anyone who claims that now is the wrong time to cap carbon is engaging in scare tactics.

EPA’s analysis sets the gold standard by using two of the most credible, transparent, and peer-reviewed economic models available.  It’s not a crystal ball, but it shows clearly that household costs will be modest under a well-designed cap and trade bill.

This bill will destroy 1.1 million jobs. – Ralph Hall (R-TX)

The Energy Information Agency of the Department of Energy has predicted that total manufacturing employment will be roughly the same in the year 2030 under a cap versus business as usual.

Once again, EDF has created a map detailing where a carbon cap will create jobs in 14 states – go to www.lesscarbonmorejobs.org.

This bill picks winners and losers. – Marsha Blackburn (R-TX)

The whole point of the cap and trade approach is to let private markets pick winners and losers, getting the government out of the way.  The private carbon market will reward companies that adopt the cheapest and most efficient technologies for reducing carbon.  See:  Cap and Trade 101 [pdf].

Carbon dioxide is not a deadly emittant (sic – there is no such word).  – John Shimkus, (R-IL)

Perhaps not in the sense of mustard gas.  In sufficient concentrations in the atmosphere, however, it would prove disastrous for both human society and the natural world.

This bill mandates environmental socialism.  It will break the back of families, forcing many out of their homes and into the street. – George Radanovich (R-CA)

Well, okayyy …

Claim:

"Anyone who thinks you can pay $3,100 to the federal government and thinks you can get that money back completely in services — like I said — he may go to M-I-T but he is an N-U-T."

– Rep. Louie Gohmert (R-TX) referring to Dr. John Reilly, the MIT economist who coauthored the 2007 "Assessment of U.S. Cap-and-Trade Proposals [pdf]."

Truth:

Thanks to Think Progress's The Wonk Room for reporting on Rep. Gohmert's childish antics. Are we really resorting to name-calling when debating something as serious as global warming?

Beyond the question of maturity, Rep. Gohmert is repeating a lie that won't die. As we point out in this Climate 411 post, the $3100 figure has been thoroughly debunked. There are lies, damn lies and then there's this $3100 claim.

Rep. Gohmert and anyone else who continues to use this $3100 figure should know the facts.

Here's what Dr. John Reilly, the author of the MIT study, told Politifact about the NRCC's $3100 claim: "It's just wrong. It's wrong in so many ways it's hard to begin."

And, in two recent letters to House Republican Leader John Boehner, Dr. Reilly asked that the NRCC stop using the "misleading" figure, noting that MIT's estimates are less than one thirtieth of what the NRCC is claiming.

"A correct estimate of that cost … for the average household just in 2015 is about $80 per family, or $65 if more appropriately stated in present value terms discounted at an annual 4% rate," Dr. Reilly wrote.

Go to Climate 411 for a more detailed response.

Global warming is a serious issue and it should be debated in a serious way. Rep. Gohmert should know better than to resort to lies and name-calling.