Earth Day falls on the calendar today, April 22, just a week after April 15, Tax Day. The proximity of the two days is a reminder to Americans that if they want any of the government remedies that would supposedly save a planet allegedly imperiled by global warming, it’s going to cost them.
Just how much it will cost them has been a point of contention lately. Many congressional Republicans, including members of the GOP leadership, have claimed that the plan to limit carbon emissions through cap and trade would cost the average household more than $3,100 per year. According to an MIT study, between 2015 and 2050 cap and trade would annually raise an average of $366 billion in revenues (divided by 117 million households equals $3,128 per household, the Republicans reckon).
But on March 24, after interviewing one of the MIT professors who conducted the study on which the GOP relied to produce its estimate, the St. Petersburg Times Politifact declared the GOP figure of $3,100 per household was a “Pants on Fire” falsehood. The GOP claim is “just wrong,” MIT professor John Reilly told Politifact. “It’s wrong in so many ways it’s hard to begin.”
Politifact reported:
According to Politifact, Reilly’s “report did include an estimate of the net cost to individuals” that “would be $215.05 per household. A far cry from $3,128.” On April 1, Reilly sent a letter to House Republicans and adjusted the cost to $340 per household.
Running with Politifact’s report and Reilly’s letter, bloggers at Think Progress called the GOP’s claim a “deliberate lie,” a “myth“, and an “outright lie“. On April 1, Keith Olbermann said that cap and trade’s “average additional cost per family six years from now would be 79 bucks, minus the amount foreign gas prices would drop based on decreased demand, and minus lowered health care costs, because of the cleaner atmosphere. Thirty-one bucks, 3,100 bucks, it’s all the same to Congressman John the mathlete Boehner, today’s worst person in the world.” On April 8, MSNBC’s Rachel Maddow said of the GOP’s figure: “No. Pants on fire. The MIT guy says ‘no.’ That’s not what the study says. Not true. You can’t say that.”
From Politifact to Think Progress to MSNBC, Reilly’s rebuttal of the GOP cap-and-trade estimate made its way to the Democratic caucus in the House of Representatives. During an April 2 floor debate, New Jersey Democrat Rob Andrews criticized Republicans for citing a study that “the author claims is just being blatantly misrepresented,” and the House energy committee chairman, Massachusetts Democrat Edward Markey, called the figure “more fuzzy math from Republicans.”
At this point, the falsity of the $3,100 per household cap-and-trade estimate was a well-established fact among members of the press. News outlets that reported Reilly’s criticism of the GOP’s figure included not only liberal outlets like The New Republic and The Washington Independent, but mainstream publications like Congressional Quarterly, The Hill, Politico, McClatchy, and the Wall Street Journal.
Minnesota Republican Michelle Bachmann faced harsh criticism after citing the $3,100 figure in an April 7 Minneapolis Star-Tribune op-ed. “Bachmann: I, Too, Know More About Climate Change Than MIT Scientist ,” sneered one headline at the website TPM. “Whether Bachmann is ignorant or dishonest is unclear,” wrote The Washington Monthly‘s Steve Benen.
When the Star-Tribune‘s opinion page editor Eric Ringham was contacted about Bachmann’s use of the figure, he apologized for letting her include it in her column. “It wasn’t on my radar. I’m embarrassed to have let it go unchallenged,” Ringham told Think Progress.
But, as the old saying goes, a lie makes its way around the world while the truth is getting its boots on. During a lengthy email exchange last week with THE WEEKLY STANDARD, MIT professor John Reilly admitted that his estimate that cap and trade would only cost $340 per year was inaccurate. The annual cost would be “$800 per household,” he wrote. “I made a boneheaded mistake in an excel spread sheet. I have sent a new letter to Republicans correcting my error (and to others).”
While $800 is significantly more than $340 (not to mention more than Obama’s middle-class-tax cut), it turns out that Reilly is low-balling the cost of cap and trade by using some fuzzy logic. In reality, cap and trade could cost the average household more than $3,900 per year.
The $800 paid annually per household is merely the “cost to the economy [that] involves all those actions people have to take to reduce their use of fossil fuels or find ways to use them without releasing [Green House Gases],” Reilly wrote. “So that might involve spending money on insulating your home, or buying a more expensive hybrid vehicle to drive, or electric utilities substituting gas (or wind, nuclear, or solar) instead of coal in power generation, or industry investing in more efficient motors or production processes, etc. with all of these things ending up reflected in the costs of good and services in the economy.”
In other words, Reilly believes that “the amount of tax collected”–which he estimates would equal $3,128 in costs passed from companies taxed through cap and trade to the average household–“has nothing to do with the real cost” to the economy. Reilly assumes that the $3,128 will be “returned” to each household. Without that assumption, Reilly wrote, “the cost would then be the Republican estimate [$3,128] plus the cost I estimate [$800].”
In Reilly’s view, the $3,128 taken through taxes will be “returned” to each household whether or not the government cuts a $3,128 rebate check to each household.
He wrote in an email:
By this logic, I asked Reilly, would he say that taxes taken to fund Social Security and Medicare equal a “cost” of $0 per household, since the taxes are recycled into the economy?
Reilly replied: “On average yes, almost–these are simply transfers. They take from one person and give to another (and over your lifetime you expect to pay some part of time and receive at other times and so the ‘average’ person should come out about even […].)”
He added later: “I am simply saying that once [the tax funds are] collected they are not worthless, they have value. If the Republicans were to focus on that revenue, and their message was to rally the public to make sure all this money was returned in a check to each household rather than spent on other public services then I would have no problem with their use of our number.”
Most Americans would be surprised to learn that Medicare and Social Security “cost” them $0 per year. Most Americans would likely care a great deal whether they get to spend that $3,128 themselves or the government spends it on programs to put a chicken in every pot and a Prius in every garage.
The fact is, it’s anybody’s guess how cap-and-trade revenues would be spent. Obama has suggested he would like to use most of cap-and-trade revenues to fund his “making work pay” middle- and lower-class tax credit ($400 per individual and $800 per family per year). Congressional Democrats have left the door open to spending the revenues to “invest in clean energy jobs and cost-saving energy efficient technology,” as Rep. Markey has written.
After corresponding with Reilly, I contacted Politifact’s reporter Alexander Lane and editor Bill Adair to ask if they would correct their report that the GOP’s estimate of cap and trade’s cost is a “pants on fire” falsehood.
Lane wrote in an email: “The detail of my piece that you think needs correcting seems to be in flux…”. The “detail” to which he referred was Reilly’s admission that the “real cost” was $800 per household, not $215 per household as Politifact originally reported.
While the discrepancy between these figures was Reilly’s fault, Politifact’s report contained more inaccuracies. Politifact reported that “results of a cap-and-trade program, such as increased conservation and more competition from other fuel sources, would put downward pressure on prices,” but it didn’t make clear that Reilly’s estimate of the “real cost” ($800) already accounts for these downward pressures. “Moreover,” Politifact added, “consumers would get some of the tax back from the government in some form.” In fact, Reilly assumed that all–not “some”–of the tax revenue would be returned. Politifact, and other news outlets reporting on Reilly’s criticism of the GOP’s estimate, did not make it clear that taxpayers would “get” some or most of this tax back through government spending.
When I asked Bill Adair over the phone last week if it would be accurate to say that Social Security taxes cost the average household $0, he replied: “You’re getting me at a really bad time. I would love to talk about this any time tomorrow.” Adair did not reply to further inquiries.
On Monday, Politifact won a Pulitzer prize. It has not yet corrected its report.
John McCormack is a deputy online editor at THE WEEKLY STANDARD.
