On Friday the House is expected to vote on the Waxman-Markey climate change and energy bill, which contains an aggressive cap-and-trade program. Critics have pointed out that it could impose serious harms on the U.S. economy with little environmental benefit. The CBO entered the fray [.pdf] recently and announced that by 2020, the annual cost to the average household would be a mere $175. Not bad for saving the planet, eh?
Of course that number is absurd. Just as Tom Woods took pleasure in documenting how the Supreme Court managed to “reconcile” federal actions with the Constitution, so too did I (and the rest of the IER hit squad) have fun pointing out the CBO’s tricks.
My favorite example: The CBO argued that cap and trade would raise nominal energy prices more than household income would rise. Thus, because the income tax is indexed to price inflation (they claim), it means households fall into lower tax brackets. The CBO counted this as an $8.7 billion benefit to households from the cap and trade scheme, which it used to suppress the overall hit.