Monday, June 22, 2009

A Little Bit on H.R. 2454 (Waxman's Cap'N'Trade)

I get a little disconcerted when "prevention" in health care is discussed in terms of more medication rather than lifestyle and environmental changes.

Incidentally, today is the 40-year anniversary of my hometown's flammable water catastrophe (which, in addition to becoming "a galvanizing symbol for the environmental movement," inspired a pretty okay beverage as well).

Likewise, I get a little disconcerted when environmental change is discussed as an overall cost to society as Paul Krugman does here. Granted, his point is that the overall cost is very low (18 cents a day), according to the CBO report:

CBO estimates that the price of an allowance, which would permit one ton of GHG emissions measured in CO2 equivalents, in 2020 would be $28. H.R. 2454 would require the federal government to sell a portion of the allowances and distribute the remainder to specified entities at no cost. The portions of allowances that were sold and distributed for free would vary from year to year. This analysis focuses on the year 2020, when 17 percent of the allowances would be sold by the government and the remaining 83 percent would be given away.

Emphasis mine. This bill is apparently 17% environmental solution and 83% corporate welfare.

The CBO's report states that "reducing emissions to the level required by the cap would be accomplished mainly by stemming demand for carbon-based energy by increasing its price." The effect is going to be drastically reduced if the price is raised only for 17% of polluters.

So why am I arguing that we should raise the price of polluting when I began with the idea that we shouldn't focus on the cost? Because the money raised through auctioning allowances doesn't just disappear when it enters the federal treasury (technically speaking, of course. We can certainly come up with a lot of, say, symbolic reasons to argue that the money has disappeared). The money can offset existing income taxes (to the benefit of those in lower incomes who might have undue strain placed unto them with higher energy costs – though maintaining a better set of incentives to conserve energy) or fund something like health care to take care of those who accidentally fell in the cuyahoga river back before we charged polluters.

Jefferey J. Smith relates the two:

To bring down costs even more, let’s clean up the environment, which would stop stressing out our immune systems, and let’s expand leisure for everyone, which would stop stressing out us. We can reach both goals via geonomics. That is, when we require members of society to pay land dues, they tend to use land efficiently and not pollute. And when we endow members of society with shares of recovered “rents”, then we all can afford to work less. With geonomics in place, we might not need any socialized medical attention at all.

His ending conclusion is more optimistic than I might suggest, but the point remains that the benefits aren't discussed nearly as much as the costs.

Also from the CBO study, on the subject of undiscussed benefits:

This analysis does not address other provisions of the bill, nor does it encompass the potential benefits associated with any changes in the climate that would be avoided as a result of the legislation...

For the remaining portion of the net cost, households in the lowest income quintile would see an average net benefit of about $40 in 2020.

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