The Obama administration has concluded privately that a cap-and-trade law would cost every American household $1,761 a year — or a national total of nearly $200 billion a year, the equivalent of hiking personal income taxes by about 15 percent.
The previously unreleased Treasury Department analysis, which CBS News reported this week, says the new law would require new taxes between $100 billion to $200 billion a year. That’s how Treasury analysts arrived at the $1,761 per household figure.
"Given the administration's proposal to auction all emission allowances, a cap-and-trade program could generate federal receipts on the order of $100 to $200 billion annually," according to the document, which was written by Judson Jaffe, who joined the Treasury Department's Office of Environment and Energy in January.
Because personal income tax revenues bring in around $1.37 trillion a year, a $200 billion additional tax would be the equivalent of a 15 percent increase a year. A $100 billion additional tax would represent a 7 percent or 8 percent increase a year.
That finding has been echoed by other internal Obama administration documents on the subject.
"Economic costs will likely be on the order of 1 percent of GDP, making them equal in scale to all existing environmental regulation," according to a second memorandum that was prepared for Obama's transition team after the November election.
CBS reported these figures based on documents that the free-market Competitive Enterprise Institute obtained under the Freedom of Information Act (FOIA) and released on Tuesday.
Other figures developed in studies for a new cap-and-trade law have been even more prohibitive.
House Republican Leader John Boehner has estimated that the additional tax bill would be at least $366 billion a year, or $3,100 a year per family. The Heritage Foundation says that, by 2035, "the typical family of four will see its direct energy costs rise by over $1,500 per year."
Christopher Horner, a senior fellow at the Competitive Enterprise Institute who filed the FOIA request, told CBS, "Heritage is saying publicly what the administration is saying to itself privately. It's nice to see they're not spinning each other behind closed doors."
Democrats pushing such legislation, meanwhile, have relied on estimates from MIT's John Reilly, who put the cost at $800 a year per family. They insist that tax credits to low-income households could offset part of the bite.
And responding to release of the document, The Environmental Defense Fund issued a statement insisting that the figures ignore the cost savings to consumers from cap-and-trade legislation.
“Even if a 100 percent auction was a live legislative proposal, which it's not, that math ignores the redistribution of revenue back to consumers,” the environmental fund’s statement said. “It only looks at one side of the balance sheet. It would only be true if you think the Administration was going to pile all the cash on the White House lawn and set it on fire.”
The Democrats are “not telling you the cost — they're not telling you the benefit," says Horner, who wrote the Politically Incorrect Guide to Global Warming. "If they don't tell you the cost, and they don't tell you the benefit, what are they telling you? They're just talking about global salvation."
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