The fiscal cost of Waxman-Markey
Couldn’t they have left themselves any leeway at all? The CBO has now costed out the Waxman-Markey act, and has come to the conclusion that over the 10 years from 2010 to 2019, it would raise $846 billion, spend $821 billion, and cost another $50 billion or so in discretionary spending. In other words, it’s at best fiscally flat, and quite possibly will actually cost the government money.
The good news, however, is that fully $693 billion of the $821 billion in direct costs is accounted for by “Outlays Associated with Emission Allowances Freely Allocated”. In other words, if and when there’s a fiscal crunch, any future government can significantly reduce the budget deficit at a stroke just by ceasing to give away carbon allowances. Which of all the different ways to raise taxes is probably likely to be one of the least politically damaging.