James Pethokoukis

House Speaker Nancy Pelosi said the cap-and-trade bill was about “jobs, jobs, jobs, jobs.” But liberal economist Paul Krugman tells National Public Radio a different story (thanks to OpenMarket):

There will be more wind farms built. There will be people retrofitting power plants to reduce their emissions. There will be people weatherproofing housing and commercial buildings.”

What economists would say is that employment would be just about the same as it would have been otherwise, but it will be a different mix of jobs.

From a source: “I think that because of the nature of backroom deals this has a decent chance of passing. However due to the large public outcry, is has a decent chance of failing.” Again very close …

It is turning out to be a very, VERY close vote in the House of Representatives. Some of the moderate Rs who were going to vote for it are weakening — like Mary Bono Mack of California. Earlier, it looked like Speaker Pelosi had the votes but was trying to get a big enough margin that politically vulnerable Ds could vote fopr it …now I think the issue is finding enough votes, period. Big gamble for Pelosi might be a bridge too far …

Just as a Congressional Budget Office estimate of the cost of healthcare reform ($1.6 trillion over ten years) threw a spanner into the works of that effort, a CBO study of cap-and-trade costs ($175 year in 2020) may have given some oomph to the energy plan which is coming to the floor fo the House. Still, the Senate is going to be a quagmire …

The always insightful Dan Clifton of Strategas Research gives his three cents:

1) $700 to $800 BN Healthcare Reform passes later this year with a major focus on Medicaid expansion and some cuts to providers;

2) Cap and trade dies of a slow death in the Senate and later replaced with a more moderate energy bill including a renewable portfolio standard and some transmission improvements;

3) A watered down financial regulation bill. However, if additional financial problems develop later this year, financial regulation could become more aggressive rather than less aggressive.

From the non-partisan Tax Foundation:

A new Tax Foundation calculator now shows how much a U.S. cap-and-trade system would cost individual households annually. The Tax Household Cap-and-Trade Burden Calculator is based upon a study released in March, Tax Foundation Working Paper No. 6, “Who Pays for Climate Policy? New Estimates of the Household Burden and Economic Impact of a U.S. Cap-and-Trade System.” The study shows that a cap-and-trade system designed to reduce greenhouse gas emissions by 15 percent would place an annual burden of $144.8 billion on American households. The average annual household burden would be $1,218, which would be approximately 2% of the average household income.

That is the conclusion of this Reuters story. But how about 2010? Here is the money graf:

Two obstacles stand in the way. First, advocates must convince the public the bill, which might initially raise electricity and other energy prices, will ultimately save money by heading off damage caused by global warming. … One opponent, the Coalition for Affordable American Energy, whose members include the influential U.S. Chamber of Commerce and about 200 other organizations, has estimated climate legislation could cost U.S. households $1,400 per year by 2020. … Second, experts said the bill must include nuclear energy, which is nearly emissions free but comes with other problems such as toxic waste. Claussen said a resolution on nuclear power could help the Senate reach the required 60 votes for the bill’s passage.

Me: Unless money from cap-and-trade is fully refundable to consumers, I don’t see it happening. And if it excludes nukes, it seems like a fantasy plan untethered from political, economic or scientific realities.

I think political analyst Dan Clifton of Strategas, an institutional research firm, has it about right concerning the prospects for a cap-and-trade climate bill passing Congress this year:

We do not believe the cap and trade bill being shepherded through the House Energy and Commerce Committee by Rep. Waxman will be signed into law this year, or even next year. Although the bill is expected to make it through the Energy and Commerce Committee Thursday night, after recess Waxman will begin talks with Ways and Means Chair Rangel, who does not see climate change legislation as a priority and is reportedly not convinced that cap and trade is the best option. We note there are 8 committees with jurisdiction over the bill, including Agriculture, chaired by Rep. Peterson who is insisting on his own mark up and has concerns about the proposal. That being said, with international climate talks slated for through the summer leading up to December’s Copenhagen meeting, it will remain a hot topic through the recess as members defend their positions to voters that in many cases lack clarity on the issue, the costs and the emission permit allocation politics.

Me: For Republicans, this is the ideal scenario. The bill doesn’t pass but it remains alive as an election issue in the 2010 congressional midterm elections.  From my conversations with folks over there, it is clear to me that they think it is a HUGE winner for them. And the Dems might not disagree.

I will admit that when I read the headline “China Looks for Big Cuts in Emissions” in the WSJ today, I thought the country had radically shifted policy and was joining the cap-and-trade crowd. My bad. The Reuters hed is more accurate: “China tells rich nations to cut emissions by 40 percent.” (Read the story.) I think it is more likely that the U.S. will eventually slap a carbon emissions tafiff on Chinese goods than it will accede to such demands, not that I think the former is too likely either.

This just arrived in my inbox from Friends of the Earth. Here is why the group says it can’t support the Waxman-Markey climate bill:

1) It sets the bar too low. It would reduce pollution, but not enough to save us from catastrophic effects of global warming. 2) Instead of being forced to pay for the transition to clean energy, corporate polluters would receive hundreds of billions of dollars in handouts, and ordinary citizens like you and me would be stuck with the costs. (That’s why Shell Oil and other corporate polluters support the bill.) 3) The bill contains massive “offset” loopholes that would delay its already-too-weak pollution reductions. 4) Despite the recent financial meltdown, the bill allows Wall Street traders to game new carbon markets, creating the potential for wild swings in energy prices that damage our economy.