The CBO released a pretty positive assessment of the cap and trade bill, finding that between 2010 and 2019, direct spending increases by $821 billion, while federal revenues increase by $846 billion. That means the bill can reduce the deficit by $24 billion between 2010-2019.
ClimateWire digs deep into the subject, and returns unsure. The simple problem is that we’ve never enacted a policy like this, and there’s no way to predict how consumers will adjust their behaviour. Likewise there’s no way to know how businesses will adjust. Mix in the fact that its a heavily politicized issue, and the facts and opinions can blur together pretty quickly.
The CBO is working on calculating an authoritative answer to the quandry. In the meanwhile, it’s important to note that estimates on massive government programs are often wrong:
- Early estimates showed that cutting sulfur dioxide emissions to comply with the Clean Air Act would cost utilities $4 billion to $5 billion annually, according to a 1997 Economic Policy Institute briefing paper. But costs shrank due to technological advancements and a switch to lower-sulfur fuel. Utilities actually saved at least $150 million in 1994 through steps taken to comply with the new law, EPI said, citing other research.
- In 2003, when Congress narrowly approved a prescription drug benefit for Medicare, costs were estimated at $633.5 billion for 2004 through 2013. Two years later, the Bush administration dramatically increased estimates, projecting costs of $1.2 trillion for 2006 through 2015. The administration also said cost savings could shrink the net price to $720 billion. All those numbers were wrong. The latest estimate from the 2009 Medicare Trustees Report puts the cost for the 2004-2013 time frame at $377.7 billion, about 40 per cent lower than even the early estimates.
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