Controversial Climate Bill Passes 219-212 in House

The House of Representatives passed the controversial Climate Change bill by a narrow vote tonight, 219-212. The vote on the more than 1,000-page bill was close because 44 Democrats voted against it due to fears that the cost in jobs and taxes would be overwhelming to the middle class.

The Waxman-Markey bill's ultimate cost was the center of the controversy, as described by Steven Mufson of The Washington Post.

The Environmental Protection Agency has estimated that the bill would only cost U.S. households an average of $98 to $140 a year from 2010 through 2050. But government analysts acknowledged that estimates are highly uncertain and depend on such factors as the price of oil and the pace of innovation on energy efficiency, carbon capture and sequestration, as well as how people and businesses respond to higher fossil-fuel prices.

GOP leaders have tried to portray the proposal as placing a heavy cost on Americans. Boehner has asserted that the bill would raise annual energy costs by $3,128 per household in 2015 and would drive jobs out of the country. He said in an April 2 news release that that figure did not include higher costs for food and consumer goods and services. The conservative Heritage Foundation has asserted that the cost could reach $4,300 a year.

Boehner's office said that it extrapolated its per-household figure from a two-year-old study of a cap-and-trade bill co-sponsored by then-Sen. Barack Obama (D-Ill.). That study, by John M. Reilly, a Massachusetts Institute of Technology professor, said that a cap-and-trade bill could generate $366 billion a year in revenue and that the GOP leader's office said it simply divided that by the number of households expected in 2015.

Afterward, Reilly sent a letter to Boehner accusing him of inflating the cost 10-fold by ignoring the offsetting benefits, such as tax cuts and free allowances, that are part of the current Waxman-Markey bill embraced by President Obama. Reilly said that the measure's cost for a family of four, in today's dollars, starts at about $75 in 2015, rises to nearly $510 by 2025, and then falls to $205 by 2050 as new technology works its way into power plants, building efficiency and automobiles. The average overall cost would be about $340 a year, he said.

"Concern about the cost impacts on middle and low income families needs to be focused on making sure allowance or tax revenue is used to offset cost impacts on these households rather than as an excuse for not proceeding with measures that would help avert dangerous climate change," Reilly said in an April letter.

Today's Wall Street Journal had pushed hard for rejection of the bill in this morning's editorial:

For starters, the CBO estimate is a one-year snapshot of taxes that will extend to infinity. Under a cap-and-trade system, government sets a cap on the total amount of carbon that can be emitted nationally; companies then buy or sell permits to emit CO2. The cap gets cranked down over time to reduce total carbon emissions.

To get support for his bill, Mr. Waxman was forced to water down the cap in early years to please rural Democrats, and then severely ratchet it up in later years to please liberal Democrats. The CBO's analysis looks solely at the year 2020, before most of the tough restrictions kick in. As the cap is tightened and companies are stripped of initial opportunities to "offset" their emissions, the price of permits will skyrocket beyond the CBO estimate of $28 per ton of carbon. The corporate costs of buying these expensive permits will be passed to consumers.

The biggest doozy in the CBO analysis was its extraordinary decision to look only at the day-to-day costs of operating a trading program, rather than the wider consequences energy restriction would have on the economy. The CBO acknowledges this in a footnote: "The resource cost does not indicate the potential decrease in gross domestic product (GDP) that could result from the cap."

But there was also a hard push for this bill's passage, not from the Democrats, but from the energy industry. Anne C. Mulkern of The New York Times reports:

E&E examined spending for 10 industries with stakes in climate and energy legislation: oil and gas, electric utilities, chemical and related manufacturing, agricultural services and products, alternate energy and production services, mining, environmental, forestry and forest products, and natural gas transmission and distribution. The industry data was compiled by the Center for Responsive Politics, which uses reports filed with the House and determines the industry categories.

For half of those industries, funds for lobbying increased. For others, particularly those battered by the recession, spending stayed flat or fell. Mining spent about 24 percent less than it did a year earlier. Utility lobbying stayed about even with last year.

But for others, it was time to ramp up the persuasion.

Oil and gas companies, agricultural services and product makers, alternative energy producers, environmental groups, and those in the natural gas businesses spent more than they did last year. Within each of those categories are stories of individual companies and organizations laying out far more than they have in the past.

Those groups say they must educate Congress.

"We're spending that money to represent our member companies at a time when initiatives in the new administration and Congress will have an impact on the viability of the industry," said Robert Dodge, spokesman for the American Petroleum Institute, a trade group for about 400 small and large companies.

Others see advocacy spending more critically.

"It's influence peddling. What you're doing is trying to purchase influence," said Tyson Slocum, director of the energy program at Public Citizen, a watchdog group. "Most of the time there's a positive return on your investment."