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Heritage Foundation Fools Itself on Carbon Taxes

Pete Altman

Posted April 2, 2009

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The Heritage Foundation is fooling itself again. In its latest insipid 'analysis' , author Nick Loris contends that cap and trade revenues are a "tax" that will force Americans to give up essentials like food, shoes or property taxes.  (Psst. Nick. Uh, I'm sure you don't need the tips, but exactly who do you think will mind giving up paying their property taxes?)

Nick structures his logic by selectively believing the parts of a Wall Street Journal report on a budget hearing that can be distorted enough to fit his views. The other facts? He'll just leave those behind, thanks very much.

The logic here is so lame my 4-year old could knock it down faster than his ABC blocks. 

  1. Nick starts off by saying "As recently acknowledged by a top White House official, a global warming tax could generate as much as $1.9 trillion in tax revenue over eight years."  

    But according to the Wall Street Journal article that Nick links to, that official said no such thing. Instead, National Economic Council deputy director Jason Furman said that a cap and trade system could raise as much as $1.9 trillion. The only time a "tax" is mentioned in the story is when it discusses tax rebates and credits for Americans.
  2. Despite basing the premise of his post on a misinterpretation of one statement by the White House, Nick is quick to dismiss other statements that would undermine his argument. The WSJ reported that the White House plans are to spend cap and trade revenues on clean energy technology (which puts people to work) and tax rebates (which puts the money back in people's pockets.) WSJ even read the footnotes to the budget, saying "A footnote in the budget framework released by the administration in February stated that "all additional net proceeds will be used to further compensate the public.""

    How does Nick handle this inconvenient truth? By choosing not to believe it, saying "Sure, there's discussion of rebate checks from "climate revenue" generation, but will they offset the costs of higher energy prices? Unlikely."

    Funny how selective Nick is about the White House statements. Do they mention a big number? Believe it! Cite it! Base your blog post on it!

    Oh, wait. They say the money will go back to the taxpayers? Humph. I don't believe it.
  3. Of course the kicker here is that Heritage is deliberately playing dumb, because polluters are the ones who pay for polluting the atmosphere under a cap and trade scheme, not consumers. Unless the consumer is a serious windbag blowing a whole lotta hot air...Oh, now I know why Nick is so worried.

    Seriously though, once you factor in facts - like environmental compliance costs less than the doom-and-gloom crowd says, the reduction in energy bills resulting from greater investments in energy efficiency, and the benefits of putting more people to work in clean energy jobs than we had working dirty energy jobs, well, things actually look pretty good.

    In fact, impact on most people will be about the equivalent to a pack of gum per day. Think of the savings on dentist bills!

Of course, this isn't the first time that Nick has basically made up his own facts. Heck, just last year he co-authored a report entitled "The economic costs of the Lieberman-Warner bill" that achieved results that were damning. Of course, they had to model something other than the Lieberman-Warner bill to get such terrible results, but they didn't point that out in their study. They just left out the parts of the bill that would have made for inconvenient results. I think I see a pattern here...

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KilroyfooApr 3 2009 12:07 AM

Cap and trade - $1.9 trillion - that is a tax and costs get passed on to the consumer. My 4 year old just explained that to me.

Steven StoftApr 3 2009 09:16 PM

Pete, Sorry to have to say this, but you're dead wrong about:

"Of course the kicker here is that Heritage is deliberately playing dumb, because polluters are the ones who pay for polluting the atmosphere under a cap and trade scheme, not consumers."

With some minor exceptions polluters pass the costs on. Even with free permits. And they think it's pretty funny that you don't get it. I know some of them.

I've been an energy economist for 20 years, and besides, if you know economics, its just obvious.

I hate it when our side is wrong and Heritage is right, and I also hate it when we blow it on the policy front because we don't know our stuff.

So I'd like to give you a hand. You've got my email. It's not rocket science. It won't be all that painful to learn. And if you want to beat corporations at their own game, it really helps to learn how the game is played. At least the basics.

Best regards,

Mary SmithApr 5 2009 09:16 PM

The premise of your argument is flawed because man-made global "warming" is a myth in the first place. The earth's climate is affected first and foremost by the solar cycle. Don't lecture us on "the inconvenient truth" when you don't have your facts straight. Just look at the real temperature data, not that crap Al Gore tries to pass off as truth.

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