Phil Kerpen’s Disingenuous Claims About the Cost of Carbon Taxes
It is time to call the National Review’s Phil Kerpen for what he is – a very dishonest person. But before I do so, let me remind folks of something Greg Mankiw wrote on the issue of raising the gasoline tax.
Public finance experts have long preached that consumption taxes are better than income taxes for long-run economic growth, because income taxes discourage saving and investment. Gas is a component of consumption. An increased reliance on gas taxes over income taxes would make the tax code more favorable to growth. It would also encourage firms to devote more R&D spending to the search for gasoline substitutes.
I suspect Kerpen is not going to join Greg’s Pigou Club:
The numerous energy taxes and regulatory schemes being proposed internationally, federally, and locally in the name of fighting global warming are a dire threat to freedom and prosperity. The costs associated with some of these proposals — both in dollars and lost liberty — are staggering.
Really?! Kerpen begins his scientific demonstration of how high these costs are by talking about opinion polls and politics. Sorry – but that’s nothing about a farce. But then he makes this claim:
An analysis commissioned by the American Council on Capital Formation and the National Association of Manufacturers projects the economic impact of the bill by 2030: 3 to 4 million fewer jobs, $4,022 to $6,752 in lower annual disposable income per household, an annual hit to GDP of between $631 billion and $669 billion, and much higher energy prices — 60 percent to 144 percent higher for gasoline and 77 percent to 129 percent higher for electricity. These figures are all adjusted for inflation. The study also found that lower-income families — people who are least able to absorb higher energy costs — will be the hardest hit.
As soon as I read that ACCF and NAM commissioned this “analysis”, I grew a little suspicious:
Conducted by Science Applications International Corporation (SAIC), the independent study unveiled today examines the implications of the legislation with respect to Gross Domestic Product and Gross State Product, future energy costs, economic growth, employment, production, household income, the impact on low income earners and other measurements. The study includes a comprehensive national economic assessment, as well as separate and specific overviews of the impacts the legislation could have on all 50 U.S. states.
OK, what are the economic credentials of this SAIC?
Science Applications International Corporation (SAIC), a leading systems, solutions and technical services company, offers a broad range of expertise in defense modernization efforts, intelligence, homeland security, logistics and product support, health and life sciences, space and earth sciences and global commercial services.
Huh? SAIC is not a group of leading economists after all? Phil Kerpen should be ashamed of himself for this fraud. Then again – he writes for the National Review who routinely lie to their readers.
Update: CoRev has us go here as he claims that an EPA study is consistent with this unsigned (by any named economist) SAIC “analysis”, but let’s have a read:
Even when experts look at the same data, they can come to vastly different conclusions. One of the biggest questions about climate change is: What will it cost to fix? Figuring that out is a huge challenge … The Environmental Protection Agency (EPA) recently issued its economic analysis of the bill. Not surprisingly, supporters and opponents each found things in it to bolster their arguments. Congressional Quarterly quotes Sen. Barbara Boxer (D) of California, who chairs the Environment and Public Works Committee, as saying: “When you look at all the scenarios the EPA analyzed, the one that most closely reflects the Lieberman-Warner bill’s technology driving policies shows that this bill is a winner for the environment, a winner for our economy, and a winner for the planet.” But the piece also quotes Sen. James In¬¬hofe (R) of Oklahoma, one of the Senate’s most vocal critics of global warming, who sees the legislation quite differently: “Americans will pay significantly more at the pump, in their homes, and in many cases, with their jobs.” Under the Lieberman-Warner bill, US gross domestic product grows 80 percent from 2010 to 2030 – just one percentage point less than projected without the bill. And average annual per-household consumption grows 81 percent over the same period – just two percentage points less than without the bill. At the same time, the price of electricity would increase 18 percent between 2010 and 2050 under the bill, according to the EPA analysis document. Environmentalists tended to see the bright side. The director of economic policy and analysis at the Environmental Defense Fund, Nathaniel Keohane, said: “EPA’s results for the scenario that most resembles the bill confirm what we have seen in every reputable analysis. We can grow our economy and tackle global warming at the same time…. The up-front costs EPA identifies are a sound investment for a strong economy down the road. For clean air, less imported oil, and avoiding the damage of climate change, they are a bargain.”
But CoRev got confused and cut and pasted the SAIC silliness as if it were what the EPA said. No! The EPA estimates showed a much, much lower cost to GDP.