Just Breaking

The Treasury Department just released to my CEI colleague Chris Horner the unredacted FOIA documents on their internal discussions of cap and trade policy that he had requested. The information previously covered up? “One advantage of auctioning allowances is the potential for raising large revenues (perhaps $300 billion annually)…” That’s over 2% of GDP! Another of the previously blacked out text: “Domestic policies…will involve significant costs and potential revenues, possibly up to several percentage points of annual GDP (i.e. equal in size to the corporate income tax).”

No wonder they had previously blacked out that information. And some people have claimed that these global warming policies would only cost Americans a postage stamp a day. The background behind this story is from the Director of Freedom Action, also Director of Energy and Global Warming Policy at CEI. From the Cooler Heads Digest, 18 September 2009:

The big news this week is furnished by my colleague at CEI, Chris Horner, who released some interesting documents he obtained through a Freedom of Information Act request from the Treasury Department. Chris’s initial blog post was picked up first by Amanda Carpenter in the Washington Times and then by Declan McCullough at CBSNews.com. There has been a flurry of stories since then, most of them trying to explain why it isn’t really a news story. (I wish more reporters spent more time explaining why what they are writing can be safely skipped. It would save a lot of time.)

It turns out that a busy team of economists hired by Bush Treasury Secretary Henry Paulson to devise a better cap-and-trade program were fully aware that it would be very costly for consumers. Treasury’s upper end estimate works out to $1761 for the average household per year.

That’s in line with what President Obama said when he was running for President (“Under my plan of a cap and trade system, electricity rates would necessarily skyrocket.”), but a lot less than what EPA and the White House have been saying about the Waxman-Markey bill.

Global warming alarmists have been quick to point out that Treasury’s $1761 estimate couldn’t possibly apply to the Waxman-Markey bill that passed the House in June on a 219-212 vote because, first, Waxman-Markey didn’t exist when Treasury was making its estimate and, second, Treasury assumed that all the ration coupons would be auctioned whereas Waxman-Markey gives most of the coupons away to big business special interests in the early years of the program.

That argument is specious. As Peter Orszag, now director of the White House Office of Management and Budget, explained in congressional testimony last year when he was head of the Congressional Budget Office: “Under a cap-and-trade program, firms would not ultimately bear most of the costs of the allowances, but instead would pass them along to their customers in the form of higher prices. Such price increases would stem from the restriction on emissions and would occur regardless of whether the government sold emission allowances or gave them away. Indeed, the price increases would be essential to the success of a cap-and-trade program….”

The most interesting thing about the documents Chris obtained from Treasury are the bits that are redacted (see above). For example, a paragraph headed Overview says: “[I]t will raise energy prices and impose annual costs on the order of [rest of sentence is blacked out].” Perhaps the folks in the FOIA Compliance Office at Treasury didn’t get the January 21st memo from President Obama on increasing transparency in his administration. The memo says in part: “The Freedom of Information Act should be administered with a clear presumption: In the face of doubt, openness prevails. The Government should not keep information confidential merely because public officials might be embarrassed by disclosure, because errors and failures might be revealed, or because of speculative or abstract fears. Nondisclosure should never be based on an effort to protect the personal interests of Government officials at the expense of those they are supposed to serve.”