Monday, September 21, 2009

CBO & CRS Analyze Effects of Climate Change Legislation

CBO Shows Real Climate Impact – The Congressional Budget Office released a report late last week saying that climate legislation limiting carbon dioxide emissions could result in as much as a 1 to 3.5% decrease in GDP by 2050. It also adds that climate legislation would cause permanent shifts in production and employment away from industries focused on the production of carbon-based energy and energy-intensive goods and services and toward the production of alternative energy sources and less-energy-intensive goods and services. While those shifts were occurring, total employment would probably be reduced because labor markets would most likely not adjust as quickly as would the composition of demand for different outputs.

CBO Study

A previous CBO study in June stated that: "the net annual countrywide cost of the cap-and-trade program in 2020 would be $22 billion - or about $175 per household."

CRS Says Economic Impacts Remain Uncertain – In another broad analysis of economic impact studies, the Congressional Research Service has concluded that projecting the price tag of Waxman-Markey is problematic because of uncertainty about things such as the success of future carbon-friendly technology. CRS says that all cost estimates of climate legislation should be "viewed with attentive skepticism." This certainly will have an impact on the debate on both sides as opponents and supporters will likely use the claim to discredit other analyses of the legislation that they don't like. In the report CRS says that economic researchers from different federal agencies and groups have reached different conclusions about the bill because they examined different time frames or investigated only one segment of its legislative text. One example of this is the recent dustup over Treasury reports that showed a much higher cost of the climate bill that were held back by the Administration.

CRS Study

(Source: Frank Maisano)

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