Possibly the voices of sanity on Capitol Hill are finding their legs. If many more exchanges like this one between Rep. Dave Camp (R., Mich.) and CBO’s David Elmendorf, from a Ways and Means Committee hearing, get out to the public history might not repeat itself.
It could be that President Oprompter won’t even have to ask the House to go out on a limb so the Senate solons can saw it off (as happened with Clinton and the BTU tax), but that instead, they look to save some of the jobs that cap-and-trade would eliminate — starting with their own:
Q: Higher energy prices? Yes.
Q: Any goods not rise in price? Unlikely.
Q: Drag on economy that reduces income and payroll receipts by 25%? Yes.
Washington D.C. – The Ways & Means Committee held a hearing today on addressing price volatility in climate change legislation. Ranking Member Dave Camp (R-MI) and Congressional Budget Office (CBO) Director Dr. Douglas Elmendorf engaged in an exchange on the effects higher energy prices could have on American households and businesses. A transcript of Mr. Camp’s questions and Dr. Elmendorf’s answers is below:
REP CAMP: Would a climate change policy that places a price on carbon—
would that mean higher energy prices across the entire economy?
CBO DIRECTOR ELMENDORF: Yes. I don’t know what you mean by the short run,
but at any point in which we are putting a price on carbon emissions, that
would be passed through to the cost that consumers face on energy products
but also all other products that are made using fossil fuels.
REP CAMP: Thank you. Are there any goods and services that would not rise
in price in response to that policy?
CBO DIRECTOR ELMENDORF: I don’t know if there are any good that use no
energy in their production. It seems to me unlikely.
REP CAMP: When CBO estimates the impact of imposing say a cap-and-tax
system on the economy, isn’t it true that when CBO scores those proposals,
that it assumes the increases on energy taxes act as a drag on the economy
and thereby reduce other income and payroll receipts?
CBO DIRECTOR ELMENDORF: Yes. An indirect tax-sales taxes, all sorts of
other indirect taxes- and the carbon tax- so the price of cap-and-trade
allowances would fit in that category. That kind of revenue would then
reduce the income that people have and the taxes they pay to the government.
REP CAMP: Isn’t it also correct to say the amount of this offsetting loss
and other revenues depends on the design of this specific policy? The CBO
in January noted that traditionally there is a 25% offset. Meaning that for
every dollar of revenue generated by cap-and-tax, other tax receipts falls
by 25 cents?
DR. ELMENDORF: Yes.