FOIA and the Treasury Department - Climate Change Policy Could Cost As Much As All Other Environmental Regulations Combined

Ronald Bailey | September 16, 2009

How much will global warming policies cost, especially the imposition of carbon rationing through cap-and-trade schemes? Various estimates have been bandied about by proponents (hardly noticeable) and opponents (extremely painful). Competitive Enterprise Institute Senior Fellow Christopher Horner filed a Freedom of Information Act (FOIA) request with the Department of the Treasury to see what estimates it had come up with. He received Treasury's FOIA response last week. What the internal memos reveal and conceal is telling: 

While such a program can yield environmental benefits that justify its costs, it will raise energy prices and impose annual costs on the order of __________________________ dollars. At the same time, given the Administration's proposal to auction all emissions allowances, a cap-and-trade program could generate federal receipts on the order of $100 to $200 billion annually. Finally, by encouraging investments in clean energy sources, climate policy could increase the fiscal cost of existing energy tax provisions, such renewable electricity and bioful tax credits. 

Growing political momentum around the issue of cimate change raises the likelihood that the U.S. will enact a policy in the near term. Economic costs will likely be on the order to 1% of GDP, making them equal in scale to all existing environmental regulation.  ...

Emission allowances under a cap and trade system are valuable assets regardless of their allocation method (analogous to revenue under an equivalent tax policy)....

One advantage of auctioning allowances is the potential for generating large revenues ___________________________ that could be used to offset distortionary taxes on labor and capital, improving the economic efficiency of the tax system and reducing overall compliance costs to the economy. 

Domestic policies to address climate change and the related issues of energy security and affordability will involve significant costs and potential revenues,________________________________________________

______________________________________________________________. 

In reading over the various memos supplied by Treasury, one finds that generally cost estimates are redacted. The cover letter says that these redactions are done pursuant to FOIA (b)(5). According to this FOIA subsection, information can be withheld when it involves ...

... inter-agency or intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency;.... 

The U.S. Office of Special Counsel explains that this subsection authorizing the withholding of information from the public generally applies to attorney work product involved in litigation. Frankly, I don't see how this exemption is relevant to these memos, but I am certainly not schooled in FOIA legal arcana.

Read those portions that Treasury allows you to see here. Read why policy nihilism may be the only rational response to climate change here.

Disclosure: I used to be an adjunct scholar at CEI. 

 
Addendum: Over at the CBS News Taking Liberties blog, Declan McCullagh reports some rough calculations based on the new Treasury FOIA documents which suggest how much carbon rationing might cost Americans:

A previously unreleased analysis prepared by the U.S. Department of Treasury says the total in new taxes would be between $100 billion to $200 billion a year. At the upper end of the administration's estimate, the cost per American household would be an extra $1,761 a year. ...

Because personal income tax revenues bring in around $1.37 trillion a year, a $200 billion additional tax would be the equivalent of a 15 percent increase a year. A $100 billion additional tax would represent a 7 or 8 percent increase a year. 

McCullagh also notes some other cap-and-trade cost estimates:

House Republican Leader John Boehner has estimated the additional tax bill would be at $366 billion a year, or $3,100 a year per family. Democrats have pointed to estimates from MIT's John Reilly, who put the cost at $800 a year per family, and noted that tax credits to low income households could offset part of the bite. The Heritage Foundation says that, by 2035, "the typical family of four will see its direct energy costs rise by over $1,500 per year." 

Go here to read the complete post. 

Comments

|9.16.09 @ 10:55AM|#

The real reason that cost estimates were redacted -

If the peasants know how much it will cost they'll likely grab torches and pitchforks on their way to the castle.

EscapedWestOfTheBigMuddy|9.16.09 @ 10:56AM|#

Tell us exactly what was asked for, please. I'd like to see how [oblivious|disingenuous] were really being here.

I mean, if the request was for seeing "cost estimates", and they were given memos with the cost estimates redacted it would be an exemplar for obstructionism.

Wicks Cherrycoke|9.16.09 @ 11:08AM|#

"inter-agency or intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency"

That is not attorney-client privilege, my friend. Information protected by attorney-client privilege is NOT available to "an agency in litigation with the agency."

And besides, how on earth could a cost estimate be covered by attorney-client privilege? Did the staff attorneys do the cost estimates?

The intra-agency memorandum exception covers truly internal commmunications that are deliberative. It extends to opinions and analysis, but not to raw data. It stretches my imagination to figure out how dollar figures contained in a memorandum fall into this exception when the vast majority of the memorandum does not.

|9.16.09 @ 11:13AM|#

If anyone thinks that the government doesn't regularly blow off their requirements under FOIA or just find incredibly stretched rationales for redacting info, they are craaaaazy.

@|9.16.09 @ 11:13AM|#

Nobody really knows how much these various schemes will cost. The mechanisms are so profoundly complex that pulling a figure out of a hat would be almost as relevant. Regardless, these battles should not be fought in the economic realm. Doing so leads only to compromise, which is the same as defeat. If we are to avert economic disaster, explicit philosophical principles must be our weapons. Is there anyone out there with the necessary intellectual prowess? It will take a hero.

EscapedWestOfTheBigMuddy|9.16.09 @ 11:16AM|#

If we are to avert economic disaster, explicit philosophical principles must be our weapons. Is there anyone out there with the necessary intellectual prowess? It will take a hero.

Sorry. I couldn't help it.

|9.16.09 @ 11:38AM|#

The U.S. Office of Special Counsel explains that this subsection authorizing the withholding of information from the public generally applies to attorney work product involved in litigation.

Those memos aren't attorney work product, and they don't have anything to do with litigation in any event. If that's how its applied, exemption FAIL.

Wicks has it right, I think. Generally speaking, if a document is privileged, the entire document is privileged, because the privilege is triggered by the nature of the document (it is between an attorney and his client, etc.).

I hope the CEI takes them to court on this.

|9.16.09 @ 11:54AM|#

It's worth it for the polar bears. (Can't mention penguins because the Antarctic ice is way above its "normal" arbitrarily-defined extent.

In other news, Crctic ice is beginning its annual refreeze, putting its minimum extent well above 2008 and 2007. Didn't see that on the news? Wonder why...

|9.16.09 @ 11:56AM|#

Argh, sorry about all the typos.

Neu Mejican|9.16.09 @ 12:02PM|#

DanD,

Didn't see that on the news? Wonder why...

Well, if you are talking climate, it would probably be because a single data point doesn't have much to do with climate.

|9.16.09 @ 12:02PM|#

OMGosh dude, no way. Thats freakin scary when you really think about it!

Jess
www.web-privacy.de.tc

|9.16.09 @ 12:07PM|#

Mejican,

I'm not referencing a datum, but thanks for making yourself look dumb.

Besides, a simple datum never stopped the media from making bogus associations in favor of anthropogenic global warming.

|9.16.09 @ 12:27PM|#

given the Administration's proposal to auction all emissions allowances,

Is this even true?

|9.16.09 @ 12:29PM|#

In other news, Crctic ice is beginning its annual refreeze, putting its minimum extent well above 2008 and 2007.

[citation needed]

|9.16.09 @ 12:37PM|#

RC Dean, you're exactly right:

http://www.ijis.iarc.uaf.edu/en/home/seaice_extent.htm

And for Antarctic sea ice extent:

http://arctic.atmos.uiuc.edu/cryosphere/IMAGES/current.365.south.jpg

Disclaimer: I think ice extent is a very narrow-minded way to monitor climate, but the global-warming hypesters started the precedent a few years back so I'm just playing by their silly rules. You won't hear them talk much about Antarctic ice these days unless it's towards a grossly uninformed audience :)

"Oh noes the ice caps are disappearing!"

Neu Mejican|9.16.09 @ 1:53PM|#

DanD,

Sorry, I thought you were citing a single year's arctic ice extent rather than an significant trend...(3 years?)
/sarcasm

RC Dean,
Them?

|9.16.09 @ 2:22PM|#

RC Dean,
Them?

Whom?

|9.16.09 @ 2:35PM|#

He's our shortstop.

American Taxpayer|9.16.09 @ 2:39PM|#

The Obama administration has privately concluded that a cap and trade law would cost American taxpayers up to $200 billion a year, the equivalent of hiking personal income taxes by about 15 percent.

A previously unreleased analysis prepared by the U.S. Department of Treasury says the total in new taxes would be between $100 billion to $200 billion a year. At the upper end of the administration's estimate, the cost per American household would be an extra $1,761 a year.

http://www.cbsnews.com/blogs/2009/09/15/taking_liberties/entry5314040.shtml

John|9.16.09 @ 4:03PM|#

Am I reading the authorship and topic info on the "1% of GDP" memo wrong? If not, it looks to have been written by a Bush administration official in November 2008 as a transition document for the incoming administration.

I know this changed how I read the memo, from "Hah! Caught Obama's administration finally admitting that cap-and-trade will gut-punch the economy" to "Heh, there's an outgoing Bushie firing a last policy shot across Obama's bow before departing."

|9.16.09 @ 7:52PM|#

Don't worry. If this cost more than one postage stamp per day, per household, the Great Goracle will fly down from heaven on his magical 0% emissions unicorn, and automatically reduce the costs to 0. Besides, this is our last chance to save the planet, we can't be worrying about cost. The Great Goracle has spoken, all hail the Goracle!

Michael Ejercito|9.16.09 @ 10:16PM|#

Which is cheaper?

Enforcing laws restricting carbon dioxide emissions?

Or setting off a few dozen hydrogen bombs ?

JB|9.16.09 @ 11:59PM|#

This is the Obama transparency I hear so much about.

There is a new two-word way to say Democrat: you lie.