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D.C. Dispatches by Cynthia Dizikes

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    Bachmann statement on cap-and-trade disputed

    By Cynthia Dizikes | Published Thu, Apr 9 2009 2:44 pm

    In an op-ed article Wednesday in the Star Tribune, Michele Bachmann referred to an MIT study on cap-and-trade legislation, despite the study’s author having made public complaints that Republicans have misrepresented his work, according to the Hill.

     “According to an analysis by the Massachusetts Institute of Technology, the average American household could expect its yearly energy bill to increase by $3,128 per year,” Bachmann wrote.

    Last month, other House Republicans, including House Minority Leader John Boehner, R-Ohio, made the same claim, referencing the MIT study.

    But John Reilly, an author of the study, told the St. Petersburg Times in March that the Republican’s $3,128 figure was “just wrong.”

    “It’s wrong in so many ways it’s hard to begin,” Reilly said.

    The MIT report says that previously proposed cap-and-trade legislation would raise $366 billion in revenue per year. The Republicans then divided that by the number of U.S. households to arrive at roughly $3,000 per household.

    But Reilly told the St. Petersburg Times, and the Republicans who called him to ask about the study, that it is just not that simple.

    From the St. Petersburg Times:

    “That's just not how economists calculate the cost of a tax proposal, Reilly said. The tax might push the price of carbon-based fuels up a bit, but other results of a cap-and-trade program, such as increased conservation and more competition from other fuel sources, would put downward pressure on prices. Moreover, consumers would get some of the tax back from the government in some form.”

    On that note, Boehner responded on April 2, defending the Republican estimate:

    “An MIT professor has questions about the $3,100 figure but his letter makes assumptions that are factually inaccurate. Moreover, he claims ‘government rebates to consumers’ must be factored in.  But we all know that Democrats have no intention of using a cap-and-trade system to deliver rebates to consumers; they want the tax revenue to fund more government spending.”

    Bachmann’s office referred to Boehner’s statement as an explanation for continuing to use the $3,100 estimate.

    Meanwhile, in testimony this March before the House subcommittee on Income Security and Family Support, CBO senior adviser Terry Dinan said that a 15 percent cut in CO2 admissions could cost the average household roughly $1,600 (in 2006 dollars).

     “Ranging from nearly $700 in additional costs for the average household in the lowest one-fifth [quintile] of all households arrayed by income, to about $2,200 for the average household in the highest quintile,” according to Dinan’s written testimony.

    President Obama’s plan would cut emissions 14 percent below 2005 levels by 2020 and 83 percent below 2005 levels by 2050.

    A top White House adviser also told Senate staff that the administration’s estimate for expected revenues could be “two-to-three” times higher than previously reported, according to the Wall Street Journal.

    As a result, some conservative pundits and members of Congess, including Bachmann, have argued that the impact on households could be significantly larger.

    On the opposite side, Obama has countered with a proposed tax credit that he argues will compensate for the higher utility costs that are expected after a cap and trade system goes into place.

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    Illustration by Hugh Bennewitz

    minnpost.com/cynthiadizikes


    Cynthia Dizikes is MinnPost's Washington, D.C., correspondent and covers Minnesota's congressional delegation and reports on developments out of Washington that are important to Minnesota readers. She received her master's degree in journalism from UC Berkeley and has worked as an intern in the Los Angeles Times' Washington bureau, reporting on a variety of topics, and as a reporter for the Anniston Star in Alabama. Her work has also appeared in the San Francisco Chronicle, the Oakland Tribune, Congress Daily and on National Public Radio. She can be reached at cdizikes [at] minnpost [dot] com.

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