# Kicking an anthill (Waxman-Markey) **URL:** \ **Category:** Great Debates\ **Created:** [June 26, 2009, 2:33am UTC](https://boards.straightdope.com/t/kicking-an-anthill-waxman-markey/501029 "2009-06-26T02:33:14Z")\ **Posts on this page:** 6\ **Page:** 1
**Author:** ![wevets](https://avatars.discourse-cdn.com/v4/letter/w/e9a140/32.png) [@wevets](https://boards.straightdope.com/u/wevets)\ **Post date:** [June 26, 2009, 2:33am UTC](https://boards.straightdope.com/t/kicking-an-anthill-waxman-markey/501029/1 "2009-06-26T02:33:14Z")
We’ve had a lovely dearth of threads related to this lately. In the hopes that this one will not become a train wreck, please limit the debate here to the merits of various ideas for limiting carbon emissions. If you wish to debate the existence of Anthropogenic Global Warming or whether global warming is harmful, please start a different thread or look for **Blake** ’s “Is Anthropogenic Global Warming Falsifiable” thread in this forum. Thanks! 🙂 Please assume for the purposes of this thread that AGW exists and is sufficiently dangerous that action must be taken to limit carbon and GHG emissions. So, getting back to Waxman-Markey. I am of two minds about this bill and I’m not sure whether I want this to be the way we go. Pros of Waxman-Markey: [ul]First legislation to cap GHG emissions.[/ul] [ul]Will set a price on carbon emissions.[/ul] [ul]Allows trading to encourage competitive free market development of ways to reduce emissions.[/ul] [ul]Includes provisions to offset the increased costs of energy to the poorest Americans (anyone under 150% of the poverty level, IIRC.)[/ul] Cons of Waxman-Markey: [ul] **Very** modest targets - the cap is what, 96% of 1990 emissions by 2020?? :dubious:[/ul] [ul]Huge handouts to carbon-intensive industries like coal.[/ul] [ul]Cuts the EPA out of GHG emission regulation through the Clean Air Act.[/ul] [ul]Offsets and the problems related to determining exactly how much GHG they remove from the atmosphere anyway.[/ul] On balance, I’m slightly leaning towards wanting it to pass because Congress is going to be very busy with other urgent issues for quite some time to come. We will undoubtedly need to revisit and tighten up emissions controls afterwards if W-M passes, but it will be easier politically to do that if W-M passes, and if it doesn’t pass, then it’ll probably be 2011 before Congress can take up the issue again. I feel like crap for wanting such a weak-kneed bill to pass, though. So what do you think? Pass? No Pass? Something else? ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [June 26, 2009, 4:09am UTC](https://boards.straightdope.com/t/kicking-an-anthill-waxman-markey/501029/2 "2009-06-26T04:09:14Z")
The first thing I thought of when reading your message was that you believe these targets are \*very modest, and yet this is a 60 billion dollar a year tax directly on manufacturers, which is going to be very damaging to the economy. That means something you consider to be meaningful is also very likely to be unaffordable and politically impossible. Also, I thought the stimulus package was critical and saving the economy had to override other concerns? I thought one of the lessons of the depression is that you don’t do a stimulus, then choke it off with tax hikes. But that’s exactly what this is. A very large tax hike, with very high deadweight costs. Finally, this will do nothing for global warming, and may actually make the problem worse. This bill gives China an added incentive to NOT implement a similar program, and it’s going to push some manufacturing from the U.S. to Asia. China uses six times the amount of energy per dollar of GDP created than does the United States. Pushing manufacturing out of the U.S. and into China could easily wind up making the problem worse, if the new Chinese factories take advantage of the much poorer environmental controls in that country. ---
**Author:** ![wevets](https://avatars.discourse-cdn.com/v4/letter/w/e9a140/32.png) [@wevets](https://boards.straightdope.com/u/wevets)\ **Post date:** [June 26, 2009, 5:04am UTC](https://boards.straightdope.com/t/kicking-an-anthill-waxman-markey/501029/3 "2009-06-26T05:04:41Z")
Not quite a tax - Waxman-Markey establishes a cap-and-trade market for GHG emissions credits. A direct carbon tax is one of the alternatives to cap-and-trade, and recently, due to some posts from **Una Persson** , I’ve been wondering if the certainty offered by a direct carbon tax isn’t a _better_ alternative to Waxman-Markey. Either way, we need a cost to emitting GHGs or the market will never encompass climate externalities. How would you propose doing that? For example, you mention China. China itself has motive to impose GHG costs and limits itself (they’re not inherently stupider than we are.) The international aspect is a dilemma - each nation could gain a temporary relative advantage by delaying costs and limits, but the longer any nation delays the greater the risk of increasing bad climate outcomes. That’s not to say that China is not a problem - that’s to say that merely waiting for a different solution is not going to help in the long run. It would be nice to have China and the U.S. agree to implement GHG costs at the same time, but as far as I know, that’s not on the table. Perhaps the best thing to do is to charge Chinese (and other) imports a tariff based on the difference in GHG emission cost between the countries. But doesn’t the WTO prohibit that option? As to the timing, do we have any choice? If we’re to keep CO[sub]2[/sub] concentrations below 450 ppmv, and in that way avoid the worst potential negative effects, we don’t have a lot of leeway in when we start. Is there an alternative that would address the timing problem or is the only alternative to wait a few years (in which case it also seems likely that China will wait a few years?) I don’t really like Waxman-Markey but I’m not seeing what good alternative policies we have. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [June 26, 2009, 8:25am UTC](https://boards.straightdope.com/t/kicking-an-anthill-waxman-markey/501029/4 "2009-06-26T08:25:30Z")
> [@wevets](#): > > Not quite a tax - Waxman-Markey establishes a cap-and-trade market for GHG emissions credits. A direct carbon tax is one of the alternatives to cap-and-trade, and recently, due to some posts from **Una Persson** , I’ve been wondering if the certainty offered by a direct carbon tax isn’t a _better_ alternative to Waxman-Markey. It’s not a direct tax, but it’s a tax nonetheless. The Obama has budgeted for 60 billion dollars in revenue for their general fund to come out of the cap and trade program. That’s a tax. It’s just a very bad tax. At least a carbon tax would be somewhat transparent and simple. Cap and Trade is a formula for politicians to inject themselves into the process and cut deals for their constituents. Big businesses are already heavily lobbying to make sure they are treated favorably. This is far worse than a carbon tax. Almost every economist would agree with that, too. > [@](#): > > Either way, we need a cost to emitting GHGs or the market will never encompass climate externalities. How would you propose doing that? I’m a realist. If you don’t have a plan for securing the cooperation of China, anything you do is worse than useless - and unilateral costs the U.S. imposes on its energy increases China’s comparative advantage in high energy manufacturing - so long as they don’t do the same. You’re actually making it more expensive for them to cut their own emissions. ANY plan to significantly cut worldwide carbon emissions has to be done on a worldwide basis. And doing it locally isn’t an incremental step in that direction - it’s a roadblock to prevent the participation of other countries. > [@](#): > > For example, you mention China. China itself has motive to impose GHG costs and limits itself (they’re not inherently stupider than we are.) It’s all about costs vs benefits. The only reason the U.S. can contemplate doing this is because it’s wealthy enough. So long as carbon emission reductions eat away at only a tiny poirtion of the standard of living of Americans, they might be willing to support it. If it meant their kids couldn’t get shoes and they couldn’t have a car, support would vanish. In China, the people are still desperately poor in many places. You’re going to have a hell of a time telling them that they might have to just work the fields an extra few hours a day to save mother earth. And the Chinese government knows it won’t have support. Yes, it’s a dictatorship, but it won’t throw away goodwill amongst the population just because the IPCC says it should. > [@](#): > > The international aspect is a dilemma - each nation could gain a temporary relative advantage by delaying costs and limits, but the longer any nation delays the greater the risk of increasing bad climate outcomes. That’s not to say that China is not a problem - that’s to say that merely waiting for a different solution is not going to help in the long run. It would be nice to have China and the U.S. agree to implement GHG costs at the same time, but as far as I know, that’s not on the table. Then neither is significant global CO2 emissions reduction. So perhaps it’s time to start thinking about mitigation strategies and technologies to either make clean energy cheaper than fossil fuel, or to scrub CO2 from the atmosphere. You can’t just wish the China problem away or make yourself feel better by flagellating your country with punitive taxes. That won’t save the planet. > [@](#): > > Perhaps the best thing to do is to charge Chinese (and other) imports a tariff based on the difference in GHG emission cost between the countries. But doesn’t the WTO prohibit that option? So.. Tax American manufacturers, then start a global trade war to force the Chinese to do the same. If Dr. Evil were trying to start a global depression using the villian’s guide to economic mismanagement, he couldn’t find a better way. > [@](#): > > As to the timing, do we have any choice? If we’re to keep CO[sub]2[/sub] concentrations below 450 ppmv, and in that way avoid the worst potential negative effects, we don’t have a lot of leeway in when we start. Is there an alternative that would address the timing problem or is the only alternative to wait a few years (in which case it also seems likely that China will wait a few years?) Of course you have some time. This particular plan does almost nothing. It’s effects won’t even be measurable for 50 years. We’re right in the middle of the worst recession in 70 years. I think global warming can wait a year or two. > [@](#): > > I don’t really like Waxman-Markey but I’m not seeing what good alternative policies we have. How about… NONE? If you don’t have a good plan, go back to the drawing board. When come back, bring a plan that makes sense and does some good. Just ‘passing something’ because you feel like something - anything - should be done is counterproductive and destructive. ---
**Author:** ![Aquila\_Be](https://avatars.discourse-cdn.com/v4/letter/a/a698b9/32.png) [@Aquila\_Be](https://boards.straightdope.com/u/Aquila_Be)\ **Post date:** [June 26, 2009, 11:24am UTC](https://boards.straightdope.com/t/kicking-an-anthill-waxman-markey/501029/5 "2009-06-26T11:24:01Z")
> [@wevets](#): > > —On balance, I’m slightly leaning towards wanting it to pass because Congress is going to be very busy with other urgent issues for quite some time to come. We will undoubtedly need to revisit and tighten up emissions controls afterwards if W-M passes, but it will be easier politically to do that if W-M passes, and if it doesn’t pass, then it’ll probably be 2011 before Congress can take up the issue again. > I feel like crap for wanting such a weak-kneed bill to pass, though. > > So what do you think? Pass? No Pass? Something else? No Pass. I have horrible fears that the economic illiterate we have as Australian PM will want to try to emulate this stunt. From a recent article/diatribe in Rolling Stone by Matt Taibbi wherein he discusses the series of evil bubbles that Goldman-Sachs has helped to inflate with the blessings of (1) Clinton (2)Bush The Younger (3) Obama we have, closely following on from: #1 The Great Depression, #2 Tech Stocks, #3 The Housing Craze, #4 $4.00 a Gallon, #5 Rigging the Bailout. #6 Global Warming is as the next great scam in the shape of ‘Cap and Trade’. You can read a near unreadable, slow loading, Scribd ipaper version of the full article Here [The Great American Bubble Machine](http://zerohedge.blogspot.com/2009/06/goldman-sachs-engineering-every-major.html). > [@](#): > > The feature of this plan that has special appeal to speculators is that the “cap” on carbon will be continually lowered by the government, which means that carbon credits will become more and more scarce with each passing year. Which means that this is a brand-new commodities market where the main commodity to be traded is guaranteed to rise in price over time. The volume of this new market will be upwards of a trillion dollars annually; for comparison’s sake, the annual combined revenues of an electricity suppliers in the U.S. total $320 billion. > > Goldman wants this bill. The plan is (1) to get in on the ground floor of paradigm-shifting legislation, (2) make sure that they’re the profit-making slice of that paradigm and (3) make sure the slice is a big slice. Goldman started pushing hard for cap-and-trade long ago, but things really ramped up last year when the firm spent $3.5 million to lobby climate issues. (One of their lobbyists at the time was none other than Patterson, now Treasury chief of staff.) Back in 2005, when Hank Paulson was chief of Goldman, he personally helped author the bank’s environmental policy, a document that contains some surprising elements for a firm that in all other areas has been consistently opposed to any sort of government regulation. Paulson’s report argued that “voluntary action alone cannot solve the climate-change problem.” A few years later, the bank’s carbon chief, Ken Newcombe, insisted that cap-and-trade alone won’t be enough to fix the climate problem and called for further public investments in research and development. Which is convenient, considering that 'Goldman made early investments in wind power (it bought a subsidiary called Horizon Wind Energy), renewable diesel (it is an investor in a firm called Changing World Technologies) and solar power (it partnered with BP Solar), exactly the kind of deals that will prosper if the government forces energy producers to use cleaner energy. As Paulson said at the time, “We’re not making those investments to lose money.” Later in the article some comments on the predicted outcomes of ‘Cap and trade’: > [@](#): > > “If it’s going to be a tax, I would prefer that Washington set the tax and collect it,” says Michael Masters, the hedge fund director who spoke out against oil-futures speculation. “But we’re saying that Wall Street can set the tax, and Wall Street can collect the tax. That’s the last thing in the world I want. It’s just asinine.” > > Cap-and-trade is going to happen. Or, if it doesn’t, something like it will. The moral is the same as for all the other bubbles that Goldman helped create, from 1929 to 2009. In almost every case, the very same bank that behaved recklessly for years, weighing down the system with toxic loans and predatory debt, and accomplishing nothing but massive bonuses for a few bosses, has been rewarded with mountains of virtually free money and government guarantees - while the actual victims in this mess, ordinary taxpayers, are the ones paying for it. As to the validity of the Matt Taibbi diatribe/polemic I’m not all that convinced as to the veracity of some of the claims he’s made. I find it quite implausible that something as blatant as the alleged dubious activities of Goldman-Sachs could go unnoticed for so long by so many of those who are employed as experts within the media mainstream covering business and finance. I do not doubt that the vast majority of elected ‘representatives’ would be no more clued in, as far as business and finance is concerned, than the average man or woman in the street, but professional politicians are supposed to employ knowledgeable people to provide them with expert advice on such matters. Just as an aside, on your final ‘Congress is going to be very busy on other issues’ remark, if Congress doesn’t have time to read 1000 plus page bills, like ‘Cap and Trade’ what do they actually do to keep busy? ---
**Author:** ![wevets](https://avatars.discourse-cdn.com/v4/letter/w/e9a140/32.png) [@wevets](https://boards.straightdope.com/u/wevets)\ **Post date:** [June 29, 2009, 9:39pm UTC](https://boards.straightdope.com/t/kicking-an-anthill-waxman-markey/501029/6 "2009-06-29T21:39:46Z")
**Costs of Cap-and-Trade versus Costs of Climate Change.** I understand a certain amount of reluctance to be in agreement with measures that have high costs associated with them: > [@Congressional Budget Office](#): > > According to CBO’s estimates, the gross cost of complying with the GHG cap-and-trade program delineated in H.R. 2454 would be about $110 billion in 2020 (measured in terms of 2010 levels of consumption and income), or about $890 per household (see Table 1). Of that gross cost, 96 percent would be the cost of acquiring allowances or offset credits. The reminder would be the resource costs associated with reducing emissions. From: [http://cbo.gov/ftpdocs/103xx/doc10327/06-19-CapTradeCosts.htm](http://cbo.gov/ftpdocs/103xx/doc10327/06-19-CapTradeCosts.htm) [sub](There are **vast** differences between cost estimates of the Waxman-Markey arrangement out there, with the Heritage Foundation’s being the highest that I have heard of. Hopefully the CBO may be seen as a neutral choice, if not necessarily accurate. I welcome seeing and discussion of other estimates.)[/sub] However, allowing global climate change to proceed unabated also has a high cost associated with it: > [@Intergovernmental Panel on Climate Change](#): > > For increases in global mean temperature of less than 1-3°C above 1990 levels, some impacts are projected to produce benefits in some places and some sectors, and produce costs in other places and other sectors. It is, however, projected that some low-latitude and polar regions will experience net costs even for small increases in temperature. It is very likely that all regions will experience either declines in net benefits or increases in net costs for increases in temperature greater than about 2-3°C [9.ES, 9.5, 10.6, T10.9, 15.3, 15.ES]. These observations confirm evidence reported in the Third Assessment that, while developing countries are expected to experience larger percentage losses, global mean losses could be 1-5%GDP for 4°C of warming [F20.3]. From: [http://www.ipcc.ch/pdf/assessment-report/ar4/wg2/ar4-wg2-spm.pdf](http://www.ipcc.ch/pdf/assessment-report/ar4/wg2/ar4-wg2-spm.pdf) (PDF) Several problems with the comparison I’m about to make are that global warming is a global problem although legal policies to address it must be national, that economic forecasting is more problematic than just about any other type of forecasting, certainly more so than climate forecasting, that GDP is a poor measure of damage and cost (for example, a Zimbabwean’s life is just as valuable as an American’s life, yet the former is represented by $200 per year in GDP and the latter by $47,000 per year in GDP,) that costs will not be evenly distributed around the globe, and a few other problems. It should be noted that the comparison below does not reflect any kind of prediction of the future due to the **extremely unrealistic** assumptions I outline, however, I hope it will be instrumental in illustrating my thought process on the problem. [ul]Let’s start with the CBO figure of $110 billion gross cost in 2020. Assuming no real economic growth (unrealistic! – but _very favorable_ to the idea of doing nothing) between now and then, with a current US GDP of $14.29 trillion, $110 billion is 0.77% of GDP.[/ul] [ul]Imagining the 4°C has materialized by 2075, if the damage is 1% of GDP it would amount to $143 billion, again assuming no real economic growth (wildly unrealistic!) If the damage is 5% of GDP it would amount to $715 billion.[/ul] So – if you could prevent $143-715 billion in damages years down the road by paying $110 billion now, would you? Why not? There’s a lot of leeway for disagreement – for example, what if the warming is higher – 5-8°C? What would you pay to prevent a 700 ppmv CO[sub]2[/sub] world? A 2000 ppmv CO[sub]2[/sub] world? I’m obviously encouraging erring on the side of caution. Waxman-Markey doesn’t do that – it doesn’t really provide for enough emissions reduction. However, in amongst the crap in there, at least it is a beginning to emissions control. And if we don’t start sometime, when will we start? > [@Sam Stone](#): > > I think global warming can wait a year or two. 😕 [Black Knight Voice:]Atmospheric Chemistry waits for no man.[/Black Knight Voice] > [@Aquila Be](#): > > Just as an aside, on your final ‘Congress is going to be very busy on other issues’ remark, if Congress doesn’t have time to read 1000 plus page bills, like ‘Cap and Trade’ what do they actually do to keep busy? Hookers and Blow of course! This is **Congress** we’re talking about here. 😉 No, seriously, I think Congress will be highly occupied by the Health Care bill, economic actions, review of regulations of the banking system, and a movement to change DOMA and/or DADT.