Senate Climate Bill Actually Reduces Deficit
The CBO has released a preliminary estimate of the Senate’s “Clean Energy Jobs and American Power Act,” basically their cap-and-trade bill. And the results are precisely the opposite of what climate deniers have warned – rather than imposing a massive energy tax, the bill would reduce the budget deficit over time.
Here are the key numbers:
CBO and the Joint Committee on Taxation (JCT) estimate that over the 2010-2019 period enacting this legislation would:
• Increase federal revenues by about $854 billion; and
• Increase direct spending by about $833 billion.
In total, those changes would reduce budget deficits (or increase future surpluses) by about $21 billion over the 2010-2019 period. (All estimated effects would be on-budget.)
In years after 2019, direct spending would be less than the net revenues attributable to the legislation in each of the 10-year periods following 2019. Therefore, CBO estimates that enacting S. 1733 would not increase the deficit in any of the four 10-year periods
Not only would the bill not increase the deficit in the short-term budget window, but CBO estimates that would hold steady over time. There would be no cost to the federal government to enact a cap-and-trade program. And furthermore, this comes from CBO, which massively overestimated the fiscal effects of cap and trade in diminishing the threat of acid rain.
Barbara Boxer, chair of the Environment and Public Works Committee, which has passed this bill, said in a statement, “The CBO score shows that there is a way to design a clean energy and climate bill that is fiscally responsible and gets the job done – while protecting the health of our families and the planet.”
The only thing about this is that the bill CBO scored is, for all intents and purposes, already dead. Sens. Kerry, Graham and Lieberman are working on a new bill that can garner bipartisan support. And that bill would include subsidies to key industries, particularly the nuclear power industry, that could raise federal spending significantly.
However, the architecture for cap and trade will likely remain regardless, and this CBO estimate shows that you can secure such a system while lowering the deficit.