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Weekly Standard Compounds $3100 GOP Lie With A $3900 Lie

By Brad Johnson on Apr 23, 2009 at 8:55 pm

Reilly Letter
John Reilly’s April 14th letter to Rep. John Boehner (R-OH). Reilly explains that the GOP continues to misrepresent his study, which found that annual price for the average household for strong cap and trade would start at $65 in 2015, averaging “about $800″ through 2050.

Accusing Massachusetts Institute of Technology economist John Reilly of using “fuzzy math” and “fuzzy logic,” the Weekly Standard has further distorted an MIT study of the economics of carbon regulation. By making an economically unsupportable assumption, Weekly Standard editor John McCormack transforms a $3100 lie promulgated by House Republicans into a $3900 lie:

While $800 is significantly more than Reilly’s original estimate of $215 (not to mention more than Obama’s middle-class tax cut), it turns out that Reilly is still low-balling the cost of cap and trade by using some fuzzy logic. In reality, cap and trade could cost the average household more than $3,900 per year.

In reality, the energy economist from the Massachusetts Institute of Technology who co-authored the “Assessment of U.S. Cap-and-Trade Proposals” report does a better job of interpreting “reality” than McCormack. It’s McCormack’s logic that is “fuzzy.”

THE $3100 LIE

The MIT study estimates the average value of the carbon market over a thirty-five year period to be $366 billion per year. If you were to divide that value by the number of households in America, you get $3,128 per household. Asserting that the value of the market is equivalent to the economic cost of the policy – which one has to do to claim that the cost of cap and trade is $3100 per household — requires the assumption that this revenue stream magically disappears somewhere. Reilly attempted to explain this to the Weekly Standard:

It is not really a matter of returning it or not, no matter what happens this revenue gets recycled into the economy some way. In that regard, whether the money is specifically returned to households with a check that says “your share of GHG auction revenue”, used to cut someone’s taxes, used to pay for some government services that provide benefit to the public, or simply used to offset the deficit (therefore meaning lower government debt and lower taxes sometime in the future when that debt comes due) is largely irrelevant in the calculation of the “average” household. Each of those ways of using the revenue has different implications for specific households but the “average” affect is still the same.

For example: Exxon Mobil became the largest corporation in the world by raking in $442.9 billion in revenue in 2008, “costing” the average American household $3,785.

Is the existence of Exxon Mobil a $3,800 tax on American families? No, because most of its revenues are redistributed in the economy — as oil rig employment, petroleum products (which fuel transportation and trade), and of course, multimillion-dollar salaries for its top executives and massive profits for its shareholders.

THE $3900 LIE

The MIT study of the economic effects of cap and trade did estimate the “welfare cost” of the transition from an unsustainable pollution-based economy to a clean-energy economy. As Reilly explained to McCormack (to no avail), this “cost to the economy involves all those actions people have to take to reduce their use of fossil fuels or find ways to use them without releasing [greenhouse gases]“:

So that might involve spending money on insulating your home, or buying a more expensive hybrid vehicle to drive, or electric utilities substituting gas (or wind, nuclear, or solar) instead of coal in power generation, or industry investing in more efficient motors or production processes, etc. with all of these things ending up reflected in the costs of good and services in the economy.

The MIT study found that this “welfare cost” is tiny with respect to the size of the economy, even with strong reductions in global warming pollution and a very high price for carbon permits. The change in total welfare is less than one-tenth of one percent in 2015, never rising above two percent for the forty-year run of their model. Averaging out the “price” of a clean-energy economy versus the status quo over those forty years, Reilly found the cost for “the average household just in 2015 is about $80 per family, or $65 if more appropriately stated in present value terms,” and the “present value cost per average current household through 2050″ is “about $800.”

McCormack decided to add $3100 to $800 and get $3900, even though Reilly told him one has to assume the carbon market value gets flushed down the toilet:

If you took the revenue and flushed it down the toilet or burned it, the cost would then be the Republican estimate plus the cost I estimate. But that is quite unrealistic, as the auction revenue will be recycled into the economy some way.

Using McCormack’s logic, we could take our $3,800 Exxon Mobil “tax” and then add in, say the $855 per household per year spent on the war in Iraq (given a lowball estimate of $100 billion in total expenditures per year) as the welfare cost of the existence of Exxon Mobil. Adding $3785 to $855 returns a figure of $4640 per average household.

Saying “Exxon Mobil is a $4640 tax” would be silly and intellectually irresponsible. But that’s essentially what McCormack is doing, as is the once-respected Heritage Foundation, who is promoting McCormack’s nonsensical $3900 figure. Read more

Climate Progress

Exclusive: MIT Professor says GOP, Weekly Standard “misrepresentation” of his April 2007 study to project costs for Waxman-Markey is “inappropriate,” “silly” and “just wrong”

By Joe Romm on Apr 23, 2009 at 8:16 pm

Memo to Media:  The MIT study being used by opponents of the Waxman-Markey bill was published in April 2007 (see here). Needless to say, it doesn’t model the bill or any of its key provisions.

The author, MIT Professor John Reilly, explained to me today in an exclusive interview that “the Republican approach to estimating the cost of cap-and-trade is just wrong.” He said even “apart from the misrepresentation of the costs” by the GOP, “it is inappropriate to draw conclusions on the costs of Waxman-Markey” from a study published two years ago that doesn’t model key cost-containment provisions, such as the use of offsets! ["Inappropriate" is an academic term.  A better word might be "fraudulent."]

Prof. Reilly said that the Weekly Standard reporter “feigned stupidity” in an effort to elicit answers that could be taken out of context and misrepresented. Reilly called the analysis in the resulting article, “Fuzzy Math: According to an MIT study, cap and trade could cost the average household more than $3,900 per year” — now being cited by conservative blogs and politicians — “just silly” for reasons discussed below.

Reilly said that his study found the cost to a typical family in 2015 of $80 (in terms of reduced economic welfare).  And, as we’ll see, he overestimates the cost of CO2 prices by a factor of 2.5 times compared to what it is likely to be under the Waxman-Markey bill aka “The American Clean Energy and Security Act of 2009.”

Reilly confirmed that in his study, even with an 80% reduction in greenhouse gas emissions, GDP roughly quadruples by 2050 and that a reasonable estimate for the slight reduction in GDP growth from even that strong cap is 0.1% of GDP a year — one tenth of a penny on the dollar — which as I’ve noted is pretty much what every major study finds (see “Intro to climate economics“).  Since the MIT study is “inappropriate” to use for estimating costs from Waxman-Markey, the only credible analysis of the bill out there is EPA’s, which finds it “could make the median household … better off than they would be without the program.”

FRAUDULENT USE OF MIT STUDY TO PROJECT COSTS OF WAXMAN-MARKEY

Read more

Politics

Rep. Ryan: Democrats have a ‘right’ to use budget reconciliaton.

By Satyam Khanna on Apr 23, 2009 at 8:00 pm

ryan21.jpgCongressional Democrats and the Obama administration have floated using “budget reconciliation” to pass health care reform — where only 51 votes would be required for approval of a bill — to bypass the increasing number of Republican filibuster threats. In response, Senate Republicans have said they would “grind the Senate to a virtual halt“; Sen. Jon Kyl (R-AZ) explained that reconciliation would be “the nuclear war.” Today, GOP up-and-comer Rep. Paul Ryan (R-WI), however, said it is Democrats’ “right” to use budget reconciliation:

“It’s their right. They did win the election,” said Ryan, R-Wis. “That’s what I tell all my constituents who are worried about this. They won the election. They did run on these ideas. They did run on nationalizing health care. So, you’re right about that. They have the votes with reconciliation. They nailed down the process so that they can make sure they have the votes and that they can get this thing through really fast. It is their right. It is what they can do.”

Notably, much of President Bush’s agenda was passed in Republican-controlled Congresses using budget reconciliation. At the Wonk Room, Igor Volsky writes that reconciliation is the key to achieving health care reform.

Yglesias

Cheney Says Techniques Taught In Torture-Resistance Classes Can’t Be Torture

By Matthew Yglesias on Apr 23, 2009 at 7:01 pm

Matt Corley has Liz Cheney explaining that waterboarding’s not torture because we subject soldiers to waterboarding when they undergo SERE training.

Matt observes that what goes on when we torture a captive is actually pretty different from a training exercise. That said, the larger issue here is that SERE stands for Survival, Evasion, Resistance and Escape. And by “resistance” they mean resistance to torture. What we do when we train soldiers isn’t torture, because it’s training. But it’s training in torture resistance. When we look through the torture-resistance manual to find ways to do interrogations, we’re looking through the torture-resistance manual to find ways of torturing people.

It’s important to recall that the SERE people asked to provide information to interrogators about how to do torture specifically warned the would-be torturers that their techniques would be illegal to apply and unlikely to produce reliable information.

This whole argument is an insult to people’s intelligence. It’s like saying that shooting someone in the head isn’t really murder because police officers do target practice.

Politics

As U.S. Attorney, Chris Christie Approved Warrantless Tracking Of Suspects Using Cell Phone GPS

By Lee Fang on Apr 23, 2009 at 6:41 pm

While serving as a U.S. attorney during the Bush administration, Christopher Christie, now a Republican candidate for Governor in New Jersey, tracked the whereabouts of citizens through their cell phones without warrants. The ACLU obtained the documents detailing the spying program from the Justice Department in an ongoing lawsuit over cell phone tracking.

While the documents reveal 79 such cases on or after Sept. 12, 2001, they do not specify how many of the applications were made during Christie’s tenure. Christie served as U.S. attorney from Jan. 17, 2002 through November 2008. ACLU staff attorney Catherine Crump noted:

Tracking the location of people’s cell phones reveals intimate details of their daily routines and is highly invasive of their privacy. The government is violating the Constitution when it fails to get a search warrant before tracking people this way.

The new revelations about the cell phone tracking program under Christie is yet another example of the warrantless spying programs authorized under the Bush administration. Previous programs approved without a court order or warrant have included the secret program to monitor radiation levels at over 100 Muslim sites and the NSA spying program on the phone and e-mail communications of thousands of people inside the U.S. These programs run contrary to the Fourth Amendment to the U.S. Constitution, which forbids “unreasonable searches” and sets out specific requirements for warrants, including “probable cause.”

During his tenure as U.S. attorney, Christie also awarded his former boss, John Ashcroft, a $28-52 million dollar no-bid contract to “monitor a large corporation willing to settle criminal charges out of court.” Former Attorney General Nicholas Katzenbach blasted the decision, saying that awarding a no-bid contract “suggests other political things, and that seems to me to be as wrong as it can be.” Christie also doled out “a multi-million-dollar, no bid contract to an ex-federal prosecutor who declined to criminally prosecute Christie’s brother on stock fraud charges two years earlier.”

Christie’s campaign manager, Bill Stepien, declined to comment on the cell phone spying program “due to pending litigation.”

Yglesias

Waterboarding: The Song

By Matthew Yglesias on Apr 23, 2009 at 6:13 pm

Watch and be astounded by the legal “reasoning” involved in the claim that waterboarding—deliberately initiating the sensation of drowning—does not involve inflicting severe suffering on the waterboarding victim:

To state the obvious, if you’re doing something to someone such that the idea is that it’s so unpleasant that they’ll do whatever you want to get them to stop, then the amount of suffering you’re inflicting has to be pretty severe. The point of waterboarding, according to the memos, is that it puts a lot of coercive power in the hands of the interrogator. It does so by inflicting “severe suffering.” There’s no other way for it to work.

Health

Rep. Paul Ryan: Dems Have ‘Right’ To Use Reconciliation, But They Are Shutting Us Out Of Health Debate

By Igor Volsky on Apr 23, 2009 at 5:44 pm

paulryan1.jpgDuring an interview with ABC’s Top Line, Rep. Paul Ryan (R-WI) admitted that the Democrats have the “right” to pass health care reform through the reconciliation process. “It is their right. It is what they can do,” Ryan admitted.

But just because they can, doesn’t mean they should. “In order to have bipartisanship, you have to have collaboration and that means the party in power must want to willingly collaborate with the minority to actually write legislation from the beginning.” “Here in the House, there is no collaboration whatsoever. We are not invited to any meetings, we are not asked to participate in the legislative drafting of these bills,” he complained.

But as I argue here, Ryan has it backwards. While Democrats have been willing to consider dissenting opinion, Republicans are more interested in defeating reform than shaping health legislation. In fact, just yesterday “House Majority Leader Steny Hoyer (D-MD) said he plans to meet with Republican lawmakers informally this week to discuss some of the thornier parts of an effort to overhaul the U.S. healthcare system:”

Hoyer told reporters on Capitol Hill that he intends to meet with Rep. Roy Blunt (R-MO), chairman of the House Republican Health Care Caucus, this week to continue a discussion on comparative-effectiveness research and a public health-plan option—among other measures—that have proven to be sticking points between the two parties…I also believe that there is an opportunity for us to try to work together and come to an agreement on issues.’, [Hoyer said].

Meanwhile, Republicans are either reproducing the McCain campaign’s old health policy proposals or smearing progressive alternatives. The first draft of the so-called GOP alternative budget, for instance, echoed the the disingenuous attacks of Betsy McCaughey, Sally Pipes, and Conservatives for Patients Rights.

In fact, this report read like a Betsy McCaughey editorial (complete with a government-health care “horror stories” section):

- Will technological advances continue to spark cutting-edge medical treatments, or will price controls and federal regulation stifle innovation and prevent life-saving breakthroughs?

- Will doctors be able to decide the best treatments for their patients, or will government bureaucrats ration and restrict access to care in an arbitrary fashion?

- Will the federal government take action now to slow the growth of health costs and bring entitlement spending under control, or will expansive—and expensive—new government programs cripple future generations in an avalanche of debt?

- Democrats propose nearly $1 trillion in new spending on health care reform as a mere “down payment” for additional spending to come.

- In a government-run health care system, bureaucrats would exercise increasing control over all health care decision-making and would resort to rationing of care as the sole means to control skyrocketing costs. Such rationing would import not only the policies of other countries, but their horror stories.

- And while Democrats would encourage doctors not to prescribe treatments that could help their patients if a bureaucrat refused to approve it, their plan would do little to reform the skyrocketing medical liability costs that plague the American health care system.

Several reports have indicated that the GOP health care study group “plans to release a framework for overhauling the health care system.” But if this paper is any indication of the kind of serious policy thinking the GOP is willing to engage in, then bipartisanship will be difficult to come by.

Related Posts

Politics

Boehner drops the t-bomb.

By Guest Blogger on Apr 23, 2009 at 5:44 pm

In a press conference today, House Minority Leader John Boehner (R-OH) broke with the Republican practice of referring to the Bush administration’s torture practices as “enhanced” or “harsh” interrogation techniques. As Ryan Grim notes, Boehner described the recently released OLC memos as outlining “torture techniques“:

BOEHNER: Last week, they released these memos outlining torture techniques. That was clearly a political decision and ignored the advice of their Director of National Intelligence and their CIA director.

Watch it:

Shortly thereafter, Boehner’s spokesperson Michael Steel e-mailed Grim, saying, “It is clear from the context that Boehner was simply using liberals’ verbiage to describe these interrogation techniques. The United States does not torture.” Earlier this week, when asked by CNS News if the US government did the right thing in waterboarding Khalid Sheik Mohammad, Boehner punted: “I don’t know, you’ll have to ask [the CIA].”

- Emily Aden

Yglesias

The Economic Impact of Educational Achievement Gaps

By Matthew Yglesias on Apr 23, 2009 at 5:25 pm

thumb_achievement_gap

McKinsey put out a report yesterday looking at the economic cost of poor educational performance through the fairly clever gimmick of asking what would the economic benefit be of closing various kinds of “achievements gaps” that can be found in the American school system. Some findings:

— If the United States had in recent years closed the gap between its educational achievement levels and those of better-performing nations such as Finland and Korea, GDP in 2008 could have been $1.3 trillion to $2.3 trillion higher. This represents 9 to 16 percent of GDP.

— If the gap between black and Latino student performance and white student performance had been similarly narrowed, GDP in 2008 would have been between $310 billion and $525 billion higher, or 2 to 4 percent of GDP. The magnitude of this impact will rise in the years ahead as demographic shifts result in blacks and Latinos becoming a larger proportion of the population and workforce.

—If the gap between low-income students and the rest had been similarly narrowed, GDP in 2008 would have been $400 billion to $670 billion higher, or 3 to 5 percent of GDP.

—If the gap between America’s low-performing states and the rest had been similarly narrowed, GDP in 2008 would have been $425 billion to $700 billion higher, or 3 to 5 percent of GDP.

To make a long story short, having a high-performing school system is extremely valuable. This is important to keep in mind when talking about spending money on schools or other social services aimed at children and their parents. There’s much more to improving educational outcomes than spending money at random, but insofar as you identify a use for the money that’s genuinely useful it’s worth spending extremely freely. This is worth mentioning because reasonable doubts are often raised about the scalability of certain promising, but limited in scope, educational models that charter school networks have been put into play. Insofar as the scalability problem is simply a question of it looking improbable that a requisite amount of money can be found, then there’s good reason to believe that it would be worth setting that worry aside and just finding the money.

In other words, we can understand this as part of the reason that some of the high-tax social democracies are so successful. It’s not, per se, that high levels of taxation don’t dampen economic activity. But the high-quality social service those taxes are financing, reflected in things like very good educational outcomes, provide a more-than-offsetting boost.

Meanwhile, I thought this chart was fascinating. On the Y axis you get average PISA scores, and on the X axis you get the percent of variance in student performance that can be accounted for in terms of socioeconomic status:

chart

There’s an impressive amount of variance along both axes. And there also isn’t a really clear trend here. You normally expect to see Finland clustered with Denmark and Sweden rather than with Japan and Canada.

Politics

Liz Cheney Claims Waterboading Isn’t Torture Because Similar Tactics Were Used In SERE Training

By Matt Corley on Apr 23, 2009 at 4:52 pm

On MSNBC this afternoon, former State Department official Liz Cheney, who is the daughter of Vice President Dick Cheney, defended the infamous Bush-era torture memos that were recently released by the Obama administration. “The tactics are not torture, we did not torture,” said Cheney.

To support her claim that the brutal techniques, such as waterboarding, that were authorized by the memos are not torture, Cheney invoked the common conservative argument that the techniques were derived from special forces training called Survival, Evasion, Resistance and Evasion (SERE):

O’DONNELL: Well Liz, we’ll get to that argument in a minute, about whether the means justify the ends, whether torture justifies itself…

CHENEY: Well, it wasn’t torture, so that’s not the right way to lay out the argument.

O’DONNELL: Ok.

CHENEY: Everything that was done in this program, as has been laid out and described before, are tactics that our own people go through in SERE training.

Later in the interview, Cheney insisted that “We did not torture our own people. These techniques are not torture.” Watch it:

As Media Matters noted when Fox News’ Jim Angle pushed the same argument, the Bush Justice Department acknowledged in one of the torture memos that waterboarding detainees is “a very different situation” from what went on in SERE training:

Individuals undergoing SERE training are obviously in a very different situation from detainees undergoing interrogation; SERE trainees know it is part of a training program, not a real-life interrogation regime, they presumably know it will last only a short time, and they presumably have assurances that they will not be significantly harmed by the training.

On Monday, Time’s Michael Scherer and Bobby Ghosh noted that a CIA inspector general report had found that the waterboarding used on detainees “was significantly different from that used in the SERE program“:

However, the IG investigation found that the waterboarding technique used on the CIA’s detainees was significantly different from that used in the SERE program: most notably, the Agency’s interrogators used much larger volumes of water.

The IG also cites the CIA’s Office of Medical Services (OMS) in saying that the “the expertise of the SERE psychologists/interrogators … was probably misrepresented.” The IG concluded: “Consequently, according to OMS, there was no a priori reason to believe that applying the waterboard with the frequency and intensity with which it was used … was either efficacious or medically safe.” In fact, the IG report also hints that the CIA didn’t consult the OMS on waterboarding until quite late: “OMS was neither consulted nor involved in the initial analysis of the risk and benefits of [enhanced interrogation techniques].”

Finally, there is no credible way that Cheney can claim that trainees undergoing waterboarding during SERE training had it applied to them with “the frequency and intensity with which it was used” on detainees. As Marcy Wheeler pointed out, one of the released memos revealed that Khalid Sheikh Mohammed was waterboarded 183 times in March 2003 and Abu Zubaydah was waterboarded 83 times in August 2002.

Transcript: Read more

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