Cost of cutting emissions may not affect economy.
Among the many organizations reviewing the economic costs of the House and Senate climate change bills, the Congressional Budget Office (CBO) said some encouraging words in their Wednesday report.
Cap and Trade initiatives included in the legislature have been heavily criticized for raising energy costs and increasing unemployment. These claims have yet to be definitively confirmed or denied, but the CBO report says the negative effects of a Cap and Trade bill won't be so bad.
Climate change bill currently in Senate contended.
As of 2007, the US Gross Domestic Product (GDP) was $13.8 trillion, about 21% of the world's total. GDP is a measure of economic performance. It's a basic market value of all the goods and services produced by a country in a year. The CBO says that this value will only decline by .25% to .75% by 2020, as compared to normal. In other words, our economic performance will only be 1/4 to 3/4 of a percent worse.
Another measure of our economy is GDP Growth Rate, which stands at -3.8% as of July 2009. When this value is low, businesses are investing less and unemployment is typically high. CBO reports that with Cap and Trade, US GDP Growth will be overall 2.5 times larger than today. That is to say, the growth of American businesses, incomes, and jobs won't be hindered that much by Cap and Trade enactment.
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Senators stll uncertain about capping carbon.
The impacts on Purchasing Power will be modest as well. Purchasing Power is the number of goods/services that can be purchased with one unit of currency. For example, the number of items you can buy at the store with $1 is way less today that it was in 1950, meaning purchasing Power has declined since then. CBO reports that the decline in this number due to Cap and Trade will be by .1%- .8% by 2050. At that rate, business lose a modest $455 a year in Purchasing Power.
All politicians and citizens know that there must be cost to cutting CO2 emissions. The report by the CBO just says that these costs can may not impact the economy so negatively. Where jobs are lost in fossil fuel industries, they are gained in alternative fuel development. Where our economy is in decline, Cap and Trade, as proposed by the current senate bill, won't make it decline much more. In other words, the ecomony won't suffer that much more as a result of Cap and Trade than it would without it. Is this a reason to pass the bill? Senators still aren't sure.
Although the predictions of CBO are considered speculative by many senators, the report confirms sentiments of some, such as Senator Sam Brownback of Kansas, who use the report to advocate that we should stop trying to curb emissions altogether. Proponents of climate change legislature say that the report confirms their statements, that Cap and Trade will result in a net economic gain. The bill currently being debated in the senate has a lot of issues and it is unclear whether reviews like the one from CBO are making the true cost of a climate change bill easier to predict. CBO director Douglas Elmendorf says the real uncertainty lays in how readily the ecomomy can swtich to an economy that uses alternative energy.
For more info: www.washingtonpost.com/wp-dyn/content/article/2009/10/14/AR2009101404054.html
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