During the course of “a lengthy email exchange,” Reilly told The Weekly Standard that because of a mathematical error, the average annual cost of a cap-and-trade scheme for a 2.5-member family would be $800 rather than $215, as he’d told PolitiFact. As for the auction revenue, however, Reilly repeated the explanation he’d made to House Republicans that the money would be returned to households. Without that assumption, Reilly wrote to the Standard, “the cost would then be the Republican estimate [$3,128] plus the cost I estimate [$800].”
Apparently, however, the magazine wasn’t buying the returns thesis, and, mashing those two numbers together, ran with the headline, “Fuzzy Math: According to an MIT study, cap and trade could cost the average household more than $3,900 per year.”
The study said nothing of the sort, and neither has Reilly. In fact, The Weekly Standard quoted one e-mail in which the economist wrote that:
[N]o 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 [sic] is still the same.
Of course, the “different implications for specific households” might be even more important to the viability of climate legislation than its “average effect” spread over the entire economy. The Weekly Standard’s article did make one valid point:
Most Americans probably care a great deal whether they would get to spend that $3,128 themselves or the government spends it on programs to put a chicken in every pot and a Prius in every garage.
Underneath that cynical language lays an important truth. Instituting a cap-and-trade system would be one of the most dramatic changes ever to the United States economy, and every detail must be considered carefully. But that is further reason why it is unfair to use the M.I.T. study, which is generalized, to draw conclusions about a specific piece of legislation such as the Waxman-Markey bill that was introduced in the House of Representatives in March. In an interview responding to The Weekly Standard’s article, Reilly explained as much to Romm at Climate Progress (who also took the opportunity to highlight an Environmental Protection Agency analysis of the Waxman-Markey bill which foresaw “a relatively modest impact on U.S. consumers”). Or, as Reilly put it in his April 1 letter to Boehner:
Many of the proposals currently being considered by Congress and as proposed by the Administration have been designed to offset the energy cost impacts on middle and lower income households and so it is simplistic and misleading to only look at the impact on energy prices of these proposals as a measure of their impact on the average household. Concern about the cost impacts on middle and low income families needs to be focused on making sure allowance or tax revenue is used to offset cost impacts on these households rather than as an excuse for not proceeding with measures that would help avert dangerous climate change.
It’s a monumental challenge, to be sure, especially with so many conservative politicians and journalists twisting scientific and economic research to their own ends.