Posted by Jonathan Adler:
What Treasury's Climate Memo Does [And Does Not] Reveal:
http://volokh.com/archives/archive_2009_09_13-2009_09_19.shtml#1253224570
A [1]confidential Treasury Department memo from March 2009, obtained
by the Competitive Enterprise Institute through a FOIA request,
purports to provide evidence that the cap-and-trade proponents have
grossly underestimated the cost of such a program. But does it really?
Here is the relevant portion of the document, as redacted by the
Treasury Department:
While such a program can yield economic benefits that justify its
costs, it will raise energy prices and impose annual costs on the
order of XXXXXXXXXXXXXX dollars. At the same time, given the
Administration's proposal to auction all emission allowances, a
cap-and-trade program could generate annual receipts on the order
of $100 to $200 billion annually. Finally, by encouraging
investments in clean energy sources, climate policy could increase
the fiscal cost of existing energy tax provisions, such as
renewable electricity and biofuel tax credits.
XXXXXXXXXXXXXXXXXXXXX.
[The Xed out portions are redacted in the memo.]
The revenue estimate above -- $100 to $200 billion -- is explicitly
based upon the auction of all allowances, so it is not a fair
representation of the cost of the Waxman-Markey cap-and-trade bill
that passed the House. These revenues are costs to energy producers --
costs that would be passed along to consumers -- but the Waxman-Markey
bill provides for giving away most of the carbon allowances, so it
would generate less revenue, and thus would impose lower direct costs
on emitting firms. Waxman-Markey is far more than just a cap-and-trade
bill, so other provisions of the bill would cost consumers in other
ways, but these are not addressed in the Treasury memo. So, contrary
to some claims, the memo does not reveal a secret Obama Administration
cost estimate for existing cap-and-trade legislation. [More from the
Washington Post [2]here.]
The Treasury memo may be significant in another way, however, insofar
as it represents the Administration's view of its obligations under
the Freedom of Information Act. Portions of the memo above providing
greater detail about the Treasury Department's assessment of the
potential economic impact of a cap-and-trade program were withheld.
And for what reason? Notations on the memo indicate these estimates
were redacted under FOIA exemption (b)(5). This exemption allows the
federal government to withhold "inter-agency or intra-agency
memorandums of letters which would not be available by law to a party
...in litigation with the agency." As [3]explained by the Justice
Department, this exemption applies to "those documents, and only those
documents that are normally privileged in the civil discovery
context." Yet the Treasury Department did not maintain that the
memorandum in its entirety was exempt, just a few clauses and
sentences providing more complete cost estimates. I will admit I am
not a FOIA expert, but this does not appear to be a faithful
application of the relevant exemption, let alone the Administration's
[4]stated FOIA policy. It also cannot help but feed suspicions that
the Administration has not been candid about the potential costs of
proposed climate policies. As Roger Pielke, Jr. [5]comments: "Memo to
politicians: if you have nothing to hide, then don't hide anything."
References
1.
http://www.openmarket.org/wp-content/uploads/2009/11/FOIA-Cap-andTrade-2009-09-11.PDF
2.
http://www.washingtonpost.com/wp-dyn/content/article/2009/09/16/AR2009091603524.html
3. http://www.usdoj.gov/oip/exemption5.htm
4. http://www.whitehouse.gov/the_press_office/FreedomofInformationAct/
5. http://rogerpielkejr.blogspot.com/2009/09/how-not-to-build-trust.html
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