Whenever carbon market opponents talk about the costs of the system, they like to point that Obama himself admitted that a cap-and-trade would cause electricity bills to increase. Sarah Palin(‘s ghostwriter) touts it in her book, and many articles quote it as well. Interestingly, this statement rings to true to many people who usually call Obama a liar. So did the President really undermine his own plan?
Well, he did say that, with a certain cap-and-trade proposal, “electricity rates would necessarily skyrocket,” but he wasn’t talking about the one Congress is considering now. As Media Matters explains,
Obama was talking about a different plan causing energy costs to “skyrocket.” As the Associated Press noted in fact-checking Palin’s book, Obama was not talking about the cap-and-trade legislation that has since passed in the House when he referred to energy costs “necessarily skyrocket[ting].” When Obama made that statement to the San Francisco Chronicle editorial board in January 2008, he was describing a cap-and-trade proposal that would auction off 100 percent of available carbon allowances, and he made no mention at the time of a plan to compensate consumers for potential cost increases. But as PolitiFact.com noted, the Waxman-Markey bill initially would distribute most of the carbon allocations for free and contains substantial provisions to offset costs to consumers, and thus “should reduce costs to consumers.”
There’s still a lot of disagreement about the exact cost of cap-and-trade. While the system itself would naturally have some cost to consumers at some point, the actual legislation includes measures to lessen the impact. The often-quoted “postage stamp a day” price comes from a Congressional Budget Office report on the Waxman-Markey bill. The CBO actually predicted a net yearly savings for low-income families. There are lower and higher estimates out there, as well.
We do know that “$3,128 per household” claim is false. It was based on an MIT study, which some House Republicans blatantly misinterpreted (read the full story at PolitiFact). In general, the most dramatic figures are produced by ignoring the features that save money. Obviously, if you leave out the cost-cutting measures, you’re going to end up with a higher cost.