Paul Krugman has argued in his most recent New York Times column that opponents of the Waxman-Markey energy and environment bill (a.k.a. the “cap-and-trade” bill) are dishonest when they argue that it would be expensive to implement. He starts with wisecracks about climate change deniers; in what I assume is a first for Professor Krugman, he cites the behavior of a corporation as positive evidence for the moral worth of his position; and he quotes Joe Romm’s blog complaining that opponents of cap-and-trade are constantly changing their analysis in order to support pre-determined conclusions – which for anybody involved in this debate qualifies as the only really good laugh line in the piece.
When Professor Krugman eventually gets around to addressing substance, here is his argument:
[T]he best available economic analyses suggest that even deep cuts in greenhouse gas emissions would impose only modest costs on the average family. Earlier this month, the Congressional Budget Office released an analysis of the effects of Waxman-Markey, concluding that in 2020 the bill would cost the average family only $160 a year, or 0.2 percent of income. That’s roughly the cost of a postage stamp a day.
By 2050, when the emissions limit would be much tighter, the burden would rise to 1.2 percent of income. But the budget office also predicts that real G.D.P. will be about two-and-a-half times larger in 2050 than it is today, so that G.D.P. per person will rise by about 80 percent. The cost of climate protection would barely make a dent in that growth. And all of this, of course, ignores the benefits of limiting global warming.
Professor Krugman starts here by repeating the already-hackneyed political talking point that over the next decade Waxman-Markey is projected to have the same cost as “a postage stamp a day”. He then, to his credit, proceeds to consider its projected costs by 2050, which is crucial because emissions mitigation would need to be sustained for many, many decades in order to achieve its desired climate effects. He waves his hand at a projected cost of about 1% of income. But 1% of U.S. income is an enormous amount of money. Suppose I proposed some government program, and told you that it would cost “only” $150 billion per year, every year, for more than a hundred years, and then told you that this was no big deal because it’s only about 1% of the economy? I mean, it would “barely make a dent”. His argument is absurd.
Of course, if there were a persuasive case that it would create benefits that would more than offset this cost, it would be rational to support it. What is his argument about the benefits? “And all of this, of course, ignores the benefits of limiting global warming.” That’s it? Professor Krugman has a Nobel Prize in economics – he’s got to be able to do better than that. Why doesn’t he make any attempt to justify the costs? As I’ve argued at length, even using assumptions that are extremely favorable to the bill, the expected costs of Waxman-Markey are at least ten times larger than the expected benefits to U.S. taxpayers.
Professor Krugman then concludes his column with seven paragraphs that chastise his ideological opponents for lacking fair-mindedness and intellectual rigor.