How Much Is That Climate Bill in the Window
by Bill Chameides | September 21st, 2009
posted by Erica Rowell (Editor)
The long-awaited Congressional Budget Office report on the costs of the Waxman-Markey climate bill hit the streets on Thursday.
The bill is projected to decrease our nation’s gross domestic product (GDP) by
- 0.25-0.75 of 1.0 percent by 2020 and
- 1–3.5 percent by 2050.
Is That a Lot?
Well, the CBO estimates that GDP will increase by a factor of 2.5 between now and 2050 — that’s 150 percent. So that would mean that if we enacted Waxman-Markey (H.R. 2454), by 2050, GDP would increase between 142 and 148 percent instead of 150 percent. Doesn’t sound like so much of a drop, does it?
Today’s GDP is a little less than $14 trillion. So one percent of that would be about $140 billion and three percent would be about $420 billion. If the GDP is 2.5 times larger than $14 trillion in 2050, then three percent of GDP would be almost $1.1 trillion. That sounds like a significant chunk of change. But is it? Let’s try a different tack.
Percentage of U.S. GDP spent on:
Imported oil: 3
Estimated cost of Waxman-Markey by 2050 as a percentage of GDP: 1-3.5
If given the choice, would Americans rather spend:
- 3 percent (or likely more by 2050) of GDP on imported oil or
- an equivalent or smaller amount reducing our dependence on foreign oil while also helping to slow global warming?
In June the CBO had estimated that the average annual household cost of H.R. 2454 would be about $175 in 2020. This report puts that cost at $160 per average household.
This post has been revised to reflect the following correction:
Correction: September 23, 2009
As originally published, we mistakenly calculated the increase of GDP between now and 2050 to be 250 percent; it should have been 150 percent. The projected impact of Waxman-Markey on GDP in 2050 in turn would mean an increase between 142 and 148 percent, not the 241 and 247 percent originally published.
and: economics, gross domestic product, legislation, U.S. Congress, Waxman-Markey climate bill