Sunday, June 21, 2009

Free handouts

Conor Clarke, Ryan Avent, and others have been blogging about the new CBO analysis of Waxman-Markey, which estimates the economy-wide cost of the bill at $175 per household. Buried in the last page of the document is a very interesting table outlining the distributional effects of the bill—for instance, the average net costs in each income quintile:

Lowest quintile: -$40
Second quintile: $40
Middle quintile: $235
Fourth quintile: $340
Highest quintile: $245

As is evident, the bill starts out progressive, but ends up costing more for the fourth quintile than the highest. This is entirely due to a specific category: "Allocation to Businesses and Net Income to Domestic Offset Producers." Handing free carbon allowances to businesses is equivalent to delivering giant wads of cash to their shareholders, and since the highest quintile holds a disproportionate amount of equity wealth in the US, it receives most of the benefits:

Lowest quintile: $65
Second quintile: $90
Middle quintile: $140
Fourth quintile: $230
Highest quintile: $885

I wish Waxman-Markey opponents who are rightly appalled at these handouts would attack the handouts directly, rather than obscure the issue and attack the idea of cap-and-trade in general...

1 comment:

marry said...

oho good dear !!!! very interesting blog and a good posting !!! you must maintain your blog, its interesting !!! Nice Buddy
________________________________

Research Papers Help