Waxman-Markey's annual average household cost is $175 -- CBO

Comprehensive climate legislation pending in the House would cost an average of about $175 per household every year, though the price tag would be even larger for wealthier Americans while the poorest can expect to get a small dividend, according to a Congressional Budget Office study released late Friday.

The CBO report studied only the cap-and-trade provisions of H.R. 2454, a major climate bill that Democratic leaders expect to bring to the floor early next month for a vote on final passage.

Under the House bill, U.S. industries would be forced to reduce their emissions 17 percent below 2005 levels, a regulatory burden that would be accomplished by stemming demand for carbon-based energy through higher prices.

"Those higher prices, in turn, would reduce households' purchasing power," CBO said in the report, which was requested by House Ways and Means Committee ranking member Dave Camp (R-Mich.). "At the same time, the distribution of emission allowances would improve households' financial situation."

In its study, CBO said the legislation's net costs would be $22 billion in 2020. That figure takes into account the free distribution of greenhouse gas allowances and a number of other policies designed to lower the costs of the program, including offsets.


Without factoring in those provisions, CBO said the law would cost a gross of $110 billion in 2020, or about $890 per household.

CBO also broke down costs by different economic demographics, with the lowest of the five income quintiles seeing an average annual net benefit of about $40 in 2020 because of the different direct rebates and other payback provisions written into the legislation.

The highest quintile can expect to see net costs of $245 per year. CBO said the second lowest quintile would see about $40 per year in added costs; $235 for the middle quintile and $340 for the fourth quintile. As of press time, CBO had not explained what income levels constitute a quintile.

Democratic sponsors of the House bill welcomed the CBO study's findings, which they said show the legislation would be about the same as the cost of a postage stamp a day.

"This analysis underscores that this legislation is effective and affordable," said Energy and Commerce Chairman Henry Waxman (D-Calif.). "It sets America on a course of energy independence while taking significant steps to reduce dangerous global warming pollution."

By contrast, Republicans complained that the CBO report omitted several billions of dollars in costs. The GOP also cited the report's statistics on the legislation's gross financial implications, which say American households would pay between $770 and $1,380 more per year for energy and other consumer items.

"The CBO analysis makes clear that this is a new multi-billion dollar tax on every American family," Camp said in a press release. "This is a direct violation of the president's pledge that families making less than $250,000 would not pay higher taxes."

CBO's study also did not include any assessment of the economic benefits from reducing greenhouse gases and any slowing of climate change. And it also ignored many of the bill's other energy provisions, including a nationwide renewable electricity standard.

Earlier this month, CBO released a much broader score for the climate bill, saying the legislation would bring in federal revenue of about $845.6 billion during the first decade of its operation. By contrast, federal spending is expected to increase by $821.2 billion, meaning the Treasury can expect a $24.4 billion net gain (E&E Daily, June 8).

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