There is some very angry back and forth about the CBO's scoring of the Waxman-Markey climate change bill. Economically, I agree, the per-household costs seem to be small. Politically, they may be much larger than their economic cost, for two reasons: first, I'm not sure people are going to put any rebate in the same mental basket as the higher prices, and second, people aren't going to pay the costs on a per-household basis. Some households will suffer a lot, while others will be net beneficiaries. Matt, Ezra, Ryan and I are all probably among the net beneficiaries.
But the real question, I think, is whether the low cost is a feature or a bug. The only way a bill is going to have an impact is if it causes real financial pain to American households--enough to get them to change their behavior. Waxman-Markey obviously is not going to do that. And indeed, the projections of its effect on global warming are entirely negligible.
So the reason to get this mad about Waxman-Markey is either that you think it provides a framework for future action, or that you think it will persuade China and India to get on board. The latter is, I think, entirely wishful thinking on the part of American environmentalists. China is not going to let its citizens languish in subsistence farming because 30 years from now, some computer models say there will be some not-well-specified bad effects from high temperatures. Nor is India. Global warming isn't even high on the list of environmental concerns they'll want to attack as they get rich; local air pollution is far more pressing. Thinking that we're somehow going to lead them by example is like thinking that poor rural teens are going to buy electric cars because Ed Begley jr. has one.
No, I think the argument has to rest on the notion that Waxman-Markey gives us a framework to advance. And it might. But then again, Europe's much-vaunted system has had multiple spectacular failures, and the only reductions it has actually achieved seem to come largely from controversial offsets with large auditing problems.
I don't say this happily; I take climate change seriously. But I am a pessimist about the prospects for control; the coordination problems so far seem insurmountable. Unless Waxman-Markey serendipitously leads to the development of some clean technology that makes carbon obsolete, I'm pessimistic about how much it will accomplish.