Daily Chart: What Waxman-Markey Will Do To The Economy

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[Update: Jim Manzi responds here and I respond to him here.]

As you might know, the House is voting later today on the Waxman-Markey climate change bill, The American Clean Energy and Security Act. Feelings are mixed. For one, there were a lot of mischievous compromises. For another, the bill doesn't have any immediate, selfish economic benefits for the country, and there's no point pretending otherwise. I think Jim Manzi and others are right to say -- if you believe the IPCC and CBO estimates -- that the U.S. won't experience a climate-induced decline in GDP until 2080 or 2100. (And that decline in GDP is not something Waxman-Markey will stop, at least without global coordination. The big question is whether this bill will increase or decrease the chance of such coordination.)

Nonetheless, I think there's a fair amount of scaremongering going on about the costs of cap and trade. I get off the Jim Manzi train when he says that Waxman-Markey will be "a terrible deal for American taxpayers" because "it is projected to impose annual costs of about $1,100 per household (a little less than 1% of total consumption) by 2050." (That's from the EPA estimate.) That $1,100 looks like a lot, but of course the country is projected be almost three times richer in 2050 than it is now. Average household consumption in 2050 will be $164,348.

Here's an easy way of visualizing the costs of Waxman-Markey. The chart below shows projected U.S. GDP with and without Waxman-Markey (drawn from the data annex of the EPA's big estimate). Projected U.S. GDP without the bill is in orange; it's sitting behind projected GDP with the bill, which is in grey. The visible orange stripe is the difference between the two scenarios:


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In 2050, GDP without Waxman-Markey is projected to be $35,377,000,000,000. GDP with Waxman-Markey is projected to be $34,918,000,000,000.


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Conor Clarke is the editor, with Michael Kinsley, of Creative Capitalism. He was previously a fellow at The Atlantic and an editor at The Guardian. More

Conor Clarke is the editor, with Michael Kinsley, of Creative Capitalism, an economics blog that was recently published in book form by Simon and Schuster. He was previously a fellow at The Atlantic and an editor at The Guardian. He is also on Twitter.
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