First, we should acknowledge the obvious: The bill is awful. It
gives away permits to greenhouse gas emitters that should instead be
auctioned. As a result, money that could be rebated to taxpayers or
used to fund the development of clean technologies instead goes to the
industries that are the source of the problem.

Second, the use of tradable permits rather than a tax is a rather
questionable policy. Permits will almost certainly require more
government enforcement bureaucracy than a system of taxes and
subsidies. And, incidentally, permits will allow Goldman Sachs and our
other Wall Street friends to make tens of billions of dollars on
trading fees in the coming decades, a high priority for all Americans.

But a bad bill is almost certainly better than no bill. If Waxman-Markey doesn't get through, it is very
difficult to see another bill getting through this Congress. And there
is no reason to believe that the Congress that gets elected in 2010
will be any less indebted to the corporate lobbyists.

The Waxman-Markey bill should be viewed as a foot in the door. It
is a modest first step toward reducing greenhouse gas emissions that
both demonstrates a commitment and provides an opportunity to show the
public that emissions can be lowered without imposing an enormous
economic burden on the country.

Of course, the only reason that so many people believe that
reducing greenhouse gas emissions will impose an enormous burden on the
economy is that the oil and coal industry, and their friends in the
media, have been pushing this tripe for more than a decade. The
Congressional Budget Office (CBO) projects that the cost of the
Waxman-Markey bill at $22 billion a year in 2020. That will be equal to
less than 0.1 percent of projected GDP in that year, or about $70 out
of the pocket of each person in the country.

The coal and oil companies are greatly anguished over this
prospective burden on American families, but let's compare this burden
to the burden posed by Iraq war levels of defense spending. Two years
ago, the Center for Economic and Policy Research commissioned Global
Insight to use its model to project the economic impact of Iraq war
levels of military spending. They projected the effect on the economy
of a sustained increase in defense spending equal to 1.0 percent of
GDP, an amount slightly less than the increase sustained in the years
following the start of the Afghanistan and Iraq wars.

Global Insight was selected because it is one of the oldest
econometric forecasting firms in the country. Its model has been widely
used for a wide variety of analyses and it certainly is not associated
with progressive or anti-defense politics. Its model is also very much
in the mainstream of the economics profession. It will not produce
results that are qualitatively different than any other mainstream
model.

The model projected
that after 10 years of higher spending, GDP would be down by about $17
billion from baseline levels. After 20 years (2021 if defense spending
stays high), GDP would be down by more than $60 billion from baseline
levels, approximately three times CBO's projection of the cost of the
Waxman-Markey bill.

Of course, these projections don't show the full loss to
households, since they don't include the money that must be diverted
from taxes or obtained by borrowing to support the higher level of
defense spending. These figures are just the lost output.

Global Insight projected that after 20 years of higher defense
spending, annual car sales would be down by more than 700,000. Housing
starts would be almost 40,000 lower. Exports would be 1.8 percent lower
and imports would be 2.7 percent higher, leading to a trade deficit
that would be almost $200 billion larger. The model also projected that
there would be nearly 700,000 fewer jobs as a result of the higher
level of defense spending.

In short, the economic harm projected from high levels of military
spending is far larger than the damage projected from the Waxman-Markey
bill. Given this situation, we would have expected that all the oil and
coal industry folks, who are now so concerned about the average
family's well-being, would have been screaming about the economic pain
that would result from sustaining the Iraq war levels of military
spending.

Did anyone ever hear them raise this issue? Does anyone recall
members of Congress giving speeches about how the job loss from the
Iraq war levels of spending would be devastating? Does anyone recall
any newspaper columns or editorials making this point? How about a news
story that analyzed the economic impact of higher levels of military
spending?

For some reason, job loss and economic pain associated with the
military are just not worth mentioning. These items only become
newsworthy when the issue is saving the environment. And the elites
wonder why the public has so little confidence in the country's
institutions.