Wednesday, 31 March 2010

More AB 32 Costs: Rep. Niello needs to check math

In today’s Sacramento Bee, Rep. Roger Niello defends the highly criticized Varshney/Tootelian estimates of the costs of AB 32 (which are annual cost of $183 billion and 1.1 million jobs for California), saying that they are not out of line with other estimates.

For evidence, he points to CBO analysis of similar proposed U.S. cap-and-trade laws that CBO estimates cost the U.S. economy $1.2 trillion (and California $156 billion) between 2009 and 2018. CBO is a credible estimate, but it is an estimate of cumulative costs over a 10 year period. The Varshney/Tootelian cost estimate is for a single year, and is higher. So, by the numbers Niello is citing, Varshney/Tootelian would appear to be too high by at least a factor of 10.

That is what Professor Sweeney at Stanford has said in his review - that Varshney/Tootelian cost estimates are too high by at least a factor of 10.

I don’t disagree with some of Niello’s points in his piece, and I have been critical of how some environmentalists have been spinnng the latest AB 32 studies as “good for the economy.” But his math is simply wrong here, and the numbers matter. So, I am recinding the favorite legislator award I gave Niello a few posts back for bravely voting against the latest round of homebuyer tax credits.

About the Author

Ethan Jacob

Author & Editor

I am Ethan Jacob Executive Director of the Center for Business and Policy Research at the University of the Pacific, where I have a joint faculty appointment in the Eberhardt School of Business and the Public Policy Program in the McGeorge School of Law..

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