Congressman Tom McClintock versus reality:
Cap and Trade policies


Sample of ideological scorn for reality:
News, November 2009:
           California Cap & Trade expected to start in 2012
Tom McClintock, June 2009:California version of cap & trade law caused escalating unemployment beginning in January, 2007
Also see expanded note with quotes at end of this web page


Congressional Budget Office projections are based primarily on studies by two teams of experts. One team was affiliated with the National Bureaue of Economic Research (NBER). The second team was affiliated with Resources For the Future. The Brooking Institution research report was co-authored by four researchers, two at the Australian National University, one at The Brookings Institution, and one at Syracuse University and the Brookings Institution. The two links below are for the full text of each report.
Additional bar charts and graphics are appended below the main comparisons

percent increase in cost

McClintock claim:    90% increase in electricity rates for cap & trade
Brookings Institute study projections for 7 cap-and-trade policy scenarios, July 24 2009, for increase in electricity costs:
                               4.2% minimum (national)
                               7.4% maximum (national)
CBO projections, July 9, 2009, for increase in costs as percent of household income:
                               1.4%  nationally
                               1.3% in California
                               0.9% to 1.2% for higher income households

Additional bar charts and graphs excerpted directly from the reports cited above from the reports

McClintock versus CBO, cost per family for cap and trade
Repetition of text in image for access by search engines:

"In total, about 80 percent of the gross cost of the program would be offset by the distribution of allowances"

..."The net annual cost per household would range from a $40 gain in income for households in the lowest one-fifth of the income distribution to a $340 loss for households in the second highest quintile."


McClintock Claim:  California's higher unemployment rate is due to its adoption of Cap and Trade legislation in 2006.

Basis of claim: Divergence of unemployment rates in recent years. Not shown in the McClintock graph is data from earlier years. Here's the unemployment comparison dating back to 1990:



Unemployment comparison, 1990-August 2009

 Unemployment, recent with overlay


Detail view starting approximately at the beginning of 2007, with California unemployment graph
copied in black, rescaled slightly it in the vertical dimension, and superimposed over the "All US" graph.

This illustrates that even in the years since AB 32 took effect (Cap and Trade in California)
the employment rates in California and the US as a whole have a very high correlation,
indicative of both responding to the same circumstances. Since the US as a whole
did not have California's Cap and Trade legislation, it follows that California's
Cap and Trade was not a factor in unemployment rate changes.
 
The divergence between the California and US graphs shows that the California
unemployment rate is slightly more sensitive to one or more factors than the US
overall unemployment rate.


What actually started the rise in unemployment?
The obvious factor:  Bursting of the subprime mortgage and housing growth bubble.

This graph of population growth in El Dorado County and in El Dorado Hills is based on building permit data for new homes. It shows that the downturn began affecting buyers of new homes and builders in 2005, well before California's Cap and Trade Law took effect at the start of 2007. Multiple Listing Service records show that resales remained strong about a year longer, until owners who had bought or refinanced with subprime mortgages began exhausting their ability to make payments and over time foreclosure processes advanced to fruition. Typical end results were actual foreclosures, short sales, and surrender of deed in lieu of foreclosure.

The first casualties in unemployment generally came from the ranks of builders and contractors, next came real estate agents and others. An example in local government was that El Dorado County's Development Services Department downsized quickly as new-home building dropped from levels of over 1,400 permits per month. New building has not recovered yet: In each of the latest two months El Dorado County logged a total of 6 permits for new homes. It's well recognized that California is one of the states most highly impacted by the mortgage, construction, and real estate crash.

Population growth downturn



Some additional charts excerpted from the Brookings Study
Brookings CO2 reduction price effects analysis
co2_reduction_cost_brookings
CO2 reduction under cap and trade, Brookings study


Sample of ideological scorn for reality:
Expanded note with direct quotes

News, November 2009:
           California Cap & Trade expected to start in 2012
Tom McClintock, June 2009:California version of cap & trade law caused escalating unemployment beginning in January, 2007
 
McClintock, from June 26, 2009  Special Orders speech to House of Representatives:

"Three years ago, I stood on the floor of the California Senate and watched a similar celebration over a similar bill, AB 32. ... the objective is the same: to force a dramatic reduction in carbon dioxide emissions.

Up until that bill took effect, California's unemployment numbers tracked very closely with the national unemployment rate. But then in January of 2007, California's unemployment rate began a steady upward divergence from the national jobless figures. Today, California's unemployment rate is more than two points above the national rate, and at its highest point since 1941.

What is it that happened in January of 2007? AB 32 took effect and began shutting down entire segments of California's economy."
Fact, reported November 25, 2009 in Sacramento Bee:

Headline:  State unveils draft of 'cap and trade'

"... The plan is scheduled to take effect in 2012.  Air Board staff members are counting on it to deliver at least a fifth of the emissions cuts required by Assembly Bill 32, the state's climate change law.


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