Yesterday, Environmental Capital reported on the $3100 per household estimate of the costs of cap-and-trade, the pushback and the method of arriving at $3100:
House Republicans are sticking to their guns. In a release today, Republican leadership explains how they got the $3,100 figure–dividing MIT’s estimate of 2015 cap-and-trade revenues of $366 billion by 117 million households.
My first reaction was, wow, they assume a vertical demand curve (i.e., consumers don't respond to price increases) and all of the higher energy prices are passed onto consumers. My second thought was, surely not, they are simply assuming that since companies absorb costs, and households own companies, then those costs should be counted too.
Given that logic, the costs of cap-and-trade are zero since government revenue ultimately becomes income (see the National Income and Product Accounts at the BEA). Assuming that government revenues are all cost requires the idea that government burns the money.
Burn, baby, burn.
