A Project of The Annenberg Public Policy Center

What’s in a Number?

The National Republican Congressional Committee has released a new ad attacking Democratic Rep. Tom Perriello of Virginia for voting with "(Barack) Obama and Nancy Pelosi" for the Waxman-Markey energy bill. It’s part of a broader effort to target several Democratic members.

The ad says the bill will result in lost jobs and cost "middle class families" $1,870 a year. That sounds pretty dire, until you consider that this week we posted an item about the Office of the Republican Whip Eric Cantor’s claim that the same bill would "impose a national energy tax of up to $3,100." So is the cost of the legislation going down? Did the NRCC make a mistake in its math?

Hardly. While it may seem curious that House Republicans would flog two different cost figures for the proposed legislation, it is indicative of the difficulty in determining how a cap on carbon emissions could affect Americans’ electricity bills. The NRCC ad credits a Washington Times editorial for its claim that the Waxman-Markey bill would make electricity prices "skyrocket," costing families $1,870 a year. But the NRCC is wrong.

The Washington Times editorial took the figure from a Heritage Foundation analysis that concluded "the GDP hit in 2020 was $161 billion (2009 dollars). For a family of four, that is $1,870." But a decrease in gross domestic product is a different calculation than an increase in electricity costs.

What’s surprising is that the Heritage Foundation actually did calculate the increase in household energy bills, which the NRCC could have used instead. Heritage estimated that "the typical family of four will see its direct energy costs rise by $1,241 per year" by 2035. We’ll note that the Heritage Foundation is a conservative think tank, and its analysts have been vocal in opposition to a cap and trade plan. And, as we’ve said before, other groups have come to different conclusions. For instance, the nonprofit advocacy group American Council for an Energy-Efficient Economy has estimated the legislation "could save $750 per household by 2020 and $3,900 per household by 2030." (As the name suggests, however, the group is in favor of action to reduce climate change.)

Even within the government there are varying estimates of how the cap and trade legislation would affect American families. The nonpartisan Congressional Budget Office projects that the bill would cost households an average of $175 in 2020. And the Environmental Protection Agency ran a range of test cases that projected average household energy expenditures (excluding gasoline) would go up several hundred dollars.