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A Project of The Annenberg Public Policy Center

Dueling Ads in Virginia Race, Part 2

Last week, we wrote about a TV ad from Virginia state Sen. Creigh Deeds, the Democratic candidate to be the state’s governor, which misleadingly described his opponent’s role in utility rate increases over the last few years. Deeds’ Republican challenger, former Virginia Attorney General Bob McDonnell, responded with a misleading ad of his own.

The ad turns the tables on Deeds, saying that he "supports Washington’s cap and trade energy scheme that will dramatically increase utility rates for families and kill 56,000 coal and manufacturing jobs."

The claim that Deeds supports "Washington’s cap and trade energy scheme" is based on the fact that he served on Virginia Gov. Tim Kaine’s 40 member Commission on Climate Change, which recommended in a December 2008 report that Congress pass climate change legislation that "[e]stablishes a mandatory economy-wide cap and trade program to reduce greenhouse gas emissions." Also, in response to a Sierra Club questionnaire that asked "[w]hat measures would you promote to address climate change in Virginia?" Deeds said, "[a]s a member of Gov. Kaine’s Climate Change commission, I have endorsed the many measures undertaken through our work."

We don’t know what Deeds’ role was in shaping the panel’s conclusions, but his campaign now says that while Deeds backs efforts to address climate change, he does not support the American Clean Energy and Security Act of 2009 (also known as the Waxman-Markey bill), which passed the House by a narrow margin in June. At a July 25 debate sponsored by the Virginia Bar Association, Deeds said that Washington should be taking up the issue of global warming, but "in a recession, any legislation that is going to cause an energy price increase for consumers, or put Virginia or American businesses at a disadvantage, is not good policy."

The ad also claims that the "cap and trade scheme" will "dramatically increase utility rates for families." A graphic on screen says the rate hike could be as much as "$532 per Virginia household." In August, the Heritage Foundation, a conservative think tank, did report that the proposed Waxman-Markey bill could increase electricity costs for households in the state by that much each year from 2012 to 2035.

But the nonpartisan Congressional Budget Office estimates that "the average per-household loss in purchasing power would be $90 in 2012 and $925 in 2050 and would average about $455 per U.S. household per year over the 2012–2050 period." Because the price of electricity is predicted to increase with each passing year as tighter caps are imposed on utilities, the average for a time frame comparable to that used by Heritage (2012 to 2035) would be lower than $455. CBO also notes that households of different income levels would be affected differently.

As we’ve said before, the exact cost to households is extremely difficult to pin down and is subject to change with shifts in assumptions that go into the calculation and as the legislation continues to make its way through Congress. Estimates on the economic impact of the bill from various groups, most of them not exactly nonpartisan, have been all over the map.

The ad also says that the bill would "kill 56,000 coal and manufacturing jobs" while an alleged quote from the Environmental Protection Agency flashes on screen saying the "[c]ap-and-trade bill could hurt U.S. manufacturing, sending jobs overseas." We couldn’t find a report from EPA containing the 56,000 figure. We contacted the McDonnell campaign and a spokeswoman told us that, indeed, the estimate didn’t come from EPA. Instead, it came from a study commissioned by the National Association of Manufacturers, a national industrial trade association, and the conservative American Council for Capital Formation, both of which oppose the bill. According to their study, estimates of job loss range from 41,400 under a low cost scenario for carbon permits to 56,400 under a high cost hypothetical.

CBO notes that a cap-and trade program would "reduce the number of jobs in industries that produce carbon-based energy, use energy intensively in their production processes, or produce products whose use involves energy consumption, because those industries would experience the greatest increases in costs and declines in sales." But CBO also says that "[s]ome provisions of the bill … would dampen the effects of the policy on employment in industries and areas where they are expected to be most severe," and that "shifts in demand caused by the policy would also create new employment opportunities in some industries."