The Bureaucratic Cost of Cap-and-Trade Legislation

Cap-and-trade legisation promises to load the plates of numerous government agencies with a lot of work. There will be studies to conduct and reports to prepare; rebates for low-income families to handle; and emissions to auction and regulate. This means more employees and, in turn, higher administrative costs — to the tune of $7.5 billion over the next decade, according to the Congressional Budget Office.

USA Today’s story about the CBO study said critics of the House bill have used the “big government” argument in an effort to drum up opposition in the Senate. Of course, there are so many other arguments out there, it’s tough to say whether this one will hold any weight.

The CBO’s initial estimate shows administrative costs of about $8.2 billion through 2019 under cap-and-trade legislation passed by the House earlier this summer. However, the CBO estimated the net cost would be about $7.5 billion because some agencies are expected to charge fees that will offset a a portion of their worker expenses.

Reading through the CBO’s study, I’m struck not only by the cost, but its sheer complexity. WSJ’s Environmental Capital makes a good point when it eludes to a simpler carbon tax method.

If the workload increases then conventional wisdom tells us to hire more people to handle it. Of course, efficiency also helps and federal bureaucracy can stray into red-tape lolly-gagging from time-to-time for all sorts of reasons that are sometimes beyond their control.

The report – issued back in June around the same time another CBO study on the estimated cost to households came out — found cap-and-trade legislation would increase direct spending by about $821 billion over a ten-year period.

That’s a lot of moolah. But before anyone out there starts hyperventilating, the CBO found cap-and-trade would bring in more revenue and in the end reduce the budget deficit. Federal revenues would increase $846 billion over the same period and reduce the budget deficit — or increase a future surplus, wishful thinking, perhaps — by about $24 billion, the study said.

Perhaps proponents of cap-and-trade legislation could use the ”reduction of budget deficit” argument considering it recently reached a record $1.3 trillion, according to the CBO.

Additional BNET coverage of climate change legislation:

• EIA: Energy Prices Inch Up In Early Years of Cap-and-Trade
• Sarah Palin Blasts Cap-and-Trade Plan
• The Climate Bill’s Death of a Thousand Cuts
• Climate Bill Passes on Razor-Thin Margin; Tougher Fighter Lies Ahead
• Putting a Cost on Cap-and-Trade Legislation
• Republicans Successfully Create Climate Legislation Catch-22