In the News

As campaign season begins to come into full swing, the timeline for passing a climate bill has been constricted to two weeks and the options on the table are far less desirable than the more economically efficient and comprehensive carbon caps originally proposed. In the time that remains, Senators scrambling to piece together a package should keep striving for three things that will improve the effectiveness and economic efficiency of this bill.

Manzi makes several important concessions: he acknowledges that denying climate science is nonsense, that we face a genuine threat, and that we should take some steps to address that threat. But Manzi goes off track with his argument that the economics and science of climate change are insufficient to justify actually trying to control greenhouse gas emissions.

With the announcement earlier this week that President Obama will nominate Jacob Lew to replace Peter Orszag at the Office of Management and Budget (OMB), it is worth taking a fresh look at how decisions are made within that agency. When the Environmental Protection Agendy (EPA), or any other federal agency, promulgate a significant regulation, the decision is pored over and scrutinized by OMB’s Office of Information and Regulatory Affairs (OIRA) to ensure it is a wise course of action. But when the government fails to regulate, little attention is paid, even when the stakes are high. To lessen the imbalance, there should be a formal process that reviews inaction.

Michael Livermore talked about the National Flood Insurance Program, how the program works, and its costs and benefits. Pres. Obama signed an extension to the program, allowing people with properties in flood areas to transact sales on those properties.

If the Obama administration is finding itself able to achieve its goals under the current executive order, it might prefer to avoid issuing a new directive that could prompt a political fight and force the White House to commit scarce resources, said Michael Livermore, executive director of the Institute for Policy Integrity. Livermore, who has argued that cost-benefit analysis can be reconciled with environmental regulation, said he supports a revised executive order that would apply the administration’s transparency initiative to regulatory policy. Though it is hard to “look behind the curtain” of the White House, he said he understands that the administration might want to maintain the balance struck by the Clinton-era policy.

A quartet of economists has written FCC Chairman Julius Genachowski with a shout-out for his “third way” Title II reclassification of broadband, in part because they say it would help preserve what is currently a de facto network neutrality regime in which most service providers “do not currently engage in prioritization or price discrimination tactics that would be restricted under the proposed rules.”

WASHINGTON, July 9, 2010 – Four economists argued in a letter to the FCC sent Wednesday that the question before the agency was “not whether to impose network neutrality, but whether to eliminate it.” They responded to a letter also sent to the FCC that was drafted by 74 Democratic lawmakers who said the FCC’s plan to impose new regulations on the internet would violate a standing bipartisan consensus about leaving the internet unregulated.

For a cost-benefit analysis of just focusing on US legislation, New York University School of Law’s Institute for Policy Integrity demonstrated last year that the Waxman-Markey American Clean Energy and Security Act (H.R. 2454) is “cost‐benefit justified under most reasonable assumptions about the likely social cost of carbon.’”

The EPA announced a proposal today that will cut power-plant pollution in 31 states, replacing a Bush administration cap-and-trade system overturned by the courts. The announcement comes as the chatter on Capitol Hill has turned to a utility-only approach to cap-and-trade. The targets of EPA’s proposed rule are not greenhouse gases, but two unhealthy toxins released into air when coal is burned — sulfur dioxide (SO2) and nitrogen oxides (NOx). The substances are dangerous thanks in part to the tiny particles that can wreak havoc on our respiratory systems. The consequences: asthma, heart disease, and cancer.

“The program is in considerable debt and there is no way to get out of it. Instead of dealing with the debt and the structural deficit the program has, Congress keeps kicking the can down the road,” says Scott Holladay, an economics fellow the Institute for Policy Integrity at NYU Law School. He says the program is running a $19 billion deficit since 2005’s record hurricane season.