The FactCheck Wire

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.

If you’re the glass-half-full type, you might think it’s good news that the nation’s unemployment rate was largely unchanged from May to June. It crept up just 0.1 percentage points to 9.5 percent. But that also means that the original projections from President Obama’s economic advisers on what would happen with and without the stimulus plan are still off — and significantly so.

In mid-June, we wrote about the large discrepancy between the jobs that actually have been lost and what administration economists had predicted in January. With the July 2 release of the June numbers from the Bureau of Labor Statistics, we offer an updated chart showing the real, monthly unemployment figures plotted in red dots on the Obama advisers’ own chart depicting their projections. This chart was created by “Geoff” at the Web site Innocent Bystanders, and we’ve checked it for accuracy.

See our full article “Making Sense of Stimulus Spending” for more on this topic.

As part of his ongoing health-care-overhaul tour, President Barack Obama held a town hall event July 1 in Annandale, Va. Among the president’s messages: Medicare and Medicaid spending are getting out of control. And he’s right.

Obama said: “And for those who rightly worry about deficits, the amount our government spends on Medicare and Medicaid will eventually grow larger than what our government spends today on everything else combined,” adding that a recent Congressional Budget Office study showed that “when you look at the rising costs of entitlement, 90 percent of it is Medicare and Medicaid — it’s not Social Security — 90 percent of it comes from the federal share of health care costs.”

It’s true that the nonpartisan CBO did say that — but we’ll note that the projections are for rising costs relative to the nation’s gross domestic product over the next 70 years. (The president did say “eventually.”) Over the next 25 years, those programs make up about 80 percent of spending growth.

CBO Director’s Blog, June 29: Under current law, the federal budget is on an unsustainable path: projected spending rises well above projected revenue, producing growing budget deficits and accumulating debt. Almost all of the projected growth in spending relative to GDP (other than interest payments on the debt) is attributable to Medicare, Medicaid, and Social Security. For these three programs together, the two health programs account for 80 percent of spending growth over the next 25 years and 90 percent over the next 70 years.

The CBO’s full report also said that under current law, spending on Medicare and Medicaid will jump from about 5 percent of GDP to more than 17 percent of GDP by 2080. “That projection means that in 2080, without changes in policy, the federal government would be spending almost as much, as a share of the economy, on just its two major health care programs as it has spent on all of its programs and services in recent years.”

In a post announcing the launch of a video news release questioning the priorities of House Speaker Nancy Pelosi, the Office of the Republican Whip Eric Cantor of Virginia says that the American Clean Energy and Security Act, which Pelosi helped usher through the House of Representatives, “will impose a national energy tax of up to $3,100 on all Americans and slam small businesses with higher energy bills, causing the loss of millions of jobs.”

The video, titled “Number One Priority,” says that “in a time of economic uncertainty, when unemployment is nearing 10 percent … and spending by the president and Democrat Congress are out of control,” Pelosi’s top priority is “creating a national energy tax.” The bill the video refers to, sponsored by Reps. Henry Waxman (D-Calif.) and Ed Markey (D-Mass.), passed two days after the video’s release, and it would cap greenhouse gas emissions at 17 percent below 2005 levels by 2020 and 83 percent below 2005 levels by 2050.  But the $3,100 figure mentioned in the post has been questioned repeatedly.

As we previously wrote in our article “Cap and Trade Cost Inflation,” the $3,100 price tag that Republicans have been citing was calculated using a 2007 study by the Massachusetts Institute of Technology. But one of the study’s coauthors called the GOP’s use of the study “simplistic and misleading” and calculated, based on the same study, that the true cost of a cap-and-trade system to American households would be closer to $800 per year. The study’s coauthor also noted that the report was based on a past cap-and-trade proposal — not the Waxman-Markey bill, or even what Obama proposed in general as a part of his budget back in February.

And Cantor’s claim of a $3,100 “national energy tax” took another hit recently with the release of an analysis by the nonpartisan Congressional Budget Office, which found the cost of the bill making its way through Congress to be a lot less than advertised by Republicans. According to the CBO, the bill would cost American households an average of $175 in 2020, at the point when the legislation would have been in affect for eight years:

CBO, June 19: [T]he Congressional Budget Office (CBO) estimates that the net annual economywide cost of the cap-and-trade program in 2020 would be $22 billion — or about $175 per household. That figure includes the cost of restructuring the production and use of energy and of payments made to foreign entities under the program, but it does not include the economic benefits and other benefits of the reduction in GHG emissions and the associated slowing of climate change.

CBO notes, however, that the $175 average cost does “not reveal the wide range of effects that the cap-and-trade program would have on households in different income brackets.” According to CBO, “households in the lowest income quintile [lowest one-fifth] would see an average net benefit of about $40 in 2020, while households in the highest income quintile would see a net cost of $245.” In addition, the report says “[h]ouseholds in the second lowest quintile would see added costs of about $40 on average, those in the middle quintile would see an increase in costs of about $235, and those in the fourth quintile would pay about an additional $340 per year.” Additionally, the CBO says that its analysis does not include the benefits, economic or otherwise, of reducing greenhouse gas emissions — which can be difficult to quantify.

The CBO analysis also says it does not include certain features of the bill, such as “federal efforts to speed the development of new technologies and to increase energy efficiency by specifying standards or subsidizing energy-saving investments,” which may increase costs. CBO notes that “[t]he incidence of gains and losses would be considerably different once the free allocation of allowances had mostly ended.”

The Wall Street Journal published a critical editorial saying that the analysis leaves out other important factors. For example, the report says that the “resource cost,” which was included in the CBO’s calculation of the net cost, “does not indicate the potential decrease in gross domestic product (GDP) that could result from the cap.” And the estimate is for 2020 only, before some of the bill’s tougher restrictions would become a factor.

According to the Journal, “[t]he reality is that cost estimates for climate legislation are as unreliable as the models predicting climate change.” While we won’t agree or disagree with that statement, we can say that the cost to American households as a result of implementing a cap-and-trade program is anything but certain. And even the CBO’s estimate of the potential costs is subject to change as the bill now makes its way to the Senate, where key details about the way the bill would work may be altered.

Sonia Sotomayor isn’t mentioned in the U.S. Supreme Court’s decision today in a much-watched reverse-discrimination case, Ricci v. DeStefano. But you can bet the decision will be mentioned plenty in the upcoming Senate confirmation hearing that could put her on that court.

Sotomayor and two other judges on the 2nd U.S. Circuit Court of Appeals had upheld a lower court decision in the case, saying that the city of New Haven, Conn., was on firm legal ground when it threw out the results of two exams firefighters took in order to be promoted. No African Americans scored well enough on the test to be eligible for promotion — a result disproportionate to their presence on the force or in the population — and the city, fearing it would be found liable under civil rights law for acting on the results, decided to start over. That’s when a group of white and Hispanic firefighters sued the city.

The decision by the 2nd Circuit panel last year was brief — just a few sentences — and unsigned. The panel upheld the ruling by a lower-court judge in favor of the city. Today’s Supreme Court action, by a vote of 5-4, reversed that result, as many expected. Justice Anthony Kennedy, writing for the majority, treats the 2nd Circuit decision that was either written or agreed to by Sotomayor — with whom he could be serving by next fall — delicately.

In fact, Kennedy barely mentions the 2nd Circuit, except in a description of how the case got where it is:

Majority opinion, Ricci v. DeStefano: After full briefing and argument by the parties, the Court of Appeals affirmed in a one-paragraph, unpublished summary order; it later withdrew that order, issuing in its place a nearly identical, one-paragraph per curiam opinion adopting the District Court’s reasoning. 530 F. 3d 87 (CA2 2008). Three days later, the Court of Appeals voted 7 to 6 to deny rehearing en banc, over written dissents by Chief Judge Jacobs and Judge Cabranes. 530 F. 3d 88.

Kennedy wrote that the city of New Haven made its decision to throw out the test results purely on the basis of race, and that mere fear of litigation didn’t justify what amounted to discrimination against nonminorities.

Majority opinion, Ricci v. DeStefano: Whatever the City’s ultimate aim - however well intentioned or benevolent it might have seemed - the City made its employment decision because of race. The City rejected the test results solely because the higher scoring candidates were white. The question is not whether that conduct was discriminatory but whether the City had a lawful justification for its race-based action.

Republicans on the Senate Judiciary Committee now have fresh fuel to use on Sotomayor when she goes before the committee, currently scheduled to happen on July 13. But the fact that four justices agreed with her — including David Souter, the one she would replace — may temper the impact, for some observers at least, of critiques of her differences with the bench’s more conservative members.