FactCheck at the Annenberg School has been enlisted on the Treasury memo story so you know — at least, given my experience with the group’s involvement on the climate issue — that the global warming industry is unnerved.

Given the previously mentioned ABC News story — which, despite being fair, got a few things wrong — and the above-cited lack of faith in certain self-appointed truth-tellers, here is my response to Fact-Check. Feel free to compare with their assessment later, especially now that Team Soros is alerted — if they weren’t on the horn with FactCheck already — that they’d better direct their spin machine in that direction:

Dear D’Angelo,
You are correct in noting that the [$1,761.00] figure does not come from Treasury directly (or from us, despite much sloppy reportage stating just that). Treasury is indeed addressing the administration’s position, not the House bill, though of course only those who are trying to change the subject claim the latter is the case or even relevant. But the red herring is not as presented. It is two-fold. A little background on an issue worked on by few and understood by even fewer is in order to hopefully arrest the utterly lost reporting on the matter.
First, the distraction is not as the spin has it — that the memos don’t address the House bill and so are not relevant — but that the House bill distracts from the question of what the administration wants from the cap-and-trade agenda item they are lobbying Congress to enact. The House passage was one of either three or five legislative steps to enactment, not the be-all-and-end-all of the debate or even laughably close. Now recall that Congress is only legislating in response to the administration calling for it and budgeting in the revenues.
Those revenues are budgeted on the administration’s (continuing) assumption of selling all of the allowances. The House did not have the political will not to give away most of the ration coupons for the first few years to rent-seekers. That’s not what the administration is asking for, nor what it continues to budget (see its Mid-Session Review released about three weeks ago, p. 33; it continues to project the revenues it originally projected from its position calling for 100 percent auctioning). I look forward to the administration disavowing its recently reaffirmed position that cap-and-trade means auctioning 100 percent of the allowances. Until then, that’s the issue, and the memos reveal the expectations.
A Senate bill followed by a conferenced product rejecting that position would make Treasury’s memos less relevant, with one major problem which is also the second layer of the red herring.
Peter Orszag has testified to the fact that it doesn’t matter to the economy whether the allowances are sold or given away to rent seekers. In his words (testimony here):
Under a cap-and-trade program, firms would not ultimately bear most of the costs of the allowances but instead would pass them along to their customers in the form of higher prices. Such price increases would stem from the restriction on emissions and would occur regardless of whether the government sold emission allowances or gave them away.
Got it. The cost to households is the cost to households. Of course — as AEP CEO Mike Morris admitted in a recent interview — either way, utilities get to recoup the cost from the ratepayer with a little sweetener on top for their troubles. Companies covered by the requirement don’t pay unless they absolutely cannot pass the cost along (in which case, they try to eat it or close shop): consumers pay.
The distraction is in implying that the relevant issue is whether the Treasury memos reflecting the administration’s position actually address the bill that has passed one house of Congress — no, they reflect the administration’s position. The administration and the green pressure groups are changing the subject – and in claiming that auctioning vs. allocation (which the House bill gets around to doing anyway, incidentally) are simply apples and oranges. I take administration’s budget director at his word to conclude that is not the case.
In short, the memos have proven very uncomfortable to many people — even (in a rather strange twist) the green groups whose position also remains 100 percent auctioning.
But that does not change that the administration’s position is what it is, and is reflected in these memos, which is all the memos purport to address. The confusion starts only when parties demand that you view the world through their lens and, voila, see, they aren’t relevant to what they would rather have you talk about. Clever. But not the point, or the issue.
Best,
Chris Horner