Next year, Republicans will be the majority party in the House of Representatives, which means they’ll hold the committee chairmanships and run the hearings. They’ll have opportunities aplenty to review the Obama administration’s global warming policies and the alarmist “science” that supposedly justifies cap-and-trade, renewable energy mandates, and EPA regulation of greenhouse gases.
They would do well to study how in the 105th and 106th Congresses, a GOP House committee chairman from Missouri single handedly debunked the Clinton-Gore administration’s economic analysis of the Kyoto Protocol.
Kyotoism: Down but Not Yet Out
Politically, the last eighteen months have been remarkable. In June 2009, the House passed H.R. 2454, the “American Clean Energy and Security Act,” popularly known as the Waxman-Markey cap-and-trade bill. Waxman-Markey’s passage was the culmination of a 20-year PR/lobbying campaign waged by U.N. officials, regulatory bureaucrats, environmental activists, lefty politicians, and corporate rent seekers.
Many of them crowed that ultimate victory was inevitable. With Barack “Blueprint for Change” Obama in the White House, Speaker Pelosi and Chairmen Waxman and Markey running the climate show in the House, and Majority Leader Reid and Chairman Boxer setting the agenda in the Senate, expectations ran high in green circles.
Their optimistic scenario went as follows: Congress would finally enact cap-and-trade, which would shame China into accepting binding emission limits at the Copenhagen conference, which would then remove the chief obstacle to U.S. ratification of a successor treaty to the Kyoto Protocol.
Things did not turn out that way. Waxman-Markey quickly became a political liability for many of its supporters, Copenhagen fizzled, and by the summer of 2010 the greenhouse bubble burst. Among the chief factors derailing the Kyoto agenda were the Climategate scandal, Waxman-Markey’s outing as a stealth energy tax, 15 years of no net warming, the worst recession since the 1930s, China’s unwavering rejection of binding emission limits, and growing realism about the economic and technical downsides of wind and solar power.
Energy realists, however, can ill-afford to become complacent. EPA is moving rapidly to “enact” Kyoto-like restrictions on the U.S. economy. The Supreme Court could also launch an era of CO2 tort litigation if it decides Connecticut v. American Electric Power in favor of plaintiffs.
Moreover, few defeats in politics are permanent. The greenhouse gang is nothing if not inventive in recycling their policy nostrums under new guises and rationales. What was cap-and-trade, after all, but an obfuscatory repackaging of Al Gore’s Btu energy tax? And when proponents could no longer sell cap-and-trade as climate policy, they blathered about air pollution and asthma, oil dependence and national security, stimulus and green jobs.
Bear in mind, too, that cap-and-trade is a wealth-transfer scheme, and there is never any shortage of politicians and interest groups eager to bilk the public. They count on the fact that most voters are so busy with work and family matters that they are rationally ignorant of the harm lofty-sounding regulatory initiatives can do to them.
No, we dare not rest on our laurels. Frédéric Bastiat debunked the broken window fallacy more than 150 years ago, yet Obama officials say with a straight face that putting a price on carbon (smashing that very big “window” consisting of all companies that make or use energy from fossil fuels) will stimulate the economy and create jobs.
Man from Missouri
Missouri is the “Show Me State,” which also makes it the Skeptic State, a place where plain folks proudly insist on seeing the evidence before assenting to the “frothy eloquence” of experts. How fitting, then, that James Talent, Republican of Missouri, adroitly used the hearing process to challenge climate-related flim-flam when he was Chairman of the House Committee on Small Business. In the 112th Congress, House GOP chairmen will need something of Jim’s talent to consolidate the gains energy realists made in the November elections and to roll back EPA’s greenhouse power grab.
On June 4, 1998 during the 105th Congress, and then again on April 29, 1999 during the 106th Congress, Chairman Talent grilled Janet Yellen, head of the Council of Economic Advisors, about the Clinton-Gore administration’s Kyoto economic impact analysis. Despite repeated Web searches, I am unable to locate the committee print for the June 4, 1998 hearing. Fortunately, I wrote a column about that hearing and excerpted much of the pertinent exchange.
Both hearings examined the Clinton-Gore administration’s estimate that implementing Kyoto the “smart way” would cost the United States only $14-23 per ton of carbon, or about 0.1% of GDP.
In the 1998 hearing, Yellen was the sole witness on the first panel. This allowed Talent to pursue a single line of inquiry. He asked her: $14-23 per ton — why so cheap? Yellen said it was because of the flexibility mechanisms (emission trading, banking, CDM credits, and the like) that the Clinton-Gore team negotiated in Kyoto.
So Talent asked, how much would complying with Kyoto cost absent the flexibility mechanisms, or “sweeteners,” as he called them? Yellen could not or would not say, raising the suspicion that Kyoto would be very costly if we had to meet the targets mainly via domestic policies and measures.
Talent then asked the obvious follow up – if you don’t know how much Kyoto would cost without the sweeteners, how can you estimate what it costs with the sweeteners? Suppose the sweeteners do reduce the overall cost of compliance by some percentage. Still, if we don’t know the base case or “raw” cost of Kyoto, how can you calculate the discounted cost? Time and again Talent pressed Yellen on this, but never got an answer. He put her on the horns of a dilemma. She could either acknowledge that Kyoto was potentially very costly or come across as incompetent or disingenuous.
In the 1999 hearing, there were only two witnesses — Yellen and Rob Reinstein, an environmental negotiator in the first Bush administration. Reinstein had estimated for each Kyoto Annex I (developed) country how many tons of emission allowances it would have to sell and how many it would need to buy. He added up the numbers and found that even with the inclusion of former Soviet bloc countries, whose economies and emission levels had collapsed, demand would exceed supply by anywhere from 1.3:1 to 12:1 (p. 33). Implication: The price of emission allowances would be higher than $14-23 per ton, potentially much higher.
Talent asked Yellen for her supply and demand estimates. She did not have the numbers but said they were “implicit” in the administration’s model. However, she offered no evidence that those “implicit” numbers were based on the kind of country-by-country assessment that Mr. Reinstein performed. Talent commented:
We asked you, the Committee asked you, in a written question for estimates of the U.S. demand for emission credits by year for the period, 2008 through 2012. And we asked for the potential supply from Russia and the Ukraine. And here was your answer: “The Administration has no estimates of the demand for emission credits by year for the period, 2008 through 2012. Demand will be sensitive to a variety of factors that are quite different [sic] to forecast ten to fourteen years in advance, especially the rate of technological innovation and the diffusion and adoption of current innovations and those placed on the market over the next ten years. For the same reason, we have no estimates of the supply of emission credits.”
In short, Talent said “show me,” and Yellen gave him “frothy eloquence.”
Implications for current committee chairs
In two hearings, using simple logic and refusing to let the witness change the subject, Jim Talent, a lawyer, stumped the White House’s top economist, discrediting the Clinton-Gore Kyoto economic analysis. What lessons should today’s chairmen draw from this slice of climate policy history?
First, when conducting an oversight hearing, have a simple but carefully prepared prosecutorial plan of action. An oversight hearing is an adversarial proceeding. It is much like a trial, albeit conducted before the court of public opinion rather than a court of law. The chairman should have a clear idea what fact or facts he wants to bring to light, what headline he wants the media to report, what conclusion he wants fellow policymakers to draw. In the 1998 hearing, I believe, Talent wanted to reveal that the administration essentially pulled its Kyoto cost numbers out of thin air and could not or would not explain how it arrived at the $14-23 per ton estimate. In the 1999 hearing, I believe, Talent wanted to reveal that the administration estimated emission allowance prices without first doing the empirical (country-by-country) research needed estimate supply and demand.
In addition to having clear objectives about what the hearing is to reveal, the chairman must be dogged in questioning the witness. He must accept only two results as satisfactory: (1) the witness finally comes clean and gives a straight answer, or (2) the witness finally exposes himself as evasive and non-responsive.
Second, limit the number of witnesses per panel to one or at most two persons. Limiting the panel to one witness ensures that the witness is on the hot seat the whole time and gives the chairman more control over the back-and-forth, facilitating a prosecutorial mode of interrogation. Adding a second, friendly witness (Reinstein, for example, in the 1999 hearing) enables the chairman to grill the other team’s witness on the basis of competing expert testimony.
A two-person panel can also be structured as an actual debate. Acting as referee, the chairman can ensure that the other team’s witness addresses the friendly witness’s arguments. He can repeatedly ask each witness to respond to the other’s arguments. Both formats — single witness or two witnesses — enhance the chairman’s ability to pursue a question until he gets a real answer or an obvious non-answer.
A debate format would be ideal for examining the claims of climate alarmists. For example, when University of Alabama in Huntsville Prof. John Christy challenged Columbia University Prof. James Hansen’s high-end climate sensitivity estimates at a Ways and Means Committee hearing in February 2009, Hansen declined to address Christy’s argument on the merits. Instead, Hansen advised the committee to ask the National Academy of Sciences (NAS) to produce a report and then accept its verdict as “authoritative.” Very convenient considering that Hansen is an NAS member and Christy is not, and that NAS is something of an old boys network.
Unsurprisingly, Chairman Rangel let Hansen off the hook. I’ll bet Jim Talent would not have done so. He’d have said something like: “You can’t refute Prof. Christy by ignoring him. And I am not going to be persuaded by a report that the NAS hasn’t written. I’m from Missouri. Show me!”