Congressional Budget Office says climate bill would cut deficit by $19B

The Associated Press reports that the non-partisan Congressional Budget Office (“CBO”) found that the American Power Act (the climate and energy bill currently stalled in the U.S. Senate) would increase revenues and reduce the federal deficit by about $19 billion over the next decade.

The American Power Act proposes to cap the number of greenhouse gases emitted from facilities that generate electricity, and from other industrial activities, beginning in 2013 (or 2016 for certain entities).

  • Under the Act, EPA would establish two separate cap-and-trade regulatory initiatives, one covering emissions of greenhouse gases and one covering hydrofluorocarbons. EPA would issue allowances to emit those gases, some of which would be auctioned at no cost.
  • For companies unable to meet the emission goals, a portion of their compliance obligation could be met by purchasing domestic or international offsets (or by the purchase of additional allowances from EPA).
  • The Act also contains provisions for the creation of additional programs, such as a program to offer financial incentives to consumers who face higher prices as a result of the bill’s implementation.
  • The Senate legislation is similar to the American Clean Energy and Security Act of 2009, which was passed by the House last year.

In its analytical letter released last Wednesday, the CBO estimated that enacting the Senate bill would increase revenues by about $751 billion, and direct spending by $732 billion, over the 2011-2020 period. In total, CBO estimates the legislation would reduce future deficits by $19 billion.

Although many political analysts believe it is unlikely the Senate’s American Power Act will pass before November’s mid-term elections, others are hopeful given the CBO’s analysis and the recent positive report issued by EPA.

Further, in an effort to gain additional bipartisan support, Democrat lawmakers are considering a more modest approach that would limit the carbon tax to the electricity sector, and at a White House meeting last week, a bipartisan group of senators discussed an emissions cap that would be limited to stationary sources.

Senate Majority Leader Harry Reid, D-Nev plans to bring the legislation to the Senate floor before the August recess.

The July 12, 2018 CBO report is available at:

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