The US Chamber's Chronic Reliance on Biased Policy Analysis

The US Chamber's recently exposed interest in commissioning a study to put health reform in a bad light isn't the first time the federation has shown its willingness to trumpet questionable analyses about proposals it doesn't like.

Heck, the US Chamber has been peddling bad studies on the economic impacts of climate policy for years.

For instance, they've had David Kreutzer, a Heritage Foundation economist, do three presentations before local Chambers in Michigan, Missouri and Virginia. We've pointed out before (here, here, here and here) that Kreutzer is a co-author of the deeply flawed Heritage Foundation "analyses" of last year's Lieberman-Warner bill and this year's Waxman-Markey bill. Even though the Heritage Foundation presents its results as though they actually modeled the bill in question, they have a funny tendency to leave out significant parts of the proposed legislation. As my colleague Laurie Johnson explained in May, looking at Heritage's "analysis" of Waxman-Markey:

And aside from the cap on emissions, virtually none of the bill is modeled:

1) the allowance value disappears instead of being spent on consumer relief, clean energy, adaptation, and other measures;

2) no cost containment provisions such as banking, the strategic reserve, and offsets are included; and

3) no complementary policies promoting energy efficiency and clean energy are allowed.

Which is pretty similar to what I noted about their modeling of Lieberman-Warner.

By not actually modeling the legislation in question, and leaving out the parts that reduce the costs, Heritage produces the results you might expect. As my colleague Laurie summarizes:

predicted prices are drastically higher than those found in widely-respected and peer-reviewed analyses done by government agencies and universities, forcing extreme differences in results.

But despite such glaring flaws, Kreutzer has presented the results as though they do model the legislation. Here's what the Chamber's official report on the Missouri presentation said:

Dr. David Kreutzer, an economist from the Heritage Foundation, focused on the impact of cap-and-trade legislation on Missouri's economy. He used his analysis of S. 3036, the "Lieberman-Warner Climate Security Act," to highlight how the program could devastate Missouri's economy, a state largely dependent on coal, through job loss, harm to the Gross State Product (GSP), and the increased cost of utilities on Missouri families.

So the US Chamber has been hosting presentations showing scary economic outcomes based on analyses that are not of the legislation the presentation is supposedly about. Way to play it straight, US Chamber!

But wait, there's more.

Sometimes the Chamber uses Margo Thorning instead of David Kreutzer. She is an economist with the American Council for Capital Formation, a polluter-funded group that has been teaming up with the National Association of Manufacturers to produce their own distorted estimates of the costs of climate legislation, which we have debunked again and again.

And well we should. The NAM/ACCF analyses use the same trick as the Heritage Foundation: leave out lots of the bill. Need proof? Look at page 9 of the NAM/ACCF study where it lists the titles of the Waxman-Markey bill, where they admit to leaving out entirely the titles that include consumer protections and cost-containment.

Yet, the Chamber has given the stage to Ms. Thorning six times since 2008 - Ohio, Montana, North Dakota, New Hampshire, Pennsylvania and Virginia.

So the news that the US Chamber was looking to fund a rigged study on health reform is actually just the latest symptom of its chronic reliance upon biased policy analysis.

This post originally appeared on NRDC's Switchboard blog.

 

Comments

[dwkreutzer]

02:34 PM on 11/21/2009

Your criticism of the Heritage studies couldn't be further off base. See longer response here: http://www­.heritage.­org/Resear­ch/Energya­ndEnvironm­ent/upload­/CDA_09_03­.pdf
Let me respond briefly to your three points.
1. The allowance value does not disappear in our analysis. We recycle 100 percent of the allowance revenue in its most efficient form--unen­cumbered cash back to the citizens.
2. All the analyses that do include banking and borrowing show net borrowing in the early years for. Had we included banking the economic damages would have been even larger. We do include offsets but not at the fantasy-le­vel of two billion tons per year.
3. With caps in place, mandates on efficiency can only increase the costs of meeting the caps--they cannot lower them. Imagine putting somebody on a strict 1,000 calorie per day diet. Mandating that they eat a half head of lettuce every day doesn't make it easier to cut calories as there could be other more satisfying and nutritious options for cutting calories.
What you don't mention is that the low-ball estimates for the cost of cap and trade all require a near doubling of nuclear power generation­. Even more, the postage-st­amp results require taking the net present value of the costs. Do a search of the NRDC web site. You will find that your organizati­on is dead set against both significan­t increases in nuclear power and the use of discountin­g future values.