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Update on Obama's EPA Compromise

Apparently, I overstated Obama's compromise on economically-destructive EPA standards. He hasn't withdrawn them, as originally reported by the media, but merely postponed them until January 2013 - that is, until just after the election.

I'd say this posturing certifies the compromise as a purely political stunt - meaning that Obama hasn't learned anything and is still as determined as ever to wreck the economy on behalf of ridiculous liberal policies.

Iain Murray has a precise summary at NRO.


Categories > Economy

Discussions - 1 Comment

The more you look at it from an administrative law background the more sensible it is. The Clean Air Act requires that air quality standards be reviewed every five years. For the ozone rules that means 2013 because it was last changed in 2008 during the last year of the Bush administration. You do have the politics of lameduck/midnight session admin rules...

"The fact that the President still wants to go ahead after he gets re-elected with a regulation that has been estimated to cost $1 trillion a year."

Who put the estimate that high? No One! This is a phenomenon by which an already slanted brief, gets compounded.

Fact: "A Manufacturers Alliance/MAPI study found that EPA's ozone proposal could result in 7.3 million U.S. jobs lost by 2020 and could add $1 trillion in new regulatory costs per year between 2020 and 2030."

So MAPI which is a biased/interested party did a worse case armageddon study, that showed the potential for a trillion dollars in costs over 10 years.

In order to get numbers that bad, they calculated from 60 ppb from a realistic basis already/still above the Bush reg of 75 ppb, so they calculated the costs of going from 80 to 60. A rough rule of thumb is that ozone reduction will cost 3-5 billion a year per point of ppb (they took the high estimate.) (5billion on a basis of 20 ppb is 100 billion/year, but seeing as how we aren't even at the 2008 (bush levels) there is a time lag. The time lag is why you can't actually say it will cost 100 billion right away...if we started right now and tried to get to 60 ppb it would be reached by to get your trillion shock you simply take the 80 basis we are currently at and figure 5 billion for ppb @ 20 over 10 years, voila 1 trillion!

"In fact, the main implication of this delay is that the president clearly rejects Lisa Jackson’s outrageous claims that environmental regulations lead to more jobs."

Environmental regulations do lead to more jobs*. Have you heard of Clean Harbors? ticker symbol CLH? They are just one of many companies in the EPA/environmental cleanup/waste management sector.

Entire sectors add jobs and or technology/wealth as a result of providing a solution to gov regulation created demand. The stock market has been relatively flat since 2000, but accounting for stock splits a share of CLH cost 63 cents in december of 1999 (prior to the Y2K scare) and is now worth around $50.

So the cost of a regulation is more akin to the cost of a pair of shoes. If we were all forced to buy rediculous new Jordan's, we would complain about paying over $100! If the cost of this regulation was 300 million people times $100 the cost of the regulation would be $30 billion, but we would all be a pair of jordans richer.

I think that for about $30 billion a year we could reduce the ozone levels from around 80 ppb to around 70 ppb. That $30 billion or $50 billion if you take the high estimate would be spent on technology that accomplishes the objective as it is legally structured.

This technology might or might not create jobs, but it will and HAS fueled a boom in "Green companies". Note that even under the Bush standard of 75 ppb we still have pent up demand for green solutions, because we haven't even reached 75 ppb yet.

Now if the utility companies cuts its own employees to cover these costs or passes these costs on to consumers and businesses (which will does and has been happening), then these regulations do put pressure on jobs.

Technology itself hardly ever produces jobs in fact money spent on this form of long term capital, tends to reduce demand for human capital. So the higher cost of electricity goes to whoever owns the patent on the green tech, it goes to R+D budgets(and because you can't know what will work ahead of time..a lot of demand for R+D is proped up by unsatisfied regulatory requirements). But the key point in the Macro view is that a cost is a sale, or a transfer of wealth to whoever comes up with the solution which satisfies the legal parameters.

Lisa Jackson's claim is I believe true if you graduated from say a Carnegie Mellon, in smoke stack engineering (Come see the new Pittsburg!) That somewhat dubious trillion dollars isn't going to just vanish, it is already gearing up all sorts of R&D demand.

The science is pretty clear that atmospheric ozone is bad for you. It causes asthma, lung cancer and supposedly going from our current 80 to the new target of 70 (or basically every 10 points is equal to 1.5 million fewer sick days...personally I think half of all sick days are more "personal days" not impacted by ozone...but who knows?)

But 1.5 million sick days is actually only 5770 year long some sense if Ozone levels drop and worker productivity increases we can know that the regulation kills jobs by 5770 jobs. Also since employed workers are more efficient than part-time workers, it is possible that you could cut say 7000 substitute/lower margin employees, from the increased efficiency of the 5770... So less ozone might result in 7000 jobs lost.

Also while the current target is 75ppb, the enforced is 84ppb and the movement towards the foreseeable target has us at 80 ppb.

Also the enforcement mechanism is state highway funds, the federal government not paying out highway funds would be an agg demand/job if it costs more for a state to fight ozone than that state gets from the federal government for highway funds there is no enforcement.

Also there is a crazy fight on how you work the basis... do you go off of the current stadard of 84 ppb or the Bush target of 75 ppb(that the EPA wants to lower to 60-70), or do you look at the 80ppb which is the average of the 675 counties in the US with ozone monitors?

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