The EPA has recently released their study of the costs and benefits of the Clean Air Act and its proposed rather draconian expansion. A reasonable person can only shake their head and wonder how intelligent discussion of manufacturing, the economy and the environment can ever take place with people so fanatical – and so fantastically incapable of sound reason - at the helm. With a straight face these certified tree hugging extremists announced that their environmental legislation will save the country over $2 trillion a year (that is not a typo – trillion as in TRILLION dollars); and compliance cost will only be $65 billion. That's right – for every dollar of increased cost the legislation will impose on industry, $30 will be saved.
What makes one wonder at the validity of the figures is that the bulk of the savings are in health care costs – reduced hospital visits, lower rates of asthma and the like. The savings will equal 14% of the GDP by the year 2020, according to the EPA – and these are not just numbers pulled from the seat of their pants. These numbers have been 'peer reviewed' by a who's who' list of economists and scientists. You can read the environmental extremists' defense of the study here.
You would think, however, that at least one of the esteemed peers doing the peer review would have sanity checked the data before releasing it and defending the study to Congress. In fact, the EPA could have made a quick phone call to the next building full of pencil pushing egg-headed bureaucrats down the road where the US Department of Health and Human Services puts out reports indicating that the total health care tab for the US in 2009 was $2.5 trillion – or 17.6% of GDP. Had they done so it might have occurred to the EPA and their peers that, just maybe, putting out a report that said the country's health care tab will be reduced by some 80% as a result of the Clean Air Act isn't a good idea.
I certainly exaggerated a bit, because the savings also include an extrapolated estimate of the projected assumed costs of reductions in lost work time, which was not part of the HHS figure. In fact, there is not a single firm number in the entire study. It is a compilation of models, estimates, projections and numerical hoodoo. You would think that, in light of the fact that the first version of the Clean Air Act was enacted close to 40 years ago they would have at least one hard savings fact to build on, but sadly that is not the case.
What is worse is that the costs are pure nonsense, as well. They include estimates of capital equipment only, and assume the industrial folks will go on a cost reduction binge to – quite conveniently – hold these costs down. No cost for all of the administrative nonsense that goes into compliance, no costs for the army of environmental bureaucrats to run the program, no cost of the inevitable army of enforcement folks … and of course no cost of the millions of dollars in grants the peers on the peer review panel milk.
Yeah – the peers are all radical, pro-environmental college professors who are world-class authorities on a lot things – mostly, it seems, on how to obtain obscenely large grants to study outrageously arcane nuances of the environment. The 'economists' on the panel are all 'envronmental economists'' – not a mainstream economist among them who actually looks into things like the actual cost of manufacturing. Peer, to these folks, means people who look at things the way they do, have the same background as they do, and agree right down the line with their opinions and methodologies.
I have no idea whether the regulations are any good or not, and no idea what the burden will be on manufacturing. I suspect it won't be good. I have at least a minimal level of common sense, however. I have enough sense to ask, if cleaning up the air actually pays back thirty bucks for every dollar it costs, why aren't the Chinese, Indians and Mexicans racing to do the same with their air? I have to wonder why the pro-environmental crowd, including a number of the peer panel who wrote articles promoting the Kyoto Accords, were willing to let the emerging economies off the hook when the environmental agenda is such a money-making boondoggle? I have to wonder why the EPA didn't ask any manufacturing experts to review and comment on their figures and assumptions before rolling it out?
We can expect extremists from all sides to come out of the woodwork on command on every issue. We should expect more from the people in positions of responsibility in the federal government, however. This economic rationalization is so pathetic as to be laughable, and we can never have serious discussions to arrive at serious solutions to serious issues when governmental officials cannot be taken seriously.