You paid what for that? We can win the cap-and-trade fight in 2009.(SPECIAL POST-ELECTION ISSUE)

THE American people have elected a Democratic president and congressional majority. It is incumbent on conservatives to try to work productively with the new leadership until the next election. Part of the role of loyal opposition is to pick battles wisely. We need to focus major disagreements on political issues that are significant--issues on which either victory is possible, or laying down a marker for future elections is critical. One obvious example of such an issue is so-called cap-and-trade legislation.

The premise behind cap-and-trade is that carbon-dioxide emissions will produce increasingly severe global warming, and that we therefore should force reductions in the use of the fossil fuels that generate most U.S. carbon-dioxide emissions in order to avoid some of the damage they are predicted to cause. Cap-and-trade is often presented by advocates as a complicated, technocratic, and "market-oriented" approach to the problem, but in plain English cap-and-trade is simple: It is carbon rationing. Basically, the federal government would make it illegal, in most cases, to emit carbon dioxide at scale without a ration card. Government officials would decide how much carbon dioxide the U.S. would emit in a given year (that's the "cap" part), print up only that many ration cards, auction them off, and then allow people to buy and sell them (that's the "trade" part).

In order to reduce carbon-dioxide emissions in any serious way, the cap would have to force the U.S. economy to consume a lot less fossil fuel than it otherwise would. Barack Obama has proposed a cap-and-trade program intended to reduce U.S. emissions by 80 percent by 2050. Given that about 85 percent of all energy consumed in the U.S. is produced by fossil fuels, this implies using government fiat to demand the elimination of a majority of all energy that would otherwise be used by the economy over roughly the next 40 years. A person possessed of common sense might think that this would keep the economy from doing as well as it otherwise would. And this person would be right.

But, of course, advocates say that these enormous costs are justified, because we are preventing a global catastrophe. A careful review of the facts indicates otherwise. The United Nations Intergovernmental Panel on Climate Change (IPCC) represents the largest existing global effort to project the potential extent and impact of global warming. The current IPCC consensus forecast is that, under fairly reasonable assumptions for world population and economic growth, global temperatures are projected to rise by about 3[degrees]C by the year 2100. Also according to the IPCC, a 4[degrees]C increase in temperatures would cause total estimated economic losses of 1 to 5 percent of global GDP. By implication, if we were at 3[degrees]C of warming at the end of this century, we would be well into the 22nd century before we reached a 4[degrees]C rise, with this associated level of cost. Note that the vast majority of mainstream economists expect the average person in this far future to have an income at least five times larger than the average person of 2008.

This is the central problem for advocates of rapid, aggressive emissions reductions. Despite the rhetoric, the best available estimate of the damage we face from unconstrained global warming is not "global destruction," but instead something on the order of a 3 percent cut in global GDP in a much wealthier world well over 100 years from now.

This is why formal attempts to weigh the costs and benefits of cap-and-trade have to make patently implausible assumptions in order to claim that the program is sensible. One trick is to build into the assumptions an unrealistically heavy weighting of benefits a century or more from now versus costs today. ...