By Ben Geman - 01/02/10 05:42 PM EST
“A total meltdown in Copenhagen might have reduced our odds, but that didn’t happen,” they note.
Back to the economy: ClearView’s basic view is that with states hurting for cash, the prospect that cap-and-trade bills will provide a revenue stream means, in a nutshell, that the bad economy creates an opening for a bill.
That’s especially true, they argue, because new direct spending to help the economy has become less fashionable on Capitol Hill.
Here’s how they put it:
“What has changed: political support for new spending programs, as exemplified by House passage of a $155 billion ‘mini-stimulus’ package on December 16, 2009, a significant downtick from the February 2009 stimulus package ($787 billion) and the October 2008 TARP program ($700 billion). As we have noted in the past, cap-and-trade would create a new currency, a ‘below the radar’ monetization of the economy in its own right, even if the program involved a ‘full auction’ of emissions allowances. Directed spending of auction proceeds increases the political value of cap-and-trade as a stimulus mechanism. We estimate that Waxman-Markey and Kerry-Boxer, by directing no-cost allocations of emissions allowances to affected emitters and stakeholder constituencies, would inject an ‘off-books’ total of approximately $1 trillion into the economy (this figure incorporates conservative allowance price and discount rate assumptions detailed in our December 16, 2009 publication).”