At the same time, economic benefits to society writ large could offset the cost to companies. Peer-reviewed studies show that reducing pollution improves public health. In March, EPA released a cost-benefit analysis of President Bush’s 1990 Clean Air Act amendments. Polluters will have paid some $65 billion annually by 2020, but the corresponding reduction in premature death and illness (not to mention the rise in worker productivity tied to that boon) will have saved $2 trillion annually.
EPA has similar estimates for the other new rules. The Good Neighbor regulation will cost $2.4 billion per year but save $280 billion in health costs by preventing up to 34,000 premature deaths; 15,000 nonfatal heart attacks; 19,000 cases of acute bronchitis; 400,000 cases of aggravated asthma; and 1.8 million sick days a year beginning in 2014. The mercury rule will cost up to $11 billion annually through 2013 (mostly for the installation of scrubbers and filters), but it will yield $59 billion to $140 billion in annual benefits, mostly by avoiding 6,800 to 17,000 premature deaths each year. Other benefits of the mercury rule—not all of which were given dollar values in the analysis—include cutting 11,000 nonfatal heart attacks and 120,000 cases of aggravated asthma, as well as improving development for young children by boosting IQ, learning, and memory. The sulfur-dioxide rules are expected to cost $1.5 billion annually and yield economic benefits of $15 billion to $37 billion annually.
A new report out this week by the nonpartisan Economic Policy Institute also concluded that, overall, the benefits of Obama’s EPA rules exceed the costs—although not by quite as large a margin as the agency calculates. The combined economic benefits of clean-air rules, not including the cross-state rule, will exceed the combined cost by $10 billion to $95 billion a year, or by a ratio of 2-to-1 to 20–to-1. The net benefits from the cross-state rule could exceed $100 billion a year. The costs born by the companies, the institute said, amount to 0.13 percent of the economy.
THE ELECTION ISSUE
For now, the political forces fighting EPA seem to be winning. Environmental and public health groups are defending the rules, but Republicans and their allies appear to have reframed the fight as one about “environment versus economy.” If that is the choice, they know how voters, trapped in a stagnant economy with 9 percent unemployment, will choose.
Many energy economists familiar with EPA’s rules say that’s a false choice. But the White House essentially conceded it was losing the political debate on Sept. 2, when it delayed the schedule for implementing a major ozone rule. Privately, senior White House staffers say they feared that the new rule would trigger further accusations that EPA had put an undue burden on the economy—particularly in Midwestern states that rely on coal and are crucial for Obama’s reelection. “I have continued to underscore the importance of reducing regulatory burdens and regulatory uncertainty, particularly as our economy continues to recover,” Obama said.
Last week, in what was viewed as another concession, Jackson slowed—albeit briefly, she said—the rollout of carbon rules. “This short-term delay and a two-year pause in the ozone review is a tacit admission by this administration that its energy and environmental regulations are dragging down an already flailing economy,” said Phil Kerpen, a spokesman for Americans for Prosperity, in a statement blasted to reporters. “Affordable, dependable energy is the backbone of a modern economy. The president should take every step to abandon his manipulation of the energy markets through taxpayer-funded favoritism of firms like Solyndra and permanently call off his EPA regulators.”
That’s the kind of message Democrats fear could resonate beyond the tea party and into states dependent on coal mining or coal-fired electricity, such as Indiana, Missouri, Montana, Ohio, and Pennsylvania. The fight between coal and EPA could make the difference in who wins the White House in 2012.
This article appears in the Sep. 24, 2011, edition of National Journal.