The House's passage of the Waxman-Markey bill raises the possibility that the United States will finally do something on global warming. This prospect has the industry hacks screaming at top volume about the horrible fate that awaits the economy. Everyone should know not to take them seriously, as I will explain in a moment.

    First, we should acknowledge the obvious: The bill is awful. It gives away permits to greenhouse gas emitters that should instead be auctioned. As a result, money that could be rebated to taxpayers or used to fund the development of clean technologies instead goes to the industries that are the source of the problem.

    Second, the use of tradable permits rather than a tax is a rather questionable policy. Permits will almost certainly require more government enforcement bureaucracy than a system of taxes and subsidies. And, incidentally, permits will allow Goldman Sachs and our other Wall Street friends to make tens of billions of dollars on trading fees in the coming decades, a high priority for all Americans.

    But a bad bill is almost certainly better than no bill. If Waxman-Markey doesn't get through, it is very difficult to see another bill getting through this Congress. And there is no reason to believe that the Congress that gets elected in 2010 will be any less indebted to the corporate lobbyists.

    The Waxman-Markey bill should be viewed as a foot in the door. It is a modest first step toward reducing greenhouse gas emissions that both demonstrates a commitment and provides an opportunity to show the public that emissions can be lowered without imposing an enormous economic burden on the country.

    Of course, the only reason that so many people believe that reducing greenhouse gas emissions will impose an enormous burden on the economy is that the oil and coal industry, and their friends in the media, have been pushing this tripe for more than a decade. The Congressional Budget Office (CBO) projects that the cost of the Waxman-Markey bill at $22 billion a year in 2020. That will be equal to less than 0.1 percent of projected GDP in that year, or about $70 out of the pocket of each person in the country.

    The coal and oil companies are greatly anguished over this prospective burden on American families, but let's compare this burden to the burden posed by Iraq war levels of defense spending. Two years ago, the Center for Economic and Policy Research commissioned Global Insight to use its model to project the economic impact of Iraq war levels of military spending. They projected the effect on the economy of a sustained increase in defense spending equal to 1.0 percent of GDP, an amount slightly less than the increase sustained in the years following the start of the Afghanistan and Iraq wars.

    Global Insight was selected because it is one of the oldest econometric forecasting firms in the country. Its model has been widely used for a wide variety of analyses and it certainly is not associated with progressive or anti-defense politics. Its model is also very much in the mainstream of the economics profession. It will not produce results that are qualitatively different than any other mainstream model.

    The model projected that after 10 years of higher spending, GDP would be down by about $17 billion from baseline levels. After 20 years (2021 if defense spending stays high), GDP would be down by more than $60 billion from baseline levels, approximately three times CBO's projection of the cost of the Waxman-Markey bill.

    Of course, these projections don't show the full loss to households, since they don't include the money that must be diverted from taxes or obtained by borrowing to support the higher level of defense spending. These figures are just the lost output.

    Global Insight projected that after 20 years of higher defense spending, annual car sales would be down by more than 700,000. Housing starts would be almost 40,000 lower. Exports would be 1.8 percent lower and imports would be 2.7 percent higher, leading to a trade deficit that would be almost $200 billion larger. The model also projected that there would be nearly 700,000 fewer jobs as a result of the higher level of defense spending.

    In short, the economic harm projected from high levels of military spending is far larger than the damage projected from the Waxman-Markey bill. Given this situation, we would have expected that all the oil and coal industry folks, who are now so concerned about the average family's well-being, would have been screaming about the economic pain that would result from sustaining the Iraq war levels of military spending.

    Did anyone ever hear them raise this issue? Does anyone recall members of Congress giving speeches about how the job loss from the Iraq war levels of spending would be devastating? Does anyone recall any newspaper columns or editorials making this point? How about a news story that analyzed the economic impact of higher levels of military spending?

    For some reason, job loss and economic pain associated with the military are just not worth mentioning. These items only become newsworthy when the issue is saving the environment. And the elites wonder why the public has so little confidence in the country's institutions.