A confidential Treasury Department memo from March 2009, obtained by the Competitive Enterprise Institute through a FOIA request, purports to provide evidence that the cap-and-trade proponents have grossly underestimated the cost of such a program. But does it really?

Here is the relevant portion of the document, as redacted by the Treasury Department:

While such a program can yield economic benefits that justify its costs, it will raise energy prices and impose annual costs on the order of XXXXXXXXXXXXXX dollars. At the same time, given the Administration's proposal to auction all emission allowances, a cap-and-trade program could generate annual receipts on the order of $100 to $200 billion annually. Finally, by encouraging investments in clean energy sources, climate policy could increase the fiscal cost of existing energy tax provisions, such as renewable electricity and biofuel tax credits. XXXXXXXXXXXXXXXXXXXXX.

The revenue estimate above -- $100 to $200 billion -- is explicitly based upon the auction of all allowances, so it is not a fair representation of the cost of the Waxman-Markey cap-and-trade bill that passed the House. These revenues are costs to energy producers -- costs that would be passed along to consumers -- but the Waxman-Markey bill provides for giving away most of the carbon allowances, so it would generate less revenue, and thus would impose lower direct costs on emitting firms. Waxman-Markey is far more than just a cap-and-trade bill, so other provisions of the bill would cost consumers in other ways, but these are not addressed in the Treasury memo. So, contrary to some claims, the memo does not reveal a secret Obama Administration cost estimate for existing cap-and-trade legislation. [More from the Washington Post here.]

The Treasury memo may be significant in another way, however, insofar as it represents the Administration's view of its obligations under the Freedom of Information Act. Portions of the memo above providing greater detail about the Treasury Department's assessment of the potential economic impact of a cap-and-trade program were withheld. And for what reason? Notations on the memo indicate these estimates were redacted under FOIA exemption (b)(5). This exemption allows the federal government to withhold "inter-agency or intra-agency memorandums of letters which would not be available by law to a party ...in litigation with the agency." As explained by the Justice Department, this exemption applies to "those documents, and only those documents that are normally privileged in the civil discovery context." Yet the Treasury Department did not maintain that the memorandum in its entirety was exempt, just a few clauses and sentences providing more complete cost estimates. I will admit I am not a FOIA expert, but this does not appear to be a faithful application of the relevant exemption, let alone the Administration's stated FOIA policy. It also cannot help but feed suspicions that the Administration has not been candid about the potential costs of proposed climate policies. As Roger Pielke, Jr. comments: "Memo to politicians: if you have nothing to hide, then don't hide anything."