It's time for the U.S. to adopt a cap and trade system on carbon emissions.
Some of our green colleagues argue that we'd be better off with a carbon tax. In a vacuum, we'd agree--a carbon tax is economically more efficient and avoids some of the pitfalls of administering a cap and trade system.
But we don't live in a vacuum, especially politically. For Democrats to take the lead in enacting a massive new tax would be political folly and would lose significant moderate Republican support for a cap and trade system. Besides, a carbon tax would also be difficult to administer and is susceptible to many of the same problems--or different ones--as cap and trade. One particular pitfall is the notable tendency of Congress to enact exceptions to taxes. You can bet we'd never actually get a "flat" carbon tax. (Cap and trade is, of course, a hidden tax.)
The time to act is NOW (i.e., this legislative session of Congress). A broad consensus has finally formed in the U.S. that we need to take aggressive steps to combat global climate change. Many business entities, anticipating regulation and fearing a patchwork of state laws, now favor a national cap and trade system. Few Republicans are "climate deniers" anymore: in what was to have been a "debate" between John Kerry and Newt Gingrich on global warming recently, Gingrich surprised Kerry and a lot of other folks by freely conceding warming and agreeing we need to do something about it. Most moderate Republicans--feeling heat from their constituents--also support legislation.
It would be a grave mistake for congressional Democrats to stall legislation in the hopes of making it an issue in the '08 presidential contest. It is likely that the GOP nominee--whoever it is--will be far greener than W. Bush. We'd expect to see Guiliani, McCain, Romney, Gingrich or Thomspson push some kind of green legislative package if Congress hasn't already acted. The issue among Republicans today is not whether warming is happening, but rather what to do about it, and they're generally open to moderate looking solutions, especially ones supported by business.
The issue is also sufficiently complicated that most Americans won't be able to parse subtle differences between say a weak Guiliani cap and trade system with loopholes for coal and oil, versus a strong cap and trade system proposed by Clinton or Obama. If anything, Democrats could get outflanked--their biggest ally now is that Bush stands for nothing. The next GOP candidate won't make that mistake.
Indeed, if congressional Democrats haven't passed a bill by '08, their presidential nominee may find herself or himself under attack from the GOP nominee for their failure of action. If Democrats pass legislation and Bush vetoes it (which we doubt will happen), or if Senate Republicans filibuster a vote, then that's a different story. But voters now expect Congress to act, so it is imperative for Democrats to agree on a bill--a cap and trade bill--and bring it to a vote. Doing so will help convince voters that putting Dems back in power was a good idea, and should help increase Democratic majorities in the next election.
5 comments:
Why don't you think Bush will veto climate change legislation? He just said last week, "Anything we do cannot hurt the economy." That to me says he's inclined to veto. I would argue congressional Democrats should push for the strongest bill possible. If they go for half a loaf now, then try for stronger legislation down the road, Republicans will say, "Why do we need to do more? We just passed a bill in 2007. What more do these tree huggers want from us?"
Coming to the Step It Up rally on Saturday?
http://www.stepitup2007.org
X, I posted something on Miles's blog https://www2.blogger.com/comment.g?blogID=29774939&postID=6239401491130996795
I know you you have mentioned that you live in Fairfax county. Do you know of anything in your county or with your utility provider with regards to load management?
Thanks
Dan
tcsi98@yahoo.com
Dan--
I'm actually in Arlington, but I don't know much about load management in any event. However, some of my regular readers may, so I hope one will get in touch with you.
Miles--
I'm going to try to make the rally, between the kids soccer games.
Bush's economic adviser has repeatedly hinted that cap and trade is something they'd consider. Democrats should push hard for a good bill, while also seeking bipartisan support (I think at least 5-8 GOP senators and 25-35 reps would support the type of cap and trade bill that the Dems will eventually push after satisfying their own constituencies (such as auto unions). Bush will be under considerable pressure not to veto, from Repubs worried about the upcoming elections. And with business support for the bill, he'll simply declare that it won't hurt the economy.
Of course, if he weren't the worst President in the last 80 years (at least), he'd actively be promoting his own bill in consultation with his party, and horsetrading with Dems on it.
You are correct that a carbon tax is economically more efficient and avoids some (I'd say most) of the pitfalls of administering a cap-and-trade system.
Politically, a carbon tax does have that inconvenient "T" word. But, cap-and-trade really isn't any better politically. Don't forget, the idea of both a carbon tax and cap-and-trade is to put a price on carbon to reduce carbon emissions. Guess what happens when you put a price on carbon? Somebody has to pay. Where does the money go? With a revenue neutral carbon tax, such as that proposed by the Carbon Tax Center, the revenues flow back to Americans through a reduction in payroll taxes or rebates. With a cap-and-trade system, the revenues go to polluters if the allowances/permits are allocated rather than auctioned and to all the lawyers, consultants, brokers and traders looking for a profit. My guess is that when cap-and-trade is closely examined, people are going to prefer the revenue neutral tax.
A carbon tax is far easier to administer than a cap-and-trade system. The carbon tax is administered by the existing tax system and should be relatively uncomplicated. A cap-and-trade system, by contrast, is far more difficult to implement and administer. Unfortunately, that complication means the benefits of putting a price on carbon will be delayed for many years. We don't have time to waste. See the Carbon Tax Center's paper comparing carbon taxes to cap-and-trade.
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