Friday :: May 16, 2014

Climate Change: Getting Something Done


by Deacon Blues
Image of the collapsing Thwaites Glacier courtesy of chennaionline.com

With the increased media attention of late to the accelerating and quite visible impacts from climate change, one might get a (false) hope that even some Republicans can be shamed into action.

Don't hold your breath. Because of GOP gerrymandering and fears of Tea Party reprisals, any attempt to generate traction for a renewal of a cap-and-trade solution like 2009's Waxman-Markey attempt would meet a quick certain death. Many members of the House GOP caucus and a good number of GOP senators either don't believe in climate change, or that humans have contributed to it. Even if many of these GOP officeholders quietly did believe something needed to be done, they certainly would not anger the Koch brothers with cap-and-trade, especially if they felt a cap-and-trade solution harmed the economy to boot. Even hammering them with the national security reasons for action may have limited effect.

So with precious time slipping away, and with GOP movement on the issue improbable for the next several years as long as cap-and-trade is the only offer from Democrats, let me suggest that Democrats and the Obama Administration call the GOP's bluff in advance of the midterms and seize the initiative, and force the Republicans in both houses onto the defensive and into another civil war. How?

Drop cap-and-trade and go with a straight-up carbon tax that includes a tax swap.

Former GOP Representative Bob Inglis, who is part of the market-oriented Energy and Enterprise Initiative, has been touting a GOP alternative solution on climate change for several years now. Democrats have virtually ignored it because it isn't cap-and-trade, and because it calls for a more free-market approach than they'd like. But with no Democratic margins in Congress likely until after the 2016 election, why not pivot and push the GOP into defending why they wouldn't go with their idea now?

Simply put, the GOP alternative is based upon "three pillars", to wit:
•Eliminate all subsidies for all fuels, from fossil fuels to renewables
•Attach all costs to all fuels—in order to get a true cost comparison
•Ensure revenue neutrality, to prevent the growth of government
It is the third pillar that rankles Democrats, because the proposal calls for a tax swap, whereby the revenue from the carbon tax would not go for new programs, energy alternatives, or deficit reduction, but rather for reducing existing income or capital taxes.

Yet there are enough positives in this approach to test it. Sure, progressives would like for carbon tax revenue to pay for alternative energy sources, but the proposal's Big Energy subsidy-elimination and its full cost accounting for each energy source meets progressive goals as well. The carbon tax envisioned in this conservative alternative has the support of conservative economists, and would not only lead to significant emission reductions on the order of what was sought with Kyoto, but would also generate large amounts of revenue over the next several decades. Brookings itself believed in 2012 that a carbon tax tied to a capital tax reduction would lead to significant GDP and employment growth over the coming decades. Another alternative would be to use up to 30% of the revenue to assist those regions most negatively impacted by the taxing of fossil fuels and leave the rest for tax swapping. This would seriously undercut typical GOP complaints about the negative effects of a carbon tax upon oil and mining states, and force them to argue against the employment and GDP benefits from the tax swap. The GOP would have to explain why we should forego the increased GDP and employment from a market-based solution just to protect the Koch brothers.

And to those GOP complaints that an American carbon tax is a self-inflicted wound if China and India aren't included in any climate change initiative, Democrats should learn from their mistakes from the 2009 debate and agree to amendments that tie the program to international adoption, thereby undercutting another industry/GOP argument.

In the context of the larger tax reform debate, confining any capital tax reduction outcome to a tax swap from carbon taxes makes the GOP choose between those who would benefit from a capital tax reduction (employers, Wall Street, and investors) and Big Energy polluters. Democrats can then have the tax reform debate free from the "revenue neutral" nonsense demanded by the right wing, and pursue the revenue from closing the remaining non-carbon tax breaks, shelters, and subsidies.

In summary, perhaps it is time for Democrats and environmentalists to "go large" and put the GOP on the defensive before the midterms on climate change, by coming out in favor of the market-based approach conservatives assume will never actually see the light of day.

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