Planet Gore

Canard, Indeed

The House Republicans laboring away on the Dems’ super-special fancy, jurisdiction-free “peacocking” committee on global warming have written to the Judiciary Committee, asking for an assessment of whether a carbon dioxide cap-and-trade scheme should follow constitutional requirements applicable to revenue measures.

 

Ranking Member James Sensenbrenner’s (R., WI) claim that “I call this idea ‘cap-and-tax’ because it will take money out of the private sector and transfer it to the government,” echoes many things said by the Congressional Budget Office. For example, there is this fairly plain assertion, in “An Evaluation of Cap and Trade Programs for Reducing US GHG Emissions”:

“the economic impacts of cap-and-trade programs would be similar to those of a carbon tax: both would raise the cost of using carbon-based fossil fuels, lead to higher energy prices and impose costs on users and some suppliers of energy”.

That is, it quacks, swims, and . . . everything else . . . just like a duck. A very economically harmful duck. Canard a la recession.

 

CBO has serially noted that a cap-and-trade scheme that sells the ration coupons–you know, that thing that Europe has not had the oignions to do and Congress is equally unlikely to accomplish in any meaningful way despite their bluster–is a revenue measure. Selling any of them, meaningful or not, however, does indeed turn the thing into a de jure tax, in addition to being a de facto one however you slice it.

 

For example, consider now-OMB Director Peter Orszag’s November 2007 testimony before the House, “Approaches to Reducing Carbon Dioxide Emissions,” which is riddled with such admissions.

 

Of course, the last thing the rationers want to do is offer the less-harmful direct tax on emissions, given that the entire point of cap-and-trade is to avoid the transparency of such a measure. Cap-and-trade is far from “the most efficient way to reduce emissions” as is commonly misstated; that is inarguably done through a tax. Cap-and-trade allows our congressional profiles in courage to ensure that ration coupons are allocated inefficiently–because they plan to allocate them, to handpicked emitters in handpicked industries, which completely defeats the express purpose of allowing the market to find the cheapest places to reduce emissions!

 

So, if it weren’t for Barbara Boxer and Nancy Pelosi both promiscuously spending the revenues raised from selling the ration coupons–rhetorically, in advance–we should think that the rationers would be happy for this one additional reason to just give the things away to certain corporate constituencies which by coincidence happen to be lobbying to, er, save the planet, yeah, that’s it. Orszag hints at this, in his footnote 5:

“Some analysts also suggest that a cap-and-trade program could be more politically acceptable than a tax because distributing the allowances for free could provide a method of directly compensating producers in the most affected industries. See Robert N. Stavins, A U.S. Cap-and-Trade System to Address Global Climate Change (Washington, D.C.: Brookings Institution, October 2007).” (He went on to discuss ways of the government using the revenue raised by both the scheme or a tax, rather answering the question for the Judiciary Committee).

The impact on you the consumer is the same, but the revenue goes to industry, not the state. And that which Orszag describes are called “rents,” precisely the reason that those companies insist that man-made global warming is an enormous threat . . . so long as they get free ration coupons to sell or build into the ratepayers’ tab, a la Europe.

 

Think rent-seeking isn’t the motive behind industry support for free cap-and-trade coupons? Duke Energy has shown us, humorously, that when the prospect of either selling the ration coupons or taxing emissions is floated instead we learn suddenly that, you know, carbon legislation really is an issue on which we don’t want to act hasty or do anything rash. See how easy it is to reduce the “threat” of global warming?

 

Making duck sausage can be messy but, thanks in part to the House Republicans for formally raising this, you really don’t want to look away. It could be fun to watch, and it isn’t going into law anytime soon, so the rest of industry can stop running around looking for someone to surrender to.

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