Debunking the GOP Claim that Cap and Trade is an "Energy Tax"

Yesterday, I noted that a debate on cap and trade hosted by Salon produced the same predictable arguments from the "right" perspective -- that cap and trade is "a job-killing energy tax" and so forth. I had a little fun with the regurgitated, keyword-laden arguments laid out by Steve Everley of American Solutions, and called them misleading. This evidently drew his ire (or it could have been because I misspelled his name -- sorry about that). Either way, he responded to my post with a lengthy rebuttal in the comments, and yes, I'm taking the bait. Here's why Everley is wrong about nearly everything. Here's Everley's argument, piece by piece, followed by my response to each section.

On Whether Cap and Trade is an "Energy Tax"

While I certainly appreciate the somewhat humorous intent here, I'd like to address the assertion that referring to cap and trade as a tax is "misleading." A government policy that raises revenue by deliberately raising the cost of a particular good (i.e. energy) is a tax. This is not a "keyword" as Merchant suggests. It is a fact.
Is it? Here's the legal definition of "tax" from
  • n. a governmental assessment (charge) upon property value, transactions (transfers and sales), licenses granting a right and/or income. These include federal and state income taxes, county and city taxes on real property, state and/or local sales tax based on a percentage of each retail transaction, duties on imports from foreign countries, business licenses, federal tax (and some states' taxes) on the estates of persons who have died, taxes on large gifts and a state "use" tax in lieu of sales tax imposed on certain goods bought outside of the state.
See cap and trade in there? The point is, what exactly constitutes a tax and what doesn't is far from set in stone. There are persistent legal debates over precisely this topic, going on even today. It's not clear at all that cap and trade, which would make polluting industries purchase permits to pollute beyond a certain amount, qualifies even as an indirect tax. It is far from "a fact" that cap and trade is a tax.

After all, the government isn't "deliberately raising the cost of a good" -- it is merely making the industries that produce that good accountable for the cost of the negative externalities (air pollution, exacerbation of climate change, et al) their good creates. Negative externalities that the taxpayers happen to currently be paying for themselves in the form of medical costs and so forth. Can we call something that shields citizens from absorbing costs unpaid by corporations a tax?

But we don't even have to argue semantics -- it's downright misleading for Everley to term cap and trade an 'energy tax' because cap and trade would not institute an added cost for all energy production across the board, as he (and the whole fleet of Republicans out there employing this language at the moment) would like you to believe.

Any energy producer that pollutes less than the established baseline (the cap) will not have to purchase additional pollution permits at all. Energy is not being "taxed" (to use their terminology) -- carbon pollution is. There are many energy producers -- those using hydro, wind, solar, natural gas, nuclear -- that would bear no punitive financial impact from cap and trade. That's the whole idea: You can't update your business in such a way that you can avoid, say, paying income taxes, but utilities and companies (for example) can clean up their operations to avoid having to purchase carbon permits under the cap and trade rules.

So if Everley and his ilk were dead set on keeping that tax label -- and why wouldn't they be? There's nothing more unpopular in the US than taxes -- they would have to term it a "pollution tax" or at least a "dirty energy tax" if they had any interest in hewing to anything resembling accuracy. But that would ruin all the fun, because Americans do have a knack for tolerating "sin taxes" on goods like cigarettes and alcohol. Truthfully reflecting that cap and trade only impacts energy produced from polluting sources would hurt their case, and may actually help motivate Americans currently purchasing "dirty energy" to seek and call for alternatives.

But How Come Nobody's Talking About Climate Change?

My focus on the economic impacts is based upon the Left's own insistence of making that topic the focus of the debate about climate legislation. John Kerry said his bill "is not a climate bill, it's a jobs bill." President Obama did not mention "global warming" once in his Oval Office address. Liberals insist this is all about "clean energy jobs." Against this backdrop, I engaged the Left on the turf they had chosen.
This, as well, is bogus. "The Left", as Everley calls it, was forced onto that turf, in part by right wing think tanks and groups like the one he works for. And he knows it.

He's fully aware of the myriad PR campaigns launched by the fossil fuel industry and the organizations and think tanks it funds that routinely seek to sew doubt about climate change in the media. As a result of these efforts, the average viewer of, for example Fox News, probably doesn't believe in climate change. He knows that those campaigns worked for a while, aided by the confusion over so-called Climate Gate, and that climate change subsequently became a difficult topic for politicians to address. But he's also probably a little afraid that people are wising up and polls are again showing that the majority of Americans would be willing to pay a little more for energy if it meant curbing carbon emissions.

Misleading Facts

Absent an infinite capacity to address every problem simultaneously, we must establish priorities by assessing trade offs and opportunity costs. This is why the global warming issue ranks dead last in importance to the American public, while jobs and the economy represent priority number one. Clearly Americans aren't buying the notion that we can tax our way to prosperity and would prefer to address a 9.7% unemployment rate before we try to tinker with temperatures 90 years from now.

Apparently the concern here is that I lifted the veil on this policy and defined it for what it actually is: a tax. If facts are "misleading," then I suppose I am guilty as charged

It's a funny line for Everley to end on, as he evidently has every interest in misleading people about the facts. Take, for example, his dismissive statement on climate change -- brushing it off as a matter relating only to "temperatures 90 years from now", and something that is to be "tinkered" with. That sentence alone demonstrates either a) Everley's supreme ignorance about the vast threat global warming poses, which 97% of scientists agree is caused by man or b) Everley's willful effort to cast the issue as a policy non-issue, framing concerns over climate change as some silly thing that we can get around to when we have some spare time.

But it's just as well if it's the latter, because it reveals the underlying nature of all of Everley's arguments about cap and trade -- it's all style over substance. Everley has no interest at all in finding a practical way to lower carbon emissions in the United States, or any thoughts on how to start cutting back the nation's dependence on fossil fuels. He just wants to win the political argument for his side. That's why he repeatedly employs the battle-tested language like 'job-killing' and 'energy tax' instead of taking a closer look at the actual policy. His arguments do as close to nothing as possible towards furthering the conversation over how to shift towards clean energy, and are instead focuses on things that will influence the readers' perception -- the repetition of the word 'tax' for instance.

It's a totally dishonest manner of debate on a fundamental level -- and yes, Steve, it's misleading.

Tags: Clean Energy | Congress | Global Warming Solutions | United States