The Rightwing Case for a Carbon Tax

Today, a bipartisan coalition of lawmakers published an op-ed in the Washington Post advocating for a price on carbon to reduce the deficit. Some of the bylines should be familiar to anyone with passing interest in climate policy: Representatives Henry Waxman and Ed Markey, the two architects of the bill that got us as close as we've ever been to pricing carbon.

Joined by two Republican ex-Reps, here's their pitch:

The debate over how to reduce our nation’s debt has been presented as a dilemma between cutting spending on programs Americans cherish or raising taxes on American job creators. But there is a better way: We could slash our debt by making power plants and oil refineries pay for the carbon emissions that endanger our health and environment. This policy would strengthen our economy, lessen our dependence on foreign oil, keep our skies clean — and raise a lot of revenue.

The best approach would be to use a market mechanism such as the sale of carbon allowances or a fee on carbon pollution to lower emissions and increase revenue. Using these policies, the United States could raise $200 billion or more over 10 years and trillions of dollars by 2050 while cutting carbon emissions by 17 percent by 2020 and 80 percent by 2050

It should strike some as deeply familiar. But the ebbing support from deeply red groups might be less so. Joe Romm rounds up some free market groups who are proposing a price on carbon over at Climate Progress. Take the American Enterprise Institute, a rightwing group that says a carbon tax should replace energy subsidies:

Instead, a tax on greenhouse gas emissions (“carbon tax”) would be imposed. The tax ... would be implemented as a tax rather than as a cap and trade program. The tax would take effect in 2013 and be phased in at a uniform pace over five years, so that the 2017 tax equaled the level prescribed for that year in the CBO option, slightly more than $26 per metric ton of CO2equivalent. As prescribed in the CBO option, the tax would thereafter increase at a 5.6 percent annual rate through 2050.
Indeed, that's a bigger tax than many left-leaning groups have dared to propose—and it would be an extremely good idea.

Here's Romm detailing some other plans:

The Economic Policy Institute (EPI) budget blueprint takes a similar approach to CAP, using carbon pricing to meet the Waxman-Markey targets with “half of the revenue from proposed carbon pricing earmarked for energy rebates and tax credits for low-and moderate-income populations” to “fully offset the higher cost of energy for the lowest 60% of earners.” The Roosevelt Institute Campus Network strategy uses the same escalating carbon tax as AEI in their plan.
Just today, David Roberts tweeted a proposal from the conservative economist Arthur Laffer, who has recently proposed taxing pollution instead of income. Laffer
sees a fundamentally backward system in the United States that imposes taxes on things people want more of: income and jobs. At the same time, the U.S. allows something we want less of — carbon dioxide pollution — to be emitted without penalty.

Laffer says that situation should be reversed. Instead of tax increases that are “veiled as ‘cap and trade’ schemes,” Congress should offset a simple carbon tax with a reduction in income or payroll taxes."

I can't help but note the irony in the fact that all these conservatives sneer at cap and trade, the market-based mechanism that would allow companies to trade permits for their pollution (and that was designed by, well, conservatives) in favor of what is, any way you cut it, a pretty radical tax. That said, Laffer's logic is sound, and if there's any sense that a coalition can grow around a full-bore carbon tax, that would definitely be the preferable way to go. We're a long ways from that point, however—these are theoretical musings from some wonky corners of the right-o-sphere, and the actual conservative leadership in Congress would still rather wipe their asses with the Constitution than publicly advocate a carbon tax. But these ideas and hypotheticals are encouraging nonetheless ...

Tags: Carbon Dioxide | Carbon Emissions | Congress