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Getting Paid For Cap and Trade
This is totally going to get lost since today is Obama's day but Robert
B. Reich has a great column in the Wall Street Journal about how to
make a cap and trade carbon system both fair to consumers and good for
the economy.
Reich's idea is to distribute profits from the cap and trade taxes directly to citizens. It would kind of be like how Alaska lets its citizens share in oil revenues but it would have a good rather than bad effect on the environment and the economy. In Reich's hypothetical, every adult American gets a $1,000 check a year.
Big industrial carbon users want to scare consumers out of supporting carbon taxes by saying that prices for manufactured products will go up. But if the government pays the proceeds to every citizen, it won't matter if prices go up we'll be able to use the proceeds from the tax to cover any inflation caused by it. Indeed, it's a transfer of corporate wealth to private citizens and that's a good thing.
It will also mean that once the carbon taxes are imposed, they'll be very hard to repeal. Not even the best corporate lobbyists will be able to get congress to sign a law that puts an end to refund checks.
I like Reich's idea quite a lot. I hope Barack Obama does too.
Comments (5)
Recommended. It's a very, very, good idea. I hope people are listening.
June 4, 2008 12:03 PM | Reply | Permalink
Very interesting.
For the record though, I don't have a problem with the funds being directed into an alternative energy fund, but only if it could be directed towards research and development of energy possibilities that actually would be a good thing. And the danger of ethanol, clean coal, and nuclear lobbyists would be certainly a danger in that.
June 4, 2008 12:06 PM | Reply | Permalink
I am apparently incapable of forming coherent sentences today. It was a late night. ;) Forgive me.
June 4, 2008 12:14 PM | Reply | Permalink
I am with Hilary on this one. If we start pushing money at people they won't understand what it is about. I hope Obama will push forward on this policy fast. Anything is better than what is here now.
June 4, 2008 1:36 PM | Reply | Permalink
The challenge to this proposal will come from the desire that Hilary is voicing -- the desire to spend the money in a way "appropriate" to the source. I.e., research on clean coal, or compensating those who are most likely to be hurt by a carbon tax (truckers, or Northerners, or lower-income folks).
But we ought to resist the temptation to be appropriate in this case. Here's why. Two reasons:
#1. Political pragmatism. Destor & Reich have put this well. It's hard to kill a program that helps everyone.
#2. If you're feeling bad about the pragmatism, here's a high-minded reason. The whole point of a carbon tax is to create an incentive for people to do things differently. If you distribute the benefits in ways that redress the costs, you are potentially undermining the whole point of the tax. E.g., if the carbon tax increases the marginal cost of living in the North, some people may find that it makes more economic sense, in their case, to move South. That might be part of the change we need to make to reduce our carbon output. We don't actually want to compensate Northerners in ways that negate the incentive.
As for research: if the cost of oil goes up, you'll be creating plenty of incentives for research.
June 4, 2008 12:52 PM | Reply | Permalink
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