Who’s ready for a carbon tax?
The words that dared not speak before Nov. 5 can now be spoken.
Judging by the flood of news I’m seeing, get ready to hear a lot about a carbon tax as a two-in-one solution for both the fiscal cliff and climate change.
First, what’s a carbon tax?
As described by Wall St. Journal journalist Keith Johnson, “The idea of a carbon tax is simple: Put a price tag on the harmful emissions from fossil fuels, such as oil and coal, and use the revenues to fund clean-energy development, pay down the deficit or slash taxes. Proponents often describe it as a win-win-win policy, because carbon taxes would penalize things that are bad (pollution) and lower taxes on things that are good (labor and capital).”
For both economic and political reasons, a carbon tax has been a complete non-starter for Congress in recent years.
But maybe now, post-election, post-Sandy, and gratefully post-Athena, there might be more room to consider this idea?
No less than vehement anti-taxer Grover Norquist floated a tiny, carbon tax-filled balloon yesterday to see where the wind was blowing:
In a step that may help crack open the partisan impasse on climate change, Grover Norquist, the influential lobbyist who has bound hundreds of Republicans to a pledge never to raise taxes, told National Journal that a proposed “carbon tax swap”—taxing carbon pollution in exchange for cutting the income tax—would not violate his pledge.
Alas, Mr. Norquist abruptly and definitively yanked back his position back today.
But one day later, after being criticized by the American Energy Alliance, the advocacy arm of a Koch-supported energy think tank devoted to promoting fossil fuel development, Norquist has completely reversed his statement, saying there virtually “no conceivable way” he could support a tax on carbon.
Well that was fun while it lasted. Cross him off the carbon-tax seating chart.
But seriously, the real reason we’re talking about a carbon tax today is that the conservative American Enterprise Institute is hosting a meeting about it.
With the fiscal cliff looming and parts of the U.S. still digging out from the aftermath of Hurricane Sandy, calls for the U.S. to adopt a carbon tax are gathering steam–even though there’s little sign of interest from Congress or the White House.
Today the conservative American Enterprise Institute is holding an all-day, on-the-record discussion of the idea. And the Brookings Institution is unveiling a slate of new measures meant to make the government more effective, including a carbon tax that could raise $1.5 trillion over ten years. All that follows a cascade of carbon-tax advocacy in recent days from the chattering classes and a slate of academic work over the summer (not to mention our own two cents).
“The time seems ripe for this discussion. The president is committed both to raising tax revenue and to dealing with climate change. A carbon tax kills two birds with one stone,” said Gregory Mankiw, a Harvard economist who advised the Romney campaign and has long pushed for more efficient taxation, including a carbon tax.
As Mr. Johnson notes in the links above, other voices are weighing in as well.
From the science community…
As looming tax increases and budget cuts threaten to plunge the US economy back into recession, Congress should take a hard look at introducing a carbon tax as an important part of the solution.
And familiar, long-time political activists…
Former Vice President Al Gore called for a carbon tax to be part of the “fiscal cliff” negotiations in the lame-duck session of Congress.
“It will be difficult for sure but we can back away from the fiscal cliff and the climate cliff at the same time,” Gore said in an interview with The Guardian. “One way is with a carbon tax.”
Meantime, Slate.com columnist Matthew Yglesias dismisses the idea of a carbon tax getting passed as a “pipe dream.”
I’m not one to go all gaga over grand bargains, but this [carbon tax] is the grand bargain that actually makes sense—a proposal that would divide both parties’ core coalitions.
Is this even remotely likely? No. It’s a pipe dream.
While I appreciate Mr. Yglesias’ perspective, I hope he’s wrong.
Just wait until the White House chimes in. Things are starting to get very interesting.