What is John Dingell up to?

Last week (September 28), House Energy and Commerce Committee Chairman John Dingell (D-Mich.) caused quite a stir by proposing global warming legislation that would directly and openly increase the cost of gasoline and home ownership.

As Dingell explained in a statement on his website, the proposed legislation would:

  • Establish a $50-per-ton tax on the carbon content of fuels, including coal, petroleum, and natural gas;
  • Increase federal motor fuel taxes on gas, jet fuel, and kerosene by $.50/gallon; and
  • Phase out mortgage interest tax deductions on homes larger than 3,000 square feet.

Some climate skeptics speculated that Dingell, who butted heads with Speaker Nancy Pelosi, Rep. Henry Waxman, and other global warming crusaders earlier this year, was actually trying to pour cold water on climate policies of the Al Gore variety. Gore is a leading proponent of cap-and-trade regulation, the centerpiece of the Kyoto climate treaty he negotiated.

For politicians eager to avoid blame for the burdens they impose on the public, cap-and-trade offers significant advantages. Most Americans have no familiarity with cap-and-trade, so it does not arouse their fear or anger. More importantly, because cap-and-trade programs are regulatory, their costs are indirect or hidden, unlike gasoline taxes, which come clearly labeled at the pump.

So some skeptics hoped that Dingell was issuing a wake-up call to a public already upset about high gas prices and worried about the collapsing sub-prime mortgage market.

Unfortunately, this is wishful thinking. Dingell offered his proposed legislation as one element of a package that also includes “an economy-wide cap-and-trade program.” Economists generally view carbon taxes and cap-and-trade as competing alternatives, not as complementary. Indeed, from a climate skeptic’s viewpoint, a carbon tax has redeeming social value only if it replaces all climate-related regulation—not just cap-and-trade but also renewable portfolio standards, biofuel mandates, and fuel economy standards.

Instead, Dingell offers carbon taxes as an add-on. The carbon tax/mortgage elimination bill is just one step towards reducing “greenhouse gas emissions 60 to 80 percent by 2050.”

Even as a civics lesson, the bill is of limited value. If Dingell’s real aim were to expose the costs of Kyotoism, he should have called for a $5.00-per gallon increase in gasoline taxes, a $500 per-ton carbon tax, and elimination of all home mortgage deductions. Such burdens are much closer to what it would take reduce emissions by 60 to 80 percent.

That Dingell (sadly) has no interest in being a spoiler is evident from the white paper he issued yesterday, the first in a series on cap-and-trade legislation. In both the white paper and an accompanying memorandum, Dingell reiterates that his goal is to reduce emissions 60 to 80 percent by 2050. He says that although carbon taxes and technology programs are “valuable tools, they do not fall under the province of the Committee and will therefore not be the focus of these papers.” In the policy mix Dingell envisions, carbon taxes are at most a side show, not the main event. The White Paper could not be clearer on this point:

Based on the hearings earlier this year, the Committee and Subcommittee Chairmen [i.e. Dingell and Rick Boucher of Virginia] have reached the following conclusions: The United States should reduce its greenhouse gas emissions by between 60 and 80 percent by 2050 to contribute to global efforts to address climate change. To do so, the United States should adopt an economy-wide, mandatory greenhouse gas reduction program. The central component of this program should be a cap-and-trade program … The Subcommittee and full Committee will draft legislation to establish such a program.