A Conservative-Progressive Carbon Tax Plot?

Representatives from the conservative American Enterprise Institute (AEI) and a number of environmentalist activist groups met behind closed doors yesterday apparently for the fifth time to plot the imposition of a carbon tax as a way to address man-made global warming, claims the Competitive Enterprise Institute's (CEI) director of energy and global warming policy Myron Ebell. In a post to a conservative listserv Ebell asserted:

From 1:30-5 PM on Wednesday, the American Enterprise Institute hosted a hitherto secret meeting to discuss how to enact a carbon tax in a lame duck session this fall or perhaps in the 113th Congress….

We defeated capntrade in 2009-10 by convincing the American public that it was really capntax. Twenty-odd House Democrats who voted for Waxman-Markey lost their seats. The Democratic Senate refused to take it up. It’s political poison, so naturally the more brain-dead parts of the Republican and big business establishment have decided how clever it would be to resurrect the carbon tax and push it as an alternative to regulation. I don’t notice anything in the AEI agenda about repealing the greenhouse gas emissions standards as part of the deal. Why don’t we do that first? Then we can talk about alternative policies—if any.

Also, note the idea that a deal could be done so that a carbon tax would be offset by reductions in other taxes and would therefore be revenue neutral. There are multiple problems with the idea of revenue neutrality. First, it never works. A new tax will quickly be raised. Second, the poorer people are, the higher the percentage of their income that goes for energy. Poor people already don’t pay much or any income tax. So a consumption tax offset by, for example, cuts in the corporate income tax rate, would be highly regressive. Third, the only way a carbon tax would reduce fossil fuel consumption and thus greenhouse gas emissions is if it’s set quite high. And the only way a carbon tax will raise much revenue is if it’s set quite high. Thus they must be advocating European levels of taxation. Say $5 dollars a gallon of gasoline. Roughly $500 per ton of coal (which is currently selling for $65 a ton at most).

We must kill this incredibly harmful idea as quickly as possible.

The agenda supplied by Ebell indicated that the first session of the meeting was devoted to an "Update on posture of key constituencies." The first panel apparently looked at Congressional Republicans, Romney and Business Leaders with the aim of "Detoxifying climate policy for conservatives." Listed discussants were AEI's Kevin Hassett; Dave Jenkins, Vice President of Government and Political Affairs at ConservAmerica; and Eli Lehrer, President of the R Street Institute.

A second panel reviewed the stands of various Progressive/Social Justice groups and included discussants, Danielle Deane, Director of Energy and Environment Program, Joint Center for Political and Economic Studies; Tyson SlocumDirector of Energy Program, Public Citizen; and Chad Stone, Chief Economist, Center on Budget and Policy Priorities.

The third panel focused on the views of Economists and Deficit Hawks. Discussants were listed as Autumn Hannah, Senior Program Director, Taxpayers for Common Sense; Aparna Mathur, AEI resident scholar; Diane Lim Rogers, chief economist, Concord Coalition; Rob Shapiro, ex- U.S. Under Secretary of Commerce for Economic Affairs under President Bill Clinton and currently chairman of the U.S. Climate Task Force.

The second session listed on the agenda was devoted to "Framing and Selling a Carbon Pollution Tax." Kevin Curtis, Program Director of Al Gore’s Climate Reality Project and Board member of the Climate Action Network offered initial thoughts on a post-election public opinion and education campaign. Next, prominent DC lobbyist and former Democratic member of Congress Tom Downey evidently talked about building bipartisan support for a carbon tax proposal and navigating the Ways and Means process in Congress. The final panel consisted of Ian Parry, Technical Assistance Advisor in the IMF’s Fiscal Affairs Department; Rob Williams, Senior Fellow and Director, Academic Programs at Resources for the Future; and Adele Morris, Policy Director for the Climate and Energy Economics Project at the Brookings Institution. They talked about honing the case for a carbon pollution tax.

I reached out to AEI for a reaction, and AEI Director of Public Affairs Veronique Rodman offered this official response:

In recent years, AEI has been accused of being both in the pocket of energy companies and organizing to advocate a carbon tax. Neither is true. AEI has been, and will continue to be, an intellectually curious place, where products aren’t influenced by interested parties, and ideas from all are welcome in seeking solutions for difficult public policy problems.

Rodman also explained that AEI has absolutely no institutional position with regard to a carbon tax. She added that AEI scholars have the intellectual freedom to explore whatever public policy ideas that they find of interest.

On its face, there is nothing wrong with people of good will who disagree about the scope and urgency of a public policy problem getting together to talk about their differences and how they might be bridged. Among other things, Ebell is expressing a generalized fear held by some conservatives that progressives will dupe clueless well-meaning conservatives into meeting them halfway and then turn around and demand more concessions.

Ebell is certainly right that the new and highly inefficient greenhouse gas emissions restrictions being imposed by the EPA should be repealed. But assuming that man-made global warming is or will become a significant problem, how might it be addressed? I review four options in my 2009 article, What's the Best Way to Handle Future Climate Change? They are: cap-and-trade; a carbon tax; techno-solutions; and economic growth. At the end of that article, I conclude:

…it is surely not unreasonable to argue that if one wants to help future generations deal with climate change, the best policies would be those that encourage rapid economic growth. This would endow future generations with the wealth and superior technologies that could be used to handle whatever comes at them including climate change. In other words, one could argue that, in order to truly address the problem of climate change, responsible policy makers … should select courses of action that move humanity from a slow growth trajectory to a high growth trajectory, especially for the poorest developing countries.

Finally, perhaps one additional item might be included on a future AEI agenda: Is Government Action Worse than Climate Change?

For more of CEI's take on the contretemps go here.