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Has Obama Backed Off Climate Goals?

Is the Obama Administration setting aside its ambitious greenhouse gas emission reduction goals due to political realities? Yes and no, the NYT explains.

Has the administration scaled back its global-warming goals, at least for this year, or is it engaged in sophisticated misdirection?

Maybe some of both. While addressing climate change appears to be slipping down the president's list of priorities for the year, he is holding in reserve a powerful club to regulate carbon dioxide emissions through executive authority.

That club takes the form of Environmental Protection Agency regulation of the gases blamed for the warming of the planet, an authority granted the agency by the Supreme Court's reading of the Clean Air Act. Administration officials consistently say they would much prefer that Congress write new legislation to pre-empt the E.P.A. regulatory power, but they are clearly holding it in reserve as a prod to reluctant lawmakers and recalcitrant industries and as evidence of good faith to other nations.

While Congress seems to have little appetite for an ambitious cap-and-trade plan at the moment, I suspect many will change their minds when confronted with the alternative of regulating greenhouse gases under the Clean Air Act. I'd like to think that pushing off the climate policy decision could cause some to reconsider use of a revenue-neutral carbon tax, as it's the best option on the table, but I am not optimistic.

pmorem (mail):
Revenue-neutral carbon tax is not on the table.

It fails to generate revenue.

There might be a "camel's nose" version of a revenue neutral carbon tax on the tabl, but it's just a facade.
4.11.2009 11:39am
Bpbatista (mail):
For Liberals, a revenue neutral carbon tax is like sex without an orgasm. What's the point?
4.11.2009 11:57am
PersonFromPorlock:

While Congress seems to have little appetite for an ambitious cap-and-trade plan....

I suspect it would be more accurate to say that Congress has little appetite for anything but the perks of office. Whatever they do will probably involve striking postures and avoiding responsibility. Oh, and receiving 'contributions'.
4.11.2009 12:57pm
BGates:
I suspect it would be more accurate to say that Congress has little appetite for anything but the perks of office.

Maybe among the Republicans, and some of the Democrats, but I think the leadership has a real commitment to expanding the power of the state.
4.11.2009 1:14pm
Allan Walstad (mail):
PFP &BG: 'nuff said.
4.11.2009 1:52pm
Oren:

While Congress seems to have little appetite for an ambitious cap-and-trade plan at the moment, I suspect many will change their minds when confronted with the alternative of regulating greenhouse gases under the Clean Air Act.

Or they could just amend the CAA to exclude CO2 ...
4.11.2009 1:58pm
mga (mail):
Those who worship at the church of global warming have so far done an excellent job of misleading people about the enormous costs of their efforts to control greenhouse gases. That is why a carbon tax will never be passed. It would be entirely too obvious that the cost increases caused by such a tax are the responsibility of our lords and masters in Congress. If the costs can be imposed indirectly, then people will get mad at the power companies or the auto manufacturers.

Last summer's gasoline price spike is a perfect illustration. If one truly believes in global warming, $4.00 a gallon gasoline isn't nearly high enough. Our lords and master did not conduct hearings on why the price was so low.
4.11.2009 2:15pm
Andy Freeman (mail):
> If one truly believes in global warming, $4.00 a gallon gasoline isn't nearly high enough.

Is that true? The cost per ton of CO2 to mitigate the damages according to the UN folks is around $2. Even at $20/ton, it's a small fraction of the price of gas and $200/ton wouldn't be a huge deal.

Note that the carbon tax advocates aren't satisfied with $2. Should I assume ignorance or malice?
4.11.2009 2:25pm
wuzzagrunt (mail):
Andy Freeman wrote:

Should I assume ignorance or malice?


Yes.
4.11.2009 2:47pm
Noah Snyder (mail):
What's the advantage of a carbon tax over cap and trade? My impression has always been that they're roughly the same in most ways, except that cap and trade has more predictable effects while choosing the right rate for the carbon tax in order to get the desired decrease in emissions is difficult. But I don't know anyone with a strong policy preference for cap and trade over a carbon tax and wondered why you have a strong preference the other way?
4.11.2009 2:53pm
BillW:
"... according to the UN folks is around $2."

Sure about that? If so, it seems too small to be worth bothering about. World CO2 emissions are running about 27 billion tonnes per year.

The price of gas is the most obvious place to look for the impact, but because gas is already so heavily taxed, it's not the most important. $20/t_CO2 is only about 20¢ per gallon (<10% increase), but about 2¢/kW-h for coal power (~25% increase).
4.11.2009 3:17pm
GregsPolitics (mail):
I'm with Noah. Im a liberal and would be perfectly content with a revenue-neutral carbon tax if it is the better solution and would be interested in where I can find some info on why it would be. I think that one reason why it doesnt get more support is a fear that opponents will play politics with it and scare people into believing that their taxes are being increased rather than its being revenue neutral.
4.11.2009 3:22pm
David Welker (www):
The idea that, going forward, we should be revenue-neutral is a really bad one if you think that lowering the deficit and the debt and not passing too much debt to future generations is an important goal.

I suppose we never need any more revenue as long as you don't mind an ever increasing percentage of the federal budget devoted to interest payments for now to forever.
4.11.2009 6:01pm
Owen Hutchins (mail):

Has Obama Backed Off Climate Goals?

Without getting into whether or not he has, or the best ways to accomplish whatever goals are set, do you think he might have other issues of more immediate and indeed acute concern at the moment?
4.11.2009 6:10pm
Fedya (www):
mga wrote:
Last summer's gasoline price spike is a perfect illustration. If one truly believes in global warming, $4.00 a gallon gasoline isn't nearly high enough.

Last summer's $4/gallon gas was wicked because the money ended up in the private sector. The same $4 a gallon gas would suddenly become magically virtuous if the money were going to Big Government.
4.11.2009 7:03pm
Oren:

Last summer's $4/gallon gas was wicked because the money did nothing to end (and probably went to perpetuating) our dependence on foreign oil that funds people that like to blow us up.

FIFY.
4.11.2009 8:37pm
loki13 (mail):

What's the advantage of a carbon tax over cap and trade? My impression has always been that they're roughly the same in most ways, except that cap and trade has more predictable effects while choosing the right rate for the carbon tax in order to get the desired decrease in emissions is difficult. But I don't know anyone with a strong policy preference for cap and trade over a carbon tax and wondered why you have a strong preference the other way?


There's one major problem with cap and trade (IMO). You know about rent seeking? Well, C&T would be the ultimate rent seeking exercise. We might use terms like "market" to describe C&T, but who sets the caps and the allowances? Government. This would end up being the ultimate lobbying bonanza, and an ongoing cash cow to Congress. Think of Medicare D and Big Pharma- except it would impact, oh, every industry.

I much prefer a Pigovian carbon tax. The graft would be more honest, and, IMO, less.
4.11.2009 9:06pm
Curt Fischer:
loki13 is right on about the practical difficulties and vulnerability to political exploitation of a cap and trade system. From that standpoint, a carbon tax sure seems simpler.


David Welker said: The idea that, going forward, we should be revenue-neutral is a really bad one if you think that lowering the deficit and the debt and not passing too much debt to future generations is an important goal.


Deficit = Spending - Revenue, right? I can think of at least one way to lower the deficit without changing revenue, then...
4.11.2009 11:01pm
Cheap Energy (mail):
There are several different issues simultanously in play.

The extreme global warming fundamentalists take a religious view - carbon is bad, costs don't really matter, and in fact the economic decline and resultant loss of freedom are "good for the soul". These are the people who want everyone else to ride the bus.

The politicians see it as a huge new source of revenue and political power (i.e. graft, contributions, etc.).

Even a "revenue neutral" rob Peter to pay Paul plan accomplishes a lot of that. Non-favored regions, industries and activities can be punished. Subsidies can be provided to favored regions, industries, activities. More government control.

People would notice a straight carbon tax, and blame the politicians. Cap-and-trade is too complicated to explain to most people, and thus protects the pols.

And or course a "reveue neutral" plan today will not be "revenue neutral" in a few years.

So other than significantly reducing the long term performance of the economy, further concentrating power in Washington (Barney Frank really inspires a lot of confidence), reducing individual liberty, and trying to control climate effects results from solar cycles by changing your light bulbs, whats not to like?
4.12.2009 1:05am
Abdul Abulbul Amir (mail):


...opponents will play politics with it and scare people into believing that their taxes are being increased rather than its being revenue neutral.



Your taxes may well go up even if the tax is revenue neutral. If so it means that other taxpayers tabs are going down. Revenue neutral to the government is far different from tax neutral to each tax payer.

Taking more from Peter and less from Paul is revenue neutral to the tax collector but not neutral to either Peter or Paul.
4.12.2009 1:57am
Dan Weber (www):
Cap-and-trade is awesome if you have lobbying power, or are going to be the one running the trading market (which is why Enron loved the idea).
4.12.2009 2:14am
David Welker (www):
Curt Fischer,

Too bad people with the philosophy you mention on how to lower the deficit lost the last election. Those of us who favor a more expansive social safety net won.

But, I think it should be clear though. The idea of being revenue-neutral is not really a neutral idea at all in our current economic circumstance.
4.12.2009 1:32pm
A.C.:
I thought the point charging people for the carbon they emit was to get them to emit less, not to fund the government that way. For this to work, the tax or whatever it is has to be high enough to be a serious disincentive to engaging in that activity. Which means that government revenue should go down as people find alternatives, or as lifestyles decline.

So who cares if it's revenue-neutral or not? That's not the issue. The question is whether it makes sense to try to force technological and/or social change in this way. I'm inclined to say not, at least not at the level of the individual consumer. If you want to tax the heck out of stationary sources like coal plants, be my guest (even though the cost will flow through to the consumer), but I'm opposed to having the government manipulate individual lifestyles through financial incentives.
4.12.2009 3:30pm
Thales (mail) (www):
"For Liberals, a revenue neutral carbon tax is like sex without an orgasm. What's the point?"

I'm a liberal, and I support a carbon tax. Revenue neutrality has nothing to do with the policy wisdom of reducing carbon emissions, however. That simply might make it a better vote sell to those who want to increase the national debt even more or pretend that they believe in ideas like starve the beast and the Laffer curve. Revenue neutrality could work on the back end too, that is as carbon use and therefore carbon tax revenue declines, the lost revenue is made up again. That seems fair, but I'm not holding my breath for proponents to add that into their package deal.

I'd actually support elimination of corporate level income taxation if dividend taxation were proportionally adjusted to make the swap revenue neutral, but the purpose of that idea is to reduce the capital allocation distortive effects of debt financing being more tax advantaged than equity financing, while preserving the expected flow of funds to federal coffers (i.e. not taxing future generations).
4.13.2009 10:44am
Thales (mail) (www):
"What's the advantage of a carbon tax over cap and trade? My impression has always been that they're roughly the same in most ways, except that cap and trade has more predictable effects while choosing the right rate for the carbon tax in order to get the desired decrease in emissions is difficult. But I don't know anyone with a strong policy preference for cap and trade over a carbon tax and wondered why you have a strong preference the other way?"

Easier to administer and less subject to regulatory arbitrage and special interest lobbying. Also, it doesn't let people pay more to pollute more (everyone pays the same price per unit emitted) or concentrate pollution levels geographically. Setting the tax at the right level has the same level of conceptual difficulty as pricing the permits or reducing the cap year to year (though cap and trade has worked great for SO2). For details on why cap and trade's success for CO2 is doubtful, see the experience of the EU with same.

Note that one important component of cap and trade is initial permit allocation. Many conservatives would like them distributed for free in proportion to market share, other wonks, including the president, would like them auctioned off. A tax would avoid this debate.
4.13.2009 10:54am
Connecticut Lawyer (mail):
The only sensible thing to do is for Congress to pass a law clarifying that carbon dioxide is not a "pollutant" under the Clean Air Act. It obviously is not a "pollutant" in the plain english sense of that word and the Supreme Court was obviously wrong in holding to the contrary but they screwed up and now we have to fix it. Letting the EPA run wild on this is utterly insane.

If and when Congress thinks that controlling carbon dioxide emissions might have some benefits, then in its infinite wisdom it can consider ways to accomplish that, taking into account the costs and benefits of the various proposals.
4.13.2009 11:09am

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