White House Chronicle

News Analysis With a Sense of Humor

GOP Establishment Savants Speak Softly, Back a Carbon Tax

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Call it a tax without tears. It is a proposal to address carbon pollution by replacing a raft of tax subsidies and regulatory requirements with a carbon tax.

What is surprising is who is pushing it: dyed-in-the-wool, rock-ribbed Republicans.

They are the top of the GOP: Every one of them has had an outstanding career in finance, industry or academia. They are men and women who contribute to Republican candidates regularly — and some of them quite generously.

These Republican grandees and party financiers have formed the Alliance for Market Solutions (AMS), which aims to educate conservative policymakers on the benefits of market-oriented solutions to climate change.

“A carbon tax, if the myriad of subsidies and regulations that policymakers now use to affect markets are stripped away, would lead to economic growth and achieve significant carbon pollution reductions,” says Alex Flint, executive director of AMS.

Well-known in Republican circles, he previously served as staff director of the Senate Committee on Energy and Natural Resources and as senior vice president of government affairs at the Nuclear Energy Institute.

The organization’s 10-member advisory board includes John Rowe, former chairman and CEO of Exelon Corp., the largest diversified utility in the United States, and Marvin Odum, former chairman and president of Shell Oil Co. and board member of the American Petroleum Institute.

What we need now, Rowe said, is “a new approach to energy tax and regulation that advances our strategic policy objectives and recognizes that the period of scarcity that began in the 1970s is over. We no longer need to subsidize energy production.”

Instead, we need policies that address “the next great energy challenge: carbon pollution,” he said.

Rowe and AMS allies believe that pairing a “revenue-neutral” carbon tax with a regulatory rollback would be good climate policy.

Flint explained: “A carbon tax would ideally be imposed upstream where carbon enters the economy. Costs would then be passed down the consumption chain through prices, which would impact decision-making and drive the use of cleaner fuels and new technologies across the economy.”

Studies by AMS estimate that a carbon tax would generate more than $1 trillion in additional revenue over the next decade, which lawmakers could use to reduce other, more distortionary taxes, or do things like make the 2017 tax reform permanent or even further reduce income taxes.

Rather than mounting a loud public-pressure campaign, Flint told me the members of the alliance — which also includes William Strong, chairman and managing director of Longford Capital Management, and Chris DeMuth, distinguished fellow at the Hudson Institute — began by meeting quietly with influential Republicans in small groups, going over the gains that would come from tax reform and emphasizing that the carbon tax does not have to be a one-size-fits-all solution, although it is a simple solution to a pressing problem.

Emphasis has been on Republicans who wield power behind the scenes and the tax writers in the House and the Senate. The reformers are getting a hearing, I am told.

The alliance has tried hard to get the facts and detailed analyses nailed down ahead of public discussion. They have done this in a new book, “Carbon Tax Policy: A Conservative Dialogue on Pro-Growth Opportunities,” edited by Alex Brill of the American Enterprise Institute.

The book is, you might say, the creed of the AMS. It is an eye-opening read by conservatives who want to limit government market-meddling and bring about sound policy through enlightened taxation.

The Economy Is Righting, but Does Congress Get It?

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The great thing about being a pessimist is that something awful may still happen tomorrow. There are still plenty of pessimists about the economy, saying that we are spending our way into perdition; that the Great Reckoning is just around the corner, unless we do draconian things.
 
However on Wall Street, there is hopefulness — even optimism. The stock market is up, the housing market is showing real life and corporate confidence has increased since the Congress delayed action on the fiscal cliff through a bit of old-fashioned give-and-take. Some economists are saying encouraging things, so are the business magazines.
 
There is evidence that the economy, which was heeling badly, is beginning to right. The U.S. economy, still the economic lungs of the world, is breathing easier.
 
Sure, there was a slight dip in performance in the last quarter, reflecting primarily reduced defense spending. It's a hard lesson for the political right to grasp: You can't extrapolate family financial rectitude into national policy, as they like to do. If a family spends more than it is earning, it simply has to cut expenditures. If it doesn’t, the end is known; credit dries up and horrors, like foreclosure, are at hand. Likewise, corporations cut costs, lay off employees and sell assets until the balance sheet recovers.
 
When a family gets into trouble, it doesn't reduce its income by cutting luxuries, it reduces its spending. When a corporation cuts back, it tries to reduce staff not customers.
 
But governments can worsen the situation when they tackle spending at the wrong time. If they cut expenditures too aggressively and too fast, revenues fall, unemployment rises and demands on the public purse grow. Unlike individuals and corporations, governments can’t walk away from their messes.
 
Witness the recessions in Britain, Ireland, Spain and the total catastrophe in Greece. Irresponsible austerity has compounded the results of earlier promiscuous spending. Strong medicine has sent the patient to intensive care.
 
Amy Kremer, head of the Tea Party Express, and many conservative members of Congress playing the pessimist’s card, like to say, and they say it often, “revenue is not the problem, spending is.”
 
If only it were that simple. The problem is many things, including the global recession, the aging population, the high cost of medicine, two wars, badly timed tax cuts, China’s undervalued currency and the balance of payments deficit.
 
Take your pick. The miracle is that the economy is as vigorous as it is.
 
Already it has to deal with the tax increases that came with the budget deal in early January, particularly the increase in the payroll tax, which takes out of the economy money that would normally be spent — the large proportion of the tax which if left in the hands of the salaried class would be disposable. This may be about as much of a hit as it can take at present.
 
But the pessimists, who believe that spending is the mortal sin of our age, want to let sequestration — a 10 percent across the board cut — happen on March 2. The Washington Post says there is no mood in Congress to compromise. But if there is no compromise, the effects could be more devastating than a simple cut in spending. The result, instead, will be a cut in program expenditures while the government’s overhead in salaries and fixed costs will eat up the budget.
 
Austerity has been a disaster for Britain, Ireland and Spain. Do we want to follow the Europeans down that path?
 
The pessimists, who also believe that borrowing is the original sin of politicians, would let this recovery falter through their belief that the government must be starved. Sequestration will starve it, alright. Trouble is we'll all go hungry. There’s pessimism for you. — For the Hearst-New York Times Syndicate

 
 
 
 
 
 
 

New to Protesting? Enjoy

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One can only be glad that so many white middle-class conservatives are fairly late in life learning the joy of protest, the feeling the thrill of the barricades, and experiencing the carthartic wonders of getting involved.

 

Let’s face it, public protest is exhilarating. To see so many otherwise stodgy people on an adrenalin high as they shout down their elected representatives and lay siege to the very idea of a town-hall meeting as a forum for ideas, is to take one back to civil rights marches, anti-nuclear demonstrations, picket lines and construction protests.

 

You’ve not lived until you’ve yelled your heart out in public. Protest–even misguided protest–is good for the soul.

 

Day after day we see really nice respectable people giving voice to their dislike of the Obama administration, their sense that the America that has been so generous to them is changing; that it may not be as generous to their grandchildren.

 

Righteous anger is as good as a whole slew of martinis, and there are no calories and no hangover.

 

After all, this all about heat not light. You’re out there yelling in public for one of two reasons: (1)You’ve missed doing it since the days of Vietnam War, protests, or (2) It’s something you’ve never done because the beastly liberals were doing it.

 

These protesters want to take back America. But first, they want to wrest the joy of public protesting from the liberals. For too long these crypto-socialists have had all the fun, from free love to smoking exotic cheroots and pouring into the streets to protest every conservative initiative, social policy or war. Just think of Victor Hugo.

 

Begone liberals. You can’t have all the fun because now we have some of it. And if any of those crackpot, socialistic, inconveniently elected Congress types try and sell their Dr. Government health care schemes by town hall meeting, we’ll be there, golf shirts and pants with a touch of spandex freshly laundered. Protesting is no longer for the unwashed; people with Brooks Brothers suits in the closet can now head to the barricades to fight for the right.

 

These town hall meetings are the gift that keeps on giving. There’s really no impediment to the joy of protest for the aging guys and gals who find

retirement a yawn. Public policy activism is the tonic these people need. Get out there and let Obamacare take it on the chin. Tell them that old people are left to die in England, that rationing dominates in Canada, that the French are forced to guzzle wine in lieu of medication, and that the Japanese are falling like flies.

 

Isn’t this a great country in which even conservatives can have a go at hitting the bricks?

 

You’re the rebels now, at the baracades, standing strong against the forces of the evil reformers. Compare socialized medicine with the post office. Beat on those bureaucrats, who you claim are going to be making health care decisions instead of doctors.

 

Here is a quick guide for the neophyte protester:

 

Don’t use an out-of-state car. Don’t wear too many diamonds. Journalists don’t understand; besides they’re in the tank for Obama. Try to look like a liberal: shabby. Don’t mention daddy’s fortune, your Palm Beach pied-a-terre, or the place in France. Go forth and shout for America.

 

Just one more thing: Whatever you do, don’t let it out that you are on Medicare. Sadly, it’s one of the most popular government programs ever.  –For the Hearst-New York Times Syndicate