Let’s pretend that the original “free enterprise solution for climate change”, Cap and Trade – developed under the Reagan administration, and deployed by George Bush the elder to successfully combat acid rain, is actually a Muslim plot.
Evidence of intelligent life in the conservative movement is sparse, conflicting, but persistent. Among the most interesting spokespeople for a new dialogue, Former Rep. Bob Inglis, and Eli Lehrer, formerly of the Heartland Institute, now founder of the “R Street” think tank in DC.
Midwest Energy News: What is your mission at the Energy & Enterprise Initiative – do you have a greater chance of implementing your program this way than in Congress?
Inglis: We’re about preparing the country for a free enterprise solution on climate change.
Our first task is to show the champions of free enterprise and fellow conservatives the strength of their own ideas, that there really is a free enterprise answer here. It’s a true cost comparison between the competing fuels that will drive innovation faster than government regulations or clumsy mandates and fickle tax incentives.
What we’re proposing is an income tax cutting, EPA-shrinking, China-in carbon tax. Then we can actually repeal some Clean Air Act regulations – not the entire Act, but there are some portions that would become redundant because of the pricing of carbon dioxide.
How do you really quantify the true costs of different energy sources and insert those costs into the market? How would you make sure the costs are passed on to the right parties?
The role for the government is being the honest cop on the beat, that brings accountability to all the fuels, that figures out an effective way to say all fuels have to be fully accountable for all of their negative externalities, all of their hidden costs. We think that’s best done by a 100 percent returnable emissions tax, so it is revenue-neutral.
The emissions tax would be paired with a dollar-for-dollar cut in existing taxes. That could be corporate income tax reduction, individual income tax reduction, or FICA tax reduction. The other part is that the tax be border-adjustable (meaning it would be imposed on imports and rebated on exports).
That’s so very important because we’ve got to figure out a way to make it in our trading partners’ interest to join us in a similar pricing of carbon dioxide. Absent that, we really could end up being the double losers — the country that prices carbon dioxide internally, causing a loss of employment, as companies pick up and move to locales that will let them emit for free; and then in moving to those countries, they actually increase emissions. So a), we lose jobs and b), we lose the race to reduce emissions.
If you’re depending on this being an international system, isn’t there a big danger that it will take a very long time to happen, if ever, and meanwhile emissions keep increasing?
We definitely don’t want to wait – we just want to make this bold commercial move that other countries then follow. We would assume it would be challenged in the World Trade Organization, but we think there are good arguments based on precedents regarding the chemical industry and the ability to impose taxes on imports based on the content of chemicals.
Based on that precedent, we think there’s a good shot the WTO would uphold the border-adjustable tax. If they did, we maintain that China within about 24 hours – they do have an amazing way of reaching consensus – would impose the same price on carbon dioxide because it would become in their interest to do so.
If you’re a state-run industry in China and you’re importing plastic to make Barbie dolls that end up on Wal-Mart shelves and you’re paying the tax based on the carbon content of that plastic on entry to the United States, it means you’re remitting money to Washington that could have been remitted to Beijing. So why not impose a similar price on carbon dioxide in China, and then keep your tax revenue at home, and enter with your plastic without an adjustment. If they’ve got the same price on carbon dioxide, there wouldn’t be any border adjustment.
Is it realistic to believe China would ever adopt such a system?
We have reason to believe that China has felt a need to act. Even if your main goal is stability and you feel you must have economic growth to support that stability, still you have a child who wants to go out and play soccer in Beijing and they can’t because the air is so bad. They need to protect their advantage in mass manufacturing, but we think they would preserve their comparative advantage (even with a carbon tax), because the whole world would be moving to (quantifying) the true cost of energy output.
What we’re talking about is not an international agreement where we have to send John Kerry to bow and scrape and beg for an international agreement that would take forever. Rather it’s a bold commercial move that wins in the WTO. If those two conditionals hold up, we think it becomes in India’s and China’s interest to follow us, and then the whole world follows suit.
–How do you get through the climate change denial? Do you think many Republicans truly do doubt the science of climate change, or is it a political posture?
A big part of (Republicans’ stance) is that the assumed solution is a bigger government that taxes more, that regulates more, that grows the nanny state and impairs liberty. That assumed solution is anathema, therefore it’s only natural that we conservatives go back to disputing whether we have a problem or not. Because the solution that is so often talked about is such a bad solution, that violates all of our deeply held beliefs.
What we have to show is that there is a solution that is completely consistent with our deeply held beliefs and actually involves a smaller government and an effective pricing of this negative externality rather than proscriptive regulations, fickle tax incentives or clumsy government mandates. It’s better to follow what we know works, which is a free enterprise answer where all the costs are in.
This causes some of the renewable fuels industry people to gasp for air – we would eliminate the Production Tax Credit, the $7,500 credit for electric cars, we would have no more Solyndras. But we would eliminate all the subsidies and attach all the costs. Then the renewable industry starts breathing again – like “We can live with that for sure, if you’re really going to do that to coal and natural gas and oil, then solar lives and wind lives.”
It’s consistent with what conservatives believe because we don’t want the government putting the thumb on the scales to favor one or another.
When you talk about liberty and freedom, what about the fact that landowners and homeowners see their quality of life and property values affected by hydraulic fracturing or coal mining near their land? It doesn’t sound like your solution would address those concerns.
As a Republican not a libertarian, I feel comfortable with land use regulation. I understand I have some libertarian friends that don’t like that, but that’s an argument we Republicans can win.
Eli Lehrer in the National Review:
Conservatives should adopt a new strategy in the battle over global warming. Rather than falling back on the claim that global warming isn’t a problem, conservatives should take a page from liberals’ playbook and use the issue to pursue policies they already favor. What we need is a conservative climate-change agenda that shrinks the size of government and uses a small portion of those savings to help do a few things better.
While many on the environmental left tend to overstate their case, there’s little doubt that the climate is changing and that human activity plays a major role in this shift. In fact, not even those conservatives whom the left unfairly tars as “deniers” dispute that the Earth has gotten warmer or that a buildup of greenhouse gases traps heat energy.
What’s more, conservatives need to more consistently condemn corporate-welfare programs for energy industries, whether it’s solar, wind, oil, gas, or any other. Any subsidies such industries receive should be limited to research efforts the private sector can’t carry out on its own. A stronger, better research establishment could help us better understand climate change and develop breakthrough technologies. This would cost taxpayers far less than the current stew of corporate welfare programs that produced Solyndra and other costly failures.
There are other, broader changes — including outright repeal of the EPA’s burdensome, ill-advised greenhouse-gas-control regulations — that conservatives ought to consider as well.
For decades, progressives have used the battle over climate change as a proxy for a broader war about culture and ideology. Whether they’re demanding cap-and-trade schemes, plotting ways to plan the entire energy economy, or trying to order entire classes of power plants out of existence by government fiat, progressives consistently forward schemes designed to enlarge the size of government and squelch the freedoms of private enterprise. It’s time to respond.
Conservatives should address climate change. And they can do it without giving up a single conservative principle.
Study links rich Republicans to climate recalcitrance.
http://www.motherjones.com/environment/2014/07/climate-denial-wealth-rich-republicans
In other words, they rationalize instead of being rational.
It’s infuriating to me that even when they’re being somewhat rational, like Inglis, it’s STILL at root about increasing wealth and advantage to the most powerful. It’s like their minds can’t accept caring for the whole of society unless it includes their receiving tax breaks and higher profits for reduced regulation.
The EPA thing is especially disturbed – let’s fight a major economic externality by reducing the ability of government to fight externalities. Great idea!
These people know that corporations are not altruistic. By their very nature they are driven by the profit motive, which will seek every way possible to cheat out of absorbing costs themselves. Because they hire hordes of society’s brightest minds, they are extremely resourceful at finding ways to game the system to their advantage. They’ll pass the true costs, always, on to society as a whole in the forms of reduced labor, environmental externalities, and so on. Giving them more advantages by reducing regulations only provides more opportunities. Giving them tax breaks will not stop or slow their urge to increase profits – it will just line their owner’s pockets more.
It’s total blind faith in an economic philosophy (theology) that by a strange coincidence has the top percents of wealth and power as its main beneficiary. Funny how that works out.
Jim,
The situation in corporate America has gotten so rotten that even a cheerleading publication like Fortune is complaining about the tax cheat mindset that has overcome intelligent citizenry concerns among the boardroom class:
http://tinyurl.com/ljpn6aa
In brief:
“Fortune magazine is out with its list of “Top American corporate tax avoiders,” members of the S&P 500 that “sure seem American—except when it comes to paying taxes.”
These are companies that even a top cheerleader for the corporate class can’t bring itself to defend. What’s more, the list is accompanied by a blistering article by columnist Allan Sloan that makes the progressive case against corporate tax evasion as forcefully as anything Sens. Bernie Sanders or Elizabeth Warren might say on the Senate floor.”
Something odd was happening the other day in Congress in that the Republicans were trying to chop down on the Export-Import Bank which i believe takes taxpayer money, then lends it to foreigners in return for those folks purchasing junk from General Electric and a few other corps.
Something makes me think this was one of Reagan’s darlings; good thing the current regime ‘forgot’ about that.
Democrats blocked it.
There is no corruption safe haven ’round there.
Eli Lehrer: “…not even those conservatives whom the left unfairly tars as “deniers” dispute that the Earth has gotten warmer or that a buildup of greenhouse gases traps heat energy.” But that is pretty much the definition of an AGW ‘denier’. If we adopt Lehrer’s redefinition then just WHAT does the word ‘denier’ mean anymore? Historically, they denied Earth was warming (and some still do, i.e., the famous “it hasn’t warmed in 17 years…”). Lately, forced to concede it is warming, they have questioned the Scientific explanation, preferring some alternate or other that wouldn’t impact the economy.
Who says conservatives lack the capacity for invention? Lehrer just diluted ‘denier’ into irrelevance.