Ever since Obama made his poorly received (by pundits at least) Punish BP/Energy Independence White House address last week there has been a lot of talk that a carbon tax, especially a cap-and-trade one, could be dead. Many read the fact that the President didn’t mention it in his speech as a sign that he was caving to Republicans on environmental reform and giving up his plan to tax polluters. Marc Ambinder over at the Atlantic says you should think of Cap-and-Trade as the public option of the energy bill.
Should progressives be skeptical about the White House’s strategy to pass comprehensive climate change legislation? That strategy, as sketched out by senior administration officials, is to delay the debate about putting a price on carbon production until both the House and Senate have passed legislation. Timewise, if the Senate passes a bill, it would take until the late fall, after the elections, for House and Senate conferees to be appointed.
If the strategy sounds familiar, that’s because it seems to similar to the White House’s approach to the more contentious aspects of health care reform, including the public option, which came to be seen by many on the left as the sine qua non of progress, and which President Obama never fully supported.
If the goal now is to get a bill that begins to wean the nation off of its addiction to oil, a carbon pricing scheme isn’t needed. If the goal is to try to fix the problem of global warming, it is essential. Of course, a bill that includes carbon pricing, either in the form of a direct Pigouvian tax or an emissions credit trading system (cap-and-trade), would include the positive elements you’d find in a weaker bill.
I don’t know if Obama has actually folded on enacting a carbon tax or if this is just politics. That’s something for the folks at Swampland to debate. If he has, it really is a shame. Much of the debate about the carbon tax has not to do with whether it is good environmental policy, but how much it will hurt the economy. Turns out it won’t. A new study by The Economist finds that a carbon tax would actually boost growth. Here’s why:
