Hacks and handout-seekers hate Obama’s climate plan

Written by adam


Environmental Capital reports that Obama’s approach to climate change legislation is foundering, because it’s tied to an ambitious social agenda. Which is weird, because Obama’s cap-and-trade proposal isn’t tied to an ambitious social agenda.

> Many Democrats are upset that President Obama’s budget earmarks most of the $646 billion in cap-and-trade revenue for generic tax cuts and to help fund other programs, rather than for specific help to cushion the blow of increased climate regulation.

This is a bit tricky to parse, but it helps if you understand that the word “earmark” here is used to mean “the opposite of an earmark.” Congresscritters want the money from cap-and-trade for projects in their own states (green infrastructure, vote-buying, what-have-you), and Obama wants to return it to taxpayers.

So where is this “ambitious health and social welfare agenda” stuff coming from? For that, we are referred to Bush-era EPA official and liar G. Tracy Mehan, III. Mehan has penned a fairly boring article in which he runs down the usual pros and cons of various flavors of carbon taxation, and then concludes:

> Basically, the most economically efficient response is similar to the revenue-neutral carbon tax: return as much money as possible to taxpayers or ratepayers to offset the elevated energy costs. This could be done through tax cuts, rebates or other kinds of payments.

> The Obama administration has decided not to pursue this more cost-effective response to carbon reduction. It intends to sell carbon allowances and pocket the proceeds to carry out its ambitious social agenda.

Were this not a family blog, I’d use some spicy language to characterize this passage. Suffice to say, Mehan is making stuff up. Obama’s budget explicitly returns _a minimum of 81%_ of projected carbon revenue to taxpayers.

So an Environmental Capital piece framed as criticism of administration overreach is actually something much more prosaic: a round-up of interest group jockeying in advance of a climate bill. Would it have been so hard to report it that way?

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  1. darooda

    The flavor of your post makes it clear you’re not looking for discussion, but I did want to point out that returning 81% of taxpayers money is not as efficient as not taking it in the first place.
    I’m a proponent of cap and trade, for environmental purposes, but the administration has no intent or returning 81% to tax payers. They are giving 81% to people, that under the proposed tax plans, don’t pay taxes (the folks in DC like to call them tax payers to pretend it isn’t handouts). That’s wealth redistribution, and that will only increase unemployment, and other social issues.
    If 19% is all it takes to effectively implement a cap and trade system that meaningfully addresses climate change, which I highly doubt, then why not take 19% in the first place and allow real tax payers to distribute their wealth as they see fit. Historically this means, more jobs, more charitable giving, and unfortunatly more sprawl.
    There are many people that are concerned about climate change, but don’t embrace the social agenda via european tax rates that accompany the administrations vision. It doesn’t mean I’m a lying, hand-out seeking, hack. It means I’m a nearly carbon neutral small business owner that enjoys providing his employees with world class compensation and benefits, and fears his hard working family and staff will have to suffer so the government can have more of our money to hand out.

  2. Adam Stein

    Er…there are a number of rather important misconceptions underlying this comment. The first (and biggest) is that the alternative to rebating the funds is not to collect them in the first place. Simply by putting a cap on carbon emissions, the full tax is getting charged. If the government chooses not to auction permits, than the windfall from the tax goes to energy companies, rather than being rebated to taxpayers.
    I recognize that this is a complex subject, and I’m sure this comment isn’t doing much to make it any clearer. But this notion that you can take just 19% is wrong. The full tax is always charged. And all the research on this topic shows that it is both fairer and better for the overall economy to give the money back to taxpayers rather back to utilities.
    The other big misconception here is that the Obama plan gives the money to people who don’t pay taxes. And, yes, this is hack-ish nonsense. Blah blah European tax rates. Yawn.

  3. Johnathan Bowman

    Mr. Stein, you have to realize that corporations don’t pay taxes. Taxes are paid by any combination of the following:
    1. By employees in reduced wages
    2. By investors through decreased dividends
    3. By consumers through increased costs
    If a corporation’s taxes are raised by government then those cost increases are passed right down through the chain. That means that if 81% of money from the carbon tax is returned to us then we are spending it immediately on higher commodity costs.

  4. Russ in San Diego

    Actually, corporations DO pay taxes. The results of those taxes are reflected in earnings, and EPS is a significant factor when an investor looks around to find which company to put her money in.
    Carbon taxes or cap-and-trade are not intended as revenue-raisers. They are intended to change the way corporations and individuals think and operate.
    Companies that become more efficient become more profitable. Instituting carbon taxes or cap-and-trade creates a new dimension of efficiency that reflects the future damage created by current operations.
    Dumping toxic waste instead of proper disposal makes a company appear more profitable today, but somebody (the company, if it still exists when the contamination is discovered, and/or you and me as taxpayers) will have to pay for remediation.
    It’s precisely the same thing.

  5. Adam Stein

    Yeah, I know. That’s the issue. A cap is going to result in higher prices for consumers no matter what. The question is what happens to the revenue from the tax: it can either be given back to corporations, which will result in increased returns to shareholders. Or it can be given back to consumers, to offset those increased costs. The second option is both more fair and better for the economy as a whole.

  6. Creative Greenius

    This issue is a whole lot simpler than it’s being made here.
    Everyone, without exception will pay a carbon tax in one form or another.
    You’ll either pay it through the health care costs caused by fossil fuel pollution and what greenhouse gases are doing to the climate; through climate change adaptation actions; through higher costs to fight fires and other consequences of long term drought; through the impact on agriculuture; through the response to sea level rise and through a myriad of other climate related costs.
    I think it only fair and just that the people responsible for producing the most pollution and climate changing carbon pay for the costs their products and actions impose on all of us. If you’re one of those people then you must pay and you deserve to.
    Bush and Cheney are gone now and your free, line-your-pockets at my expense ride is over now.
    We’re already ten years past the point for trading carbon credits. It’s too easy to game that system and it’s not effective enough to get the job done in the time we have available.
    Now it’s time for a straight and heavy carbon tax and I’d like that tax to pay for the development of the necessary renewable energy, plug-in cars and the smart electric grid we need to be building today.
    I’d like that tax to subsidize my new solar energy rooftop system and my solar thermal hot water heater. I want it to help pay for my plug-in car too and upgrading my electrical system to a more efficient one.
    And if you don’t think you should have to pay for that with the carbon taxes your business will be forced to pay then I say too damn bad for you and your business. Change or go broke, but stop your whining and complaining. I feel as sorry for you as I do for the buggy whip industry and the former titans of the matchbook industry. Times change, legacy products go by the wayside, and toxic killers don’t keep getting paid.
    The missing sense of urgency and realization FAIL about the available time we have left to drastically cut greenhouse gas emissions makes these petty business profit arguments pretty moot and outright laughable. And my sympathy for them is right up there with the empathy I have for Bernie Madoff and AIG bonus babies.
    If folks don’t understand where we are in the climate crisis timeline and that biting the bullet is long overdue then they don’t deserve any tears for the financial problems they still think are worth complaining about.
    When they were given the chance, they screwed our childrens’ futures with their lack of actions on climate change thus far. So at this point I don’t give a damn what happens to their future profits or the part of the economy they think they’re so important to.

  7. outfoxed

    @Creative Greenius: yeah, Yeah, YEAH!!!!
    You took the words right out of my mouth. Well said, comprehensively stated.
    At the risk of derailing this thread, Fox News interviewed our friend the Honorable Republican James Inhofe for a “fair and balanced” look at the Obama cap and trade plan this morning. His objections: “Mexico and China won’t do it, so why should we?” On that point, I would echo one of Mr. Obama’s campaign statements, “The position of leader of the free world has been unfilled for the last 8 years.” It’s called leadership: you’re understandably unfamiliar with it: look it up. Perhaps we can break the India/China/US blame circle, where each one won’t join in because the others won’t, and actually _lead_.
    His other objection: “For those (few?) of you who believe in man-made global warming, you should know that this is a regressive tax.” Although Mr. Inhofe’s party has long been a staunch supporter of making the US tax system more progessive (cough), this objection seems to be pretty well covered by the rebating of 81% of the revenues from the auctions to the taxpayers, assuming this is done in a progressive (not regressive) way.

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