It’s Not Cap-and-Tax and Reagan Made It Work

admin — Sat, 19 Feb 2011 02:08:51 +0000

Our current Congressional leaders, particularly those who would ignore science or derogatorily call Reagan’s system “cap-and -tax”, should look to Reagan as an example.

The U.S. has been unable to make much progress on environmental issues because of opposition by our Republican leaders. They have inflated the cost while ignoring the benefits, labeled environmental issues as “liberal” to discourage support by conservatives, spread false “science”, and biased voters against a cap-and-trade approach by labeling it cap-and-tax. My own Congressman, Frank Lucas, espouses the current Republican leaders’ views and calls it “cap-and-tax” in his town hall meetings and in his “Frankly Speaking” articles that he sends to small town newspapers in Oklahoma.

Many Republicans recently celebrated Ronald Reagan’s hundredth birthday as he is considered a unifying figure who skillfully blended principle, pragmatism, and service to the nation. He was a thoughtful, traditionalist conservative who was mindful of our stewardship obligation to future generations. He preserved many wilderness areas so they could not be damaged by economic development. The way he solved two pollution problems should set an example for Republican politicians today.

During the 1980s, scientific evidence mounted that the CFCs from spray cans and refrigerants were damaging the ozone layer. The layer filters out UV light which can cause skin cancers and environmental damage. Reagan ignored the political disputes, the ideological posturing, and the claims of economic disaster – and followed the advice of the scientists. He signed into effect the Montreal protocol, banning emissions of CFCs into the atmosphere. The economic catastrophes never came to pass and the ozone layer is recovering.

When Canada became alarmed that emissions from Northeastern power plants were drifting into Canada and acidifying their lakes, Reagan proposed a market solution to the problem. He devised a cap-and-trade system whereby polluters had to pay by buying credits while companies who reduced their pollution would receive credits. In spite of initial complaints, the system worked well and it cost far less than the power companies claimed it would – and none went out of business.

The scientific evidence has become clear and convincing that man’s release of CO2 is causing our climate to change, endangering the environment and the health of future generations. Yet, many of our Republican leaders are unwilling to accept the scientific evidence. The industries involved are saying it will be too costly, and some are claiming it will ruin our economy. The cap-and-trade system put forward to address the problem is stalled by misinformation and political controversies. Our current Congressional leaders, particularly those who would ignore science or derogatorily call Reagan’s system “cap-and -tax”, should look to Reagan as an example.

The Republican Flip/Flop on Cap-and-Trade

admin — Thu, 22 Jul 2010 23:35:06 +0000

A Winning Flip: I can remember when Republicans liked Cap-and-trade. (1) For instance, John McCain cosponsored cap-and-trade bills in the Senate in 2003, 2005, and 2007 and, during his 2008 presidential campaign, proposed a pragmatic national energy policy based upon good stewardship, good science, and reasonableness. As he said then,

“A cap-and-trade policy will send a signal that will be heard and welcomed all across the American economy. And the highest rewards will go to those who make the smartest, safest, most responsible choices.”

And he was right. Having to pay the true cost of fossil fuel use is fair and would create incentives for renewable energy and energy efficiency.

Cap-and-trade was once considered to be the market solution to reducing carbon emissions. While popular, a number of key Republicans, such as Sen. Lisa Murkowski (R-Alaska), Sen. Richard Lugar (R-Ind.), Sen. Lindsey Graham (R-S.C.) went on record as endorsing the policy. Even Sen. Scott Brown (R-Mass.), only two years ago, while supporting a version of a cap-and-trade bill in the Massachusetts legislature said:

”Reducing carbon dioxide emission in Massachusetts has long been a priority of mine. Passing this legislation is an important step … towards improving our environment.”

But somewhere amid lobbying, big donations from power companies, and criticisms from so called conservatives who don’t really want to conserve much, the Republicans are now calling it cap-and-tax, essentially making fun of what was once their own idea.

The Sticker Shock Distortion Flop: In an effort to kill the bill, Republicans such as Senator Tom Coburn (R-OK) are now claiming cap-and-trade would cost each U.S. households about $3,100 a year, a cost that has considerable sticker shock. However, that number was fabricated by doing some misleading additional math on a MIT study. Dr. John Reilly, the economist who authored the study, has criticized Republicans for distorting his work. In his words,

“It’s just wrong, It’s wrong in so many ways it’s hard to begin.” Not only is it wrong, but he said he told the House Republicans it was wrong when they asked him. “That’s just not how economists calculate the cost of a tax proposal”, Reilly said. “The tax might push the price of carbon-based fuels up a bit, but other results of a cap-and-trade program, such as increased conservation and more competition from other fuel sources, would put downward pressure on prices.” Moreover, he said, consumers would get some of the tax back from the government in some form. (2)

What Is the Uninflated Cost? The report by the nonpartisan Congressional Budget Office (CBO), the entity responsible for providing Congress with nonpartisan analyses of economic and budget issues, estimates that the net annual economywide cost of the cap-and-trade program in 2020 would be $22 billion—or an average of about $175 per household. That figure includes the cost of restructuring the production and use of energy but it does not include the economic benefits and other benefits of the reduction in greenhouse gas emissions and the associated slowing of climate change. Households in the lowest income bracket would see an average net benefit of about $40 in 2020 while those in the highest bracket would see a net cost of $245. Overall, net costs would average 0.2 percent of households’ after-tax income. (3) That doesn’t seem so bad, particularly as the CBO experts also estimate the climate and energy bill now stalled in the Senate would reduce the federal deficit by about $19 billion over the next decade. (4)

The High Cost of Doing Nothing: The cost of doing nothing may be unacceptably high in the long run because of resource scarcity, environmental damage, and the risk of reachng catastrophic tipping points. A recent report by the National Academy of Sciences details the high economic costs of reduced streamflow, rainfall, and crop yields (5). Estimates by the World’s top economists such as Britain’s Nicholas Stern (6) or the US’s Paul Krugman (7) are that right now it would cost about 2% of the worlds GDP to mitigate environmental damage – but if delayed, that amount could rise to 20% or more of the world’s GDP and put us at risk of an environmental catastrophe.

A Flip is Needed: What is it worth to have clean air, clean water, a more sustainable economy, and a less risky future? Can we risk doing nothing? We need a flip by our Republican leaders.

(1) http://www.grist.org/article/2010-06-29-remember-when-republicans-liked-cap-and-trade/

(2) http://flavcountry.blogspot.com/2009/05/mit-economist-john-reilly-calls.html

(3) http://cboblog.cbo.gov/?p=300

(4) http://www.msnbc.msn.com/id/38130006/ns/politics-capitol_hill/

(5) http://www.denverpost.com/headlines/ci_15536630

(6) http://siteresources.worldbank.org/INTINDONESIA/Resources/226271-1170911056314/3428109-1174614780539/SternReviewEng.pdf

(7) http://www.nytimes.com/2010/04/11/magazine/11Economy-t.html

J.C. Moore Online » cap-and-tax

It’s Not Cap-and-Tax and Reagan Made It Work

The Republican Flip/Flop on Cap-and-Trade