Mark Thoma posts a roundup of writing on cap and trade versus carbon taxes which includes a good primer on how the economics works and why the two plans are so similar. He also excerpts a rather cynical take, by Pete Davis, on the political reasons that cap and trade is preferred by politicians. Some of the calculations involved are no doubt correct, but I disagree with much of the piece. Like this, for starters:
I kid my friends that “I formulated three carbon taxes for Bob Dole back in the early 1980’s that are still in his filing cabinet.” I’d be very surprised if the former Senate Finance Chair really kept them, but the fact that they were formulated at all shows that Senate leaders, then as now, were fully aware of of the advantages of a carbon tax…
He goes on to argue that this demonstrates that, strategically, those weaselly politicians don’t like carbon taxes. I think it’s worth pointing out here that climate change science was considerably more debatable back in the early 1980s. I’m sure that if I handed a GOP Senator a seemingly random tax proposal today, he probably wouldn’t go rushing off the floor to introduce it.
Secondly, I think Davis badly reads the political environment when he writes:
Our political leaders will be watching the public and private reaction to this debate very carefully for signs of what changes they will need to make next year.The primary change will be to water the bill down. No one wants to take credit for raising gas prices by 53 cents and electricity prices by 44% by 2030 or to cut GDP by $2.8 trillion by 2050. The path to reduced greenhouse gas emissions in next year’s bill will be slower than that which is proposed now. …
The conventional wisdom among greens and political pundits is, I believe, that Lieberman-Warner represents a floor for future climate bills rather than a ceiling. That this is the case should be obvious for two reasons. First, every month that goes by the science becomes clearer and the tangible impacts of warming become more apparent to a public that’s warming to the idea of climate legislation. Second, Congress is almost certain to be more Democratic next year, and the White House will be more friendly to climate bills whoever the president is (but substantially more so if Obama is the victor). Both Hillary and Obama have proposed climate policies much better and tighter than L-W. And the principal sources of denialism and delay in Congress are currently on the GOP side of the aisle.
Democratic leaders are watching now to see how their opponents plan to fight, so that next year, they’re prepared to use their majority to effectively counter opposition en route to a truly good climate bill.