Andrew Sullivan responds to a couple of folks who joined me in suggesting that it’s silly to hold out for a carbon tax bill at this point in the game. Answering Kevin Drum, who asked why anyone would continue to oppose cap-and-trade, Andrew writes:
Because we actually believe that a carbon tax will bring green benefits without the kind of crude regulatory scheme that could stigmatize environmentalism for a long time? Because we think it will work better?
To the first point, Kevin makes an excellent observation — practically all of the brute force bureaucracy involved in regulating carbon will be in place whether you use cap-and-trade or a tax. Either way you have to assess emissions and monitor sources. The difference in the plans is whether after all of that you pay a tax or buy a permit (from the government or someone else). That’s it.
Aside from that, the differences all come down to implementation. The only way there are significant benefits from a carbon tax over a cap-and-trade plan is if Congress chooses to approach one plan in a dramatically different fashion than the other. It seems to me that they’re at least as likely to make technical errors with one as another — by failing to adjust or overadjusting cap levels or tax rates, say. And I see no reason to think that the industry lobbyists who have put the screws on legislators over permit allocation would suddenly turn into pussycats if a tax were on the table. At least with cap-and-trade the giveaways are glaringly obvious, where tax breaks can be complex and obscure.
Cap-and-trade can be structured to behave almost exactly like a carbon tax, it has some advantages over a carbon tax, and in basically all the ways that matter it is every bit as good as a carbon tax. It’s the implementation that’s crucial. Those holding out for a carbon tax need to explain why they think Congress would suddenly be less ignorant or craven in debating a tax than they are in debating a cap-and-trade plan, AND they need to explain why the difference in outcome would be large enough to justify the cost of delaying action by a year or several as a new bill was rolled out, sold, defeated a few times, and then eventually passed.