The inconveninenter truth

Matt's taken to defending John Dingell. Here's why I'm not ready to: It's not as if the "inconvenient truth" is that the only way to forestall the climate crisis is to enact a carbon and a gas tax. I personally think, from my position of relative privilege and policy nerdiness, that a carbon and a gas tax--when paired, as Dingell has, with reimbursements for the poor--comprise two of the best abstract policy options with which we can attack the climate change problem. Sadly, though, the low- and middle- (and, yes, upper-) income people who struggle to pay for gasoline everyday don't necessarily understand the nuances of these policies, and so it turns out they're fairly politically unpopular.

Matt writes:

What he's saying with his "yes to unrealistically aggressive action on climate change, no to high CAFE standards position" is, basically, "stop giving me shit about this." And he's right. Either Democrats are going to commit to taking politically inconvenient -- inconvenient for all of them -- stands to curb carbon emissions, or else emissions won't be curbed

and the good news is it just doesn't have to be that way! There's this whole other option available to us--one that's a bit less elegant as policy, but rather easier sell to businesses-types and regular people: Instead of a carbon tax, use a stand alone cap-and-trade program (preferably one which creates a market for carbon credits) and at the same time raise CAFE standards. I'll get back to cap-and-trade in a second, but for now, keep in mind that the impact of increasing CAFE standards and the impact of establishing a gas tax are exactly the same--they both lower auto emissions. The obvious difference is that in the case of CAFE standards the costs are distributed to the car companies while in the case of a progressive gas tax, the costs are distributed to rich people. Yes, on balance, I think the second order benefits of a gas tax (for instance, less driving) are preferable to the second order benefits (and in some cases costs) of higher CAFE standards. But CAFE is a genuinely good alternative to a gas tax, and also happens to be much, much more politically feasible.

Cap-and-trade (which is part of Dingell's plan) is not mutually exclusive from a carbon tax (nor, for that matter, is a gas tax mutually exclusive from higher CAFE standards). It is, though, a stand alone method of lowering emissions--one that is, again, much more popular than the "alternative". That's why it's the basis for just about every plan we've seen introduced thus far. What's good about cap-and-trade and CAFE, too, is that it's perfectly possible to write triggering mechanisms into the laws: If we don't meet our first benchmark in 2012, we institute an auction/carbon tax/gas tax to buttress the first-round legislation and then there's no going back. 

What I've very broadly outlined, then, is a somewhat politically palatable alternative to the Dingell plan. The Beutler plan. A plan that would make environmentalists dance on their Priuses if it became law, and which, at the same time, would stand a much greater chance of getting there than Dingell's does in the first place. The real inconvenient truth is that my plan would be...inconvenient...in the short term for car companies, and that's why Dingell's proposed this highly volatile alternative. I don't any longer believe that he'll dump this bill into Pelosi's office and walk away holding his nose. In fact, I think he'll fight for it pretty hard. But if (or when), despite his best efforts, it fails in the House, it could, like Hillarycare set the underlying cause back for a very long time. We don't have that kind of luxury.

As I've said before, Dingell's new to the game. While he was busy doing other things, a strong consensus was emerging among the people who'd been thinking about this issue for years and years. What they came up with might not be good for Dingell, but it's still very, very good. Moreover it is, to my mind, the only smart first strike against the problem, and Dingell knows this. Unsurprisingly, though, he's letting relatively narrow interests guide his thinking, and I guess we'll all just have to live with the consequences of that.

Post Script: To compare this loosely with a different issue, I know what Matt thinks about the right way forward on health care, and it's certainly not for leading Democrats to back Medicare-for-all. Why then the call for the Dingell plan? Likewise, on climate change, nobody serious is suggesting a middle-way boondoggle. But sometimes the right way forward makes for slightly (though just slightly) suboptimal policy.

Comments

[JimPortlandOR]

I want to avoid wading into too deep waters here, because this is complicated stuff (cutting hydrocarbon emissions), but this Dingell/No Dingell argument seems to be way too deep into the jungle (inelegantly mixing metaphors).

First: CAFE

Let's recall this affects FLEET standards - the mix of cars of varying model efficiency actually sold. Increasing CAFE standards can mean two things: (1) every model gets more efficient, or (2) the mix is changed to sell more of the efficient cars and less of the inefficient. It can mean doing some of both as well.

Detroit has, for decades now, chosen to sell high profit/unit, low efficency vehicles because they make money on this, and don't make money on low profit/unit vehicles (for many reasons, union benefits being a major piece).

SO, Detroit feels that both of these CAFE alternatives are really bad for their business - the number of vehicles sold compared to non-Detroit competitors, and the profit per vehicle. They are probably correct, unless they choose to compete on a different basis than they have in the past. Detroit is stubborn and not good in forecasting the direction of the market: bad management. That is a fact. They are short-run thinkers.

Dingell's job is to keep Detroit (and the plants of US manufacturers wherever they are) in business, or he'll be out of a job along with all the workers who would be laid off. All of the US (Detroit) vehicle companies are shakey financially, and they all could be out of biz real soon now, so this isn't a game for them.

Given the situation/reality, a choice between short run and long run, Dingell (and Detroit) won't look way ahead (to a greatly lower hydrocarbon future) at the expense of short run viability - they realizing that Keynes dictum about 'in the long run we are all dead' applies to them with particular potency.

So the dilemma is: how to keep the US auto industry in biz while reducing carbon emissions. There may not be a way to do this that is acceptable to the short-run thinking of the Detroit guys, whose quarter to quarter sales and profit numbers determine their jobs and their companies.

My assessment is that Dingell's 'big' plan is a trojan horse. He knows its won't fly, and he also knows he has to appear to be solving the carbon-emissions problem or he'll lose his control over energy law.

The Dingell plan may sound pretty good, but it is dead dead dead in Congress at this particular time. All of the Repubs and many of the Dems don't want to rock the boat (another metaphor!) before the 08 elections. If Congress is willing to throw out our civil liberties (FISA) and unwilling to end the Iraq nightmare (withdrawal) because of 08 concerns, why would anyone believe they will do anything 'rash' about energy?

[Dan]

Cap-and-trade in its usual form, with all or most allowances given away to existing polluters, is certainly not "very, very good."

Cap-and-trade proponents, such as the United States Climate Action Partnership, have provided a real service in moving Congress and the country toward accepting that action on climate change is imperative and that putting a price on carbon is essential. Cap-and-trade will not be the ultimate solution, however; because of its complexity, serious equity issues and the delays inherent in its development and implementation.

JimPortland's prediction that a carbon tax won't be passed before the '08 elections is probably correct, but it's also unlikely that a cap-and-trade program will be passed before we have a new Congress and administration. That means there will be plenty of time to consider the relative merits of carbon taxes as opposed to cap-and-trade without the pressure of an upcoming election.

The Carbon Tax Center (www.carbontax.org) strongly endorses a carbon tax. We begin with the principle that charging businesses and individuals a price to emit CO2 is essential to reduce U.S. emissions quickly and steeply enough to prevent atmospheric concentrations of CO2 from reaching an irreversible tipping point. The transformation of our fossil fuels-based energy system to reliance on energy efficiency, renewable energy and sustainable fuels won't happen without carbon taxes sending the appropriate price signals into every corner of the economy and every aspect of life.

We have serious questions about the efficacy and equity of a cap-and-trade program and believe that a carbon tax is the most transparent, universal, equitable, understandable and immediate measure for creating incentives to reduce carbon emissions. For a comparison of a carbon tax to cap-and-trade, see the issue paper on our website comparing carbon taxes to cap-and-trade.

[Dave]

Let's not forget if we increase CAFE too much, not only will it impact jobs, it will limit the number of vehicles to choose from. We can do it smartly - with technology - but we can't mandate fuel standards that are too extreme. Parents should be able to purchase a minivan if they so choose. I have more info at my organization at DriveCongress.com.