Debt and (Carbon) Taxes: Obama’s Last Chance for Climate Redemption is Just After 2012 Election

One of the silliest headline to come out of the debt ceiling post mortems comes from ClimateWire (subs. req’d):

Debt deal, promising energy budget cuts, appears to chill hopes for a carbon tax

How exactly do you chill something that has been frozen near absolute zero?

In fact, in my reading, the debt deal actually warmed up hopes for a carbon tax from those liquid helium temperatures to at least liquid nitrogen temperatures — you know, around -321°F.

Why?  Because it didn’t include any revenue increases or reforms in the tax code.  That means a grand bargain is still on the table.  There are two things Republicans want more than anything else in the bargain — more, even than actual debt reduction — extension of the Bush tax cuts for the wealthy and a reduction in the corporate tax rate.

And there is one thing Democrats will insist on as part of the post-2012 debt ceiling deal —  some net revenue increases.

Yes, it’s true that President Obama has proven himself to be a feckless negotiator and even worse messager on the debt issue.  But he will actually have maximal leverage right after the 2012 election when the Bush tax cuts are poised to expire if no positive action is taken.  Also, he won’t be up for re-election so, in theory, he can play hardball.  Yes, I know, it’s a theory, but remember, we’re 321°F below 0.  Put on your thermal underwear and play along.

Obama could trade both the Bush tax cuts and the corporate tax rate reduction for a carbon tax.  No, I’m not saying he will.  I’m only saying that he could — and indeed, it strikes me as his only opportunity in his entire second term to enact any policy that would actually reduce absolute levels of U.S. greenhouse gas emissions.

It is therefore his only chance  to meet the commitment he made before Copenhagen, a commitment that is certainly crucial if there is to be a global deal  during his, hypothetical, second term,  a commitment that is crucial if there is to be even a tiny chance of averting multiple, catastrophic climate impacts.  Yes, Obama does have to get reelected for this scenario to make much sense, but that looks to be at least 50-50 right now.

The ClimateWire piece comes to its conclusions with some bizarre quotes from experts at the end:

“A carbon tax could be an appealing alternative to even more ambitious cuts to entitlements and defense spending as well as a national value-added tax, repealing the home mortgage tax deduction, or higher income taxes,” [economist Joe] Aldy said in an email. “A well-designed carbon tax could raise some revenues to finance deficit reduction and enable a reduction in payroll tax rates, for example.”

No, that isn’t the bizarre quote.  That’s kind of sane.

Still, a former Democratic aide who is promoting climate policies believes the debt deal formalizes the discussion around new revenue. In a “rational” world, that debate would naturally lead to the benefits of taxing pollution over paychecks, this person said.

I personally think the likelihood of a big tax deal has increased,” the former aide said, noting that carbon revenue could be combined with lower tax rates for people and corporations.

Hmm.  Not bizarre either.  Seems to contradict the headline, actually….

But others express astonishment at the thought of a carbon tax being passed by a House that just forced the White House to abandon smaller goals on revenue, like stripping subsidies from oil and gas companies.

“If it didn’t work this time, how’s it going work next time?” asked Ted Gayer, an economist with the Brookings Institution who supports a carbon tax. “I don’t want to be pessimistic, but I didn’t look at the [debt] compromise and see this as a big opening.”

I’m not sure what is meant by “it didn’t work this time” but there was no carbon tax put on the table this time.  In any case, Gayer’s point is that there is not a “big opening.”  Who could argue with that?  But that isn’t the same as saying it has chilled the possibility.  No, for that we have, Joshua Freed, vice president of clean energy at Third Way:

Freed, of Third Way, thought he misheard a reporter ask about a carbon tax — in his mind, it’s that far-fetched.

“In which country and under which Congress?” he asked. “That’s as likely as me pitching for the Nats this year — impossible.”

So one quote saying it is impossible.  And from a guy who just last month coauthored a paper titled “Climate Pragmatism” that said the only politically pragmatic climate strategy for the U.S. should be built around a big new federal spending effort of $15 billion a year or more for low-carbon technology.  So more than $100 billion in new spending over 10 years, that is a pragmatic thing to propose, but a carbon tax, which actually raises revenues, well, that is impossible.

Certainly it ain’t likely.  But the chances for a carbon tax are also certainly considerably higher than for the $15 billion year or more clean energy spending effort.

In fact, if Obama actually made a veto threat over it and offered the deal I proposed above, he could almost certainly get some sort of carbon tax.  Yes, I know, a very big IF to make happen, but that is what climate hawks are for, no?


Below are old comments from the earlier Facebook commenting system:

President Obama is not a progressive.

Yes he talks like one at election time and in some of his speeches but surely the budget cuts that he put forward as part of raising the debt sealing were above and beyond anything the GOP originally asked for. No, what you have is a president who is significantly right of center. Keep in mind the center in US politics is rapidly shifting right given that in fact there are no longer any extreme left wing politicians left if there were ever any.

Progressives as they have always done will be asked to support President Obama’s re-election based on the politics of fear.If you don’t support him you get the GOP.

It’s time to start rejecting this game since it has left the progressive movement in continuous retreat for almost 4 decades but always being told there will be a better day if they vote Democrat.

6 · Like · Reply · Subscribe · August 2 at 1:23pm

Dan Ives · Colorado

Absolutely spot on. The progressive movement needs to face reality and understand that to advance its agenda, it needs to stop clinging hopelessly to the Democratic Party and start openly challenging it in the streets.

2 · Like · Reply · August 2 at 2:19pm

Peter S. Mizla · Top Commenter · Vernon, Connecticut

I have totally given up on Obama- He is the Neville Chamberlain of our times. Mention climate change? Doubtful.

Looking over at Weather Underground, that 100 degree plus heat continues to be centered in the ‘dust-bowl’ of the 30s. As it has now for weeks. The rest of the Midwest and Mid to lower great plains still in the mid to upper 90s. As they have been for weeks. What a miserable place to live.

2 · Like · Reply · Subscribe · August 2 at 2:56pm

Barry Saxifrage · Top Commenter

I sure hope it unfolds as you lay it out, Joe. You’re one of the few people with both clear climate knowledge and federal government experience…so if you think it is above 3 Kelvin I’ll keep some hope going.

It is a total no-brainer to swap income taxes for carbon taxes. A conservative government in BC did it and made big cuts to personal, corporate and small biz taxes. Bush tax cuts for carbon tax. Why not?

Too bad the oil companies have tricked the GOP into painting their party into a pro-climate-pollution corner. Hard to see how they get out of there…and we know Obama won’t push them to move on climate. He still has the audacity of asking us to hope.

1 · Like · Reply · Subscribe · August 3 at 12:40am

Wesley Rolley · Top Commenter · Northwestern University

When the Progressive wing of the CA Democratic Party called for a primary challenge to Obama, it looks like another act in a Kabuki drama.

We all know that it isn’t going to happen with anyone credible. Even if it did get started in CA , the 3 sisters (Pelosi, Feinstein, Boxer) would kill it quickly. Right now, my only choice is Dr. Mesplay. At least he understands the science and would be willing to work for it. If voting Green elects a Bachmann, so be it.

1 · Like · Reply · Subscribe · August 2 at 6:23pm

me (signed in using Yahoo)

If you want a carbon tax, you have to, at the very least, talk about climate change. And he won’t even do that. He’s going to try and solve the deficit “crisis” on the terms he’s already laid out — lame attempts at populism through taxation of the rich, and he can barely sell that. A carbon tax is inevitably tied to a whole other political can of worms.

1 · Like · Reply · Subscribe · August 2 at 2:16pm

sasparillafizz (signed in using Yahoo)

He might have some leverage at that point (if he wins) as you point out Joe, but he’s not the guy that will champion climate change – its not worth anything to him (otherwise his choices over these many years would have been different). By 2013 (if elected) he’ll probably be triangulating with the latest GOP initiative for something hideous with the rest of us astounded he could possibly be contemplating it…

It’s a nice thought that he could possibly bring it up (he possibly could), but our President doesn’t care about this issue – he’s made that abundantly clear while we’ve stood by astounded at his many anti-climate change choices over these years. His only reason for existence (at this point, IMO) is to prevent the GOP from sweeping all 3 sectors of elected federal government and destroying the future of the country on their Libertarian crusade. Other than that he’s unrecognizable as a democrat.

Like · Reply · Subscribe · August 2 at 11:25pm

James Hwang · Top Commenter (signed in using Hotmail)

Maybe we could replace the mortgage deduction with a deduction for home repairs and retrofits (including solar panels). It would discourage wasteful spending on big houses (smaller houses generally means less environmental damage in the process) and more energy efficiency and small solar.
And if we REALLY wanted to push low-carbon no matter what, then it could be possible to convince those wanting the “fair tax” to base the tax amount on energy intensity either for creation or usage.

Like · Reply · Subscribe · August 2 at 1:29pm

Timothy Hughbanks · Top Commenter · Professor at Texas A&M University

“How exactly do you chill something that has been frozen near absolute zero?”

Adiabatic demagnetization?

Like · Reply · Subscribe · August 2 at 3:31pm

Paul Magnus · Top Commenter

“Obama’s Last Chance for Climate Redemption is Just After 2012 Election”….
Our last chance?

Like · Reply · Subscribe · August 2 at 4:06pm

dansanch01 (signed in using Yahoo)

Feeling optimistic today, Joe?

Like · Reply · Subscribe · August 2 at 1:08pm

Joseph Romm · Top Commenter · Center for American Progress

It’s all relative!

Like · Reply · August 2 at 1:38pm

Leif Erik Knutsen · Top Commenter · Friends with Joseph Romm

Fifteen billion is only about 2.5% of the current Military budget. The military does have some discretionary spending available, and could easily do without one B-1 for a secure sustainable energy R & D policy that would in turn save lives at the front. (Although the GOBP is attempting to prevent that.) That sustainable energy R&D could trickle down to the American people much like the internet has done. The GOBP has painted themselves into a corner and their defense of their philosophy becomes more and more bizarre by the day.

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