"Earl Blumenauer’s Carbon Audit"
Earl Blumenauer deserves major props for having inserted a provision into the TARP bill last fall calling for a comprehensive “carbon audit” of the U.S. tax code.
This is important for a lot of reasons. One is that you have people like Ross Douthat out there saying they’re worried that even if anthropogenic climate change is real, mitigating it may not pass cost-benefit scrutiny. I don’t think that claim is nearly as plausible as those who put it forward like to make, but it is true that the costs of emissions reductions are an important consideration. But what’s frustrating about the conversation is that when we talk about costs we oftentimes just assume that all we can do is take the baseline policy environment we have, and then plop emissions reductions on top of it. As if the pre-existing status quo already constituted optimal growth policy or something.
But of course that’s not right. The American Clean Energy and Security Act would reduce emissions at remarkably low cost but in part the cost would be low because the reduction targets aren’t all that ambitious. It would be an excellent start—indeed, it would be the single most important piece of environmental legislation in the history of the world—but it will be necessary to go further. And to get deeper cuts, you really need to wring the inefficiencies out of the current system. Removing economically distorting tax subsidies makes the economy grow faster rather than slower. And removing distorting tax subsidies that encourage greenhouse gas pollution obviously reduces greenhouse gas pollution. So scouring the tax code for win-win opportunities is enormously useful.