In a Saturday article on President Obama’s budget outline, the NYT reported:
Full details of Mr. Obama’s budget for the 2010 fiscal year will be released in April. The outline on Thursday will make clear that he intends to push ahead on promises to contain health care costs and expand insurance coverage, and to move toward an energy cap-and-trade system for controlling emissions of gases blamed for climate change.
“The president believes there are essentially three areas that have to move forward even as we pare back elsewhere — health care, energy and education,” said David Axelrod, his senior adviser. “These are the bulwark of a strong economy moving forward.”
So, yes, we will see a cap-and-trade bill on Obama’s desk in FY2010 — between October 1, 2009 and September 30, 2010. Equally interesting are the details of the bill that leaked into the budget:
On energy policy, Mr. Obama’s budget will show new revenues by 2012 from his proposal to require companies to buy permits from the government for greenhouse gas emissions above a certain cap. The Congressional Budget Office estimates that the permits would raise up to $300 billion a year by 2020.
Since companies would pass their costs on to customers, Mr. Obama would have the government use most of the revenues for relief to families to offset higher utility bills and related expenses. The remaining revenues would cover his proposals for $15 billion a year in spending and tax incentives to develop alternative energy.
This may be surprising to Congressional Dems, some of whom may expect to be using for a variety of energy and environmental purposes.
But I’ve been saying for a while that, as a matter of politics, the vast majority of the revenues from the auction will need to be returned to taxpayers — that is to say, the vast middle class. I think at least 60% to 80% needs to be refunded to start with, rising to 80% to 90% within 10 years. Otherwise conservative opponents will simply attack this entire effort as a tax (see “Is 450 ppm politically possible? Part 6: What the Boxer-Lieberman-Warner bill debate tells us”). Yes, they’ll do so anyway, but if the bottom of three to four quintiles are made whole, the argument can be refuted.
Fortunately, team Obama seems to understand that.