James Pethokoukis

Politics and policy from inside Washington

The EPA and Obama’s Uncertainty Tax

December 8, 2009

Here’s the theory about the new U.S. position on greenhouse gases. The official finding by the U.S. Environmental Protection Agency that the emissions endanger human health sets the stage for permit requirements on power plants, factories and automobiles. It also supplies President Barack Obama with more evidence at the Copenhagen summit of a “new normal” in America when it comes to climate policy. And back home, it supposedly gives a nudge to the Senate where cap-and-trade legislation is stuck on the back burner.

But in practice, the only thing certain about the EPA ruling is more regulatory uncertainty leading to less economic growth and fewer jobs. Bad news, to be sure, for American businesses already flummoxed by the mercurial state of healthcare, financial and tax reform. Call it Obama’s Uncertainty Tax.

While a cap-and-trade bill has already passed the House of Representatives, few Capitol Hill observers expected the Senate to approve one, even by the end of 2010 thanks to the anemic economy and political risks for incumbent Democrats facing midterm elections. What’s more, expectations of a more Republican-leaning congress after 2010 made it seem like economy-wide carbon caps were sliding off the Obama agenda for the foreseeable future.

But now it’s conceivable carbon restrictions would be implemented as early as next year – even though the EPA itself admits its efforts would be more disruptive and less efficient than congressional action. Such an optimistic timetable assumes no legal challenges. But there will be plenty of those. Already, business groups are preparing to file suit against the EPA. It could fall to U.S. courts to determine the future of the nation’s approach to climate policy. This is a nightmare scenario for the private sector when it comes to planning for new expansion or hiring. Note that the big problem with the job market at the moment is not so much job losses and zippo new jobs being created. It will take a year of 4 percent growth adding 250,000 jobs a month to lower the unemployment rate to 9 percent.

Of course, about the only thing worse than regulatory uncertainty would be for the EPA to follow through with its top-down, command-and-control approach to dealing with perceived climate change.

One solution would be for Congress itself to act. GOP strategists would love to disrupt reeling Democrats with another controversial proposal – which is precisely why it won’t happen. Dems in the Senate are well aware of the shellacking their House colleagues have taken on their cap-and-trade vote.

Another option would be for the White House to devise a plan that would generate some bipartisan support. One idea might be a carbon tax whose revenue could be distributed back to citizens as a dividend, or used to offset payroll taxes. Such a refund could be progressive and popular.

But the most likely scenario is no cap-and-trade and no carbon tax, just more government “investment” in clean energy. But for now, workers and business are left to keep paying the Uncertainty Tax.

Comments

Uncertainty tax, indeed. That just about sums up the Obama administration’s approach to governance. Hard to believe that giants like Roosevelt (both of them), Truman, Eisenhower, Reagan and the like once occupied the White House. Now it’s mellifluous Barack Obama and Rahm whatsisname and a pile of IOUs. Three more years too.

Posted by gotthardbahn | Report as abusive
 

I agree with the primary assessment of the author. I would like to add that, when discussing this topic we should be careful to distinguish between “climate change” and “anthropogenic global warming” (AGW). This is a classic maneuver by the left to change the definition of argument specifics in the course of debate. There will always be “climate change,” it is a natural phenomenon. The linchpin of Kyoto-Copenhagen-Cap & Trade scheme relies on the “evidence” for AGW linked to carbon emissions. For a decade now the globe has not become warmer in spite of increased emissions – breaking the alleged link. However, the climate has changed. Hence the new rally cry, ‘we must fight to stop climate change!’

Posted by B Taylor | Report as abusive
 

Remember when Hillary Clinton said that climate change would be a great organizing principle for the economy? The true believers really think it will help the economy, and that millions of high paying union “green jobs” will magically spring up.

Wait until the Republicans gain seats in November, Obama will have choice but to impose executive regulations to save the planet, because cap and tax won’t be going anywhere.

 

I find it mind-boggling that just days after the Climate Science claque is revealed to have lied for years, the EPA nonetheless goes ahead and gets into the game of regulating my breathing.

The sooner this lot is neutered, the better.

Posted by Patrick Carroll | Report as abusive
 

I have a better idea, dry up the tax revenues, scorched earth. Since the plans are to tax us to death by increments, let’s do one better. Resign from the working group. Go Galt. Quit. Get sick and go on long term disability. What ever can be used to kill the tax tree,
do it.
I think the perpetrators of this crap need to have permanent blinding migrain headaches.

Posted by Cluebyfour | Report as abusive
 

the real greenhouse gas – G2O

Garbage Data in –> Garbage Code = Garbage (squared) Out

G2O

Posted by Jeff | Report as abusive
 

Further to B. Taylor’s point, we need to further distinguish between AGW and *catastrophic* AGW. If AGW is real but causes a mere one degree temperature increase over the next 100 years, then who cares? Let’s move on to some real problems. The weight of scientific evidence (when one neglects fudged data and questionable models) indicates that AGW lies somewhere between a minor problem and a non-problem.

Posted by Dana H. | Report as abusive
 

I actually spent some time today mucking about in the applicable sections of Title 42, dealing with public health and welfare (and civil rights, too). I’ve not seen the Fed. Reg. ruling by which the EPA has acted, but from what I’ve read it seems to be that this is a designation under § 7408(a)(1), under which the EPA gets to designate pollutants for purposes of establishing national primary and secondard air quality standards. Interestingly, under § 7408(a)(2) the EPA’s standards adopted must “accurately reflect the latest scientific knowledge,” which ought to provide some piquant hilarity in light of Warmingate. Under § 7411 the EPA gets to establish categories of “stationary sources” and establish standards for new sources. Those new sources are subject to permitting requirements established under § 7661a; the EPA has the right of entry and inspection to monitor compliance under § 7661c. Section 7413 establishes civil, criminal, and administrative penalties for non-compliance with any permit. Right now those provisions relate only to “stationary sources”; “moving sources” appear to be, for the moment, motor vehicles and the fuel they burn.

So as of right now the EPA could establish, for example, categories of “new stationary sources” to include things like “domestic fossil fuel sources,” e.g. your daddy’s gas grill out on the sundeck, or “domestic non-fossil fuel sources,” e.g. your boys’ weenie roast in the back yard. You then have to have an EPA-approved permit to host the neighborhood kids over to cook weenies and marshmallows, and if you should fail, and the neighborhood crank decide to rat you out to the new EPA inspector who just got hired to implement the “domestic stationary source compliance program,” and is consequently looking to make his bones with his boss . . . well, good luck to you.

Now let’s get a bit paranoid. How surreptitious would Congress have to be to include “moving sources” other than motor vehicles under the same sections (§§ 7401 et seq.) as the stationary sources the EPA currently can control? Shove a definition into the general definitional section that defines a “moving source” to be “any source of any substance identified in [reference the statutory designations of pollutants] or designated by the Administrator pursuant to [reference the various sections under which the EPA gets to make those designations] which is not a stationary source.” Folks, you, your children, your pets, and your livestock are now “moving sources” of a pollutant designated by the EPA. Whatever you do to create a new source or alter the emissions from an existing source is now subject to permitting and regulation by the EPA. And woe betide you if you fail to comply.

Think the above is too kooky for words? Remember when OSHA seriously opined that it had the power, and the intention, to come into your house to make sure your own den complied with its statutes and regulations because you just might be working from home? Remember that? Or who exactly it was that decreed that the toilet in your master bathroom be of insufficient capacity to accomplish its intended office on a single throw of the lever? Recall also that one of our president’s troupe of czars is on record as seriously advocating mandatory abortion to protect the environment. “Kooky” has to be defined with what is on the table right now. I hope my musings on “moving sources” other than motor vehicles never comes to pass. But it easily could, with a teensy bit of legislative drafting, and do we really, truly, genuinely trust that kind of power not only to the bureaucrats presently in power, but to all future power-holders? All of them? Remember that on 29 January 1933, the office of Reichskanzler wasn’t nearly what it became, starting the next day.

Posted by Countrylawyer | Report as abusive
 

The Great Depression was brought about by a series of policy blunders following the 1929 Stock Market Crash. Obama and the Democrats in Congress are doing their level best to make history repeat itself. And the sad part is, they haven’t a clue about what they are unleashing.

Posted by No Cause For Indictment | Report as abusive
 

All of us small businessmen are just waiting to see if we will be allowed to continue existing. A person would be a fool to invest in an economy where the rules can change overnight and whether you win or lose is determined by government fiat rather than merit and effort.

If one’s intent were to destroy the economy it would be difficult to come up with a better plan than the one being concocted by the White House.

Everyone is just hanging onto their cash because they know they won’t ever have the opportunity to make any more with the current regime in power. Since the only feasible way to pay down the massive debts being run up now is through inflation it is likely that even just husbanding your resources is a losing hand.

Really, we have reached the point where there is no where a man can go to be free and live a decent and productive life. The US was the last, best hope of humanity and it has now been lost. We traded it for a few meager handouts just like the Indians traded away their existence for a few pretty baubles.

Posted by To Hayek With You | Report as abusive
 

No wonder the trial lawyers assoc. gives so much money to the dems!

Posted by liberpublican | Report as abusive
 

Gerald Warner of the UK Telegraph called it “Rule by EPA Decree”

http://tinyurl.com/yhknjku

We’re in the midst of a political coup, if anyone cares to note it.

Posted by ahem | Report as abusive
 

It is -16 degrees F. here in Montana. The high was below 0. Now “our” government is going to save us from global warming. My disgust knows no bounds.

Posted by Mkelley | Report as abusive
 

“Another option would be for the White House to devise a plan that would generate some bipartisan support. One idea might be a carbon tax whose revenue could be distributed back to citizens as a dividend, or used to offset payroll taxes. Such a refund could be progressive and popular.”

I’m sorry, are we looking on this one favorably?

Posted by SukieTawdry | Report as abusive
 

Results of these tax reforms are uncertain. Lets see what happens.

 

So I’m guessing creating jobs and helping the economy isn’t the most important thing for the Government to do anymore?

Hey, why not run another Depression. We’ve clearly forgotten what the last one was really like. Apparently this sort of thing is something we’ll have to do every 50-100 years so that people can remember that damaging the economy is bad.

Posted by Gekkobear | Report as abusive
 

its been proved that these tax reforms will only bring more pain in the long term

Posted by cainindia | Report as abusive
 

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