James Pethokoukis

Politics and policy from inside Washington

Tea Party’s other big win: death of cap-and-trade

Nov 5, 2010 18:42 UTC

Looks like Tea Party America has busted a cap in cap-and-tax. Following sweeping Republican election victories, President Barack Obama has conceded his cap-and-trade plan to cut carbon emissions is dead for the foreseeable future. “I think there are a lot of Republicans that ran against the energy bill that passed in the House last year, Obama said at a Nov. 3 press conference. “And so it’s doubtful that you could get the votes to pass that through the House this year or next year or the year after.”

Yet Obama added that cap-and-trade  “was just one way of skinning the cat.” You see, the president has a plan B: Let the Environmental Protection Agency work its magic on American business. The EPA would begin regulating pollution from large factories and power providers starting in January. Now Obama acted like the agency has no choice. “The EPA is under a court order that says greenhouse gases are a pollutant that fall under their jurisdiction,” he added.

But that isn’t quite true. The Supreme Court ruled in 2007 that the EPA had the right to regulate emissions of greenhouse gases under the Clean Air Act – but it was not mandated to act. Even regulators admit this alternative is more economically harmful than a system where companies can offset carbon use by purchasing tradable permits. (And a straight carbon tax offset by payroll tax cuts would be even better.) But that drawback is a desirable feature to the White House. They’ve been hoping the threat of onerous EPA action would spur business to bring Republicans around.

The GOP response earlier this year was to try and strip the EPA of its relevant authority. The effort didn’t work, but it might next year. Republicans could try the same approach or attempt to cut funding for what it now mocks as the Employment Prevention Agency. Either measure would easily pass the GOP-controlled House. The Senate, still run by Democrats, would be a tougher slog. But between six additional Republicans and a dozen nervous red-state Democrats up for reelection in 2012, an anti-EPA bill might have the 60 votes needed for passage.

Obama could still veto the bill, of course. But legislation that merely forestalled EPA action until the economy perked up might stay his hand.  Or Republicans could attach it to some more important spending measure, reducing the chances of a veto. And the threat of defunding — and endless Capitol Hill hearings — could make the EPA think twice

If all else fails, business has its own Plan C: tie the agency up in court. The EPA’s last big clean air effort inspired a decade of legal challenges. One tactic works regardless of which party is in power: If you can’t legislate, litigate.

COMMENT

How many climate scientists did it take to change a light bulb? NONE. But they did have consensus that it would change.
Why wasn’t Climate Change ever regarded as the number one issue of prime importance to everyone since we were told climate change was to have been immanent death for the planet, as in SAVE THE PLANET?
Why did we enjoy condemning our kids to their graves with CO2 death warrants and CO2 death threats? This is liberal love?
Was it necessary to threaten my kids with death by CO2 just to get them to turn the lights out more often?
Why were there thousands of more “consensus” scientists than protesters?
Why did CO2 levels rise despite our contributing less with the world economic downturn?
Wouldn’t the plants have shown effects long before the climate would shown effects?
Why did the leftwing hope for the CO2 misery to really have happened and the rightwing discounted it as corrupt exaggerated and politicized science?
Why were scientists not called what they were, fallible and mortal human beings and lab coat consultants?
Didn’t scientists pollute the world in the first place with their chemicals?
Why didn’t the countless thousands of consensus scientists march in the streets if this was certain death we were facing?
Since Climate Change denied ancient climate, did the doomers therefore deny evolution too? Who’s the knuckle dragging neocon now?
Why didn’t the people know that the UN’s scientific warning, predicted the effects of CO2 were to have been anything from “nothing at all” to “unstoppable warming” (death)?
Will history view climate scientists as being to science what witch burners and The Crusades and abusive priests were to religion?
History has already shown that Climate Change was to the Democrats what the Iraq War was to the neocons, lies, and fear and politics.

Posted by DavidNutzuki | Report as abusive

U.S. tax cuts may cheat death, but reform needs life

Nov 5, 2010 15:25 UTC

The Bush tax cuts look on the verge of cheating death. The White House is strongly hinting it will compromise with Republicans and agree to temporarily extend wealthy and middle-class tax reductions set to vanish at year-end. That would provide welcome relief since even partial expiration risks sapping economic growth during a flaccid recovery. But a two-year deal, while welcome, would also still leave the long-term state of the tax code in flux. Washington should use the extra time for sweeping reform.

The tax cuts enacted by George W. Bush became an important talking point for the midterm campaigns. Besides the national GOP victories, liberal Washington state provided a glimpse into how the country seems to be thinking about the issue. Voters there overwhelmingly rejected a measure that would have raised income taxes on the richest 1 percent to pay for education and health spending.

Higher taxes remain politically toxic in the slow-growth, high unemployment U.S. economy. That’s one reason why White House press secretary Robert Gibbs said his boss is willing to haggle. President Obama already was on board with permanently extending middle-class cuts costing $2.9 trillion over a decade. He now also seems ready to accept a brief extension of cuts for the rich that will add to the tab.

The deal is likely to be a combined two-year extension. Republicans reckon their 2012 negotiating position would be stronger by keeping both sets of cuts on the same schedule since the high-end ones are less popular. But the timing also ensures the hot-button matter will get new life during the presidential election season.

The only potential silver lining to this unpleasant sausage-making is that it provides a window for a long overdue discussion about a longer-term fix. America needs a more stable and simpler tax system to become more competitive.

Obama’s deficit panel may offer some suggestions next month, but the basics seem basic enough. Taxes should be lower, broadly applied and subject to as few market-distorting deductions and loopholes as possible. As Indiana Governor Mitch Daniels often quips, America needs a tax system that looks like someone designed it on purpose.

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