James Pethokoukis

Politics and policy from inside Washington

Trust but verify, China edition

Dec 15, 2009 13:47 UTC

The words of #42 (RWR) came back to me when I read this in the NYT:

China, which last month for the first time publicly announced a target for reducing the rate of growth of its greenhouse gas emissions, is refusing to accept any kind of international monitoring of its emissions levels, according to negotiators and observers here. The United States is insisting that without stringent verification of China’s actions, it cannot support any deal

Expanders vs. Restrainers

Dec 15, 2009 13:38 UTC

I actually agree with this greenie op-ed the UK’s Guardian, though the author and I are on different sides:

Humanity is no longer split between conservatives and liberals, reactionaries and progressives, though both sides are informed by the older politics. Today the battle lines are drawn between expanders and restrainers; those who believe that there should be no impediments and those who believe that we must live within limits.

Cap-and-dividend instead of cap-and-trade?

Dec 14, 2009 15:37 UTC

The cap-and-trade approach to limiting climate emissions does not seem to be going anywhere in the Senate. But a more-populist bill introduced by Sens. Maria Cantwell (D-Wash.) and Susan Collins (R-Maine) might be another option. Its goal is to cut emissions 20 percent by 2020 and 83 percent by 2050. Key difference with the existing cap-and-trade approach (via The Hill):

1) Wall Street may be particularly disappointed in the new bill. The Cantwell-Collins bill, known as the Carbon Limits and Energy for America’s Renewal (CLEAR) act, would restrict trading in a new carbon market to entities regulated by the act, a move that may have more populist appeal. … Banks like Goldman Sachs that looked forward to new profits under the giant secondary trading market created under economy-wide cap-and-trade legislation are unlikely to get on board, however.

2)  It would require fuel producers, rather than fuel users like electric utilities, to hold credits. The credits all would be sold at an auction. The cap-and-trade bills Congress has considered would distribute emissions allowances for free during the initial phase of the program in order to keep energy prices from rising too quickly.

3) Under Cantwell-Collins, revenues from the auction would largely go back to low- and middle-income households to offset higher energy costs the new carbon regulations are intended to cause. An average family of four would receive $1,100 annually in rebates, according to Cantwell’s office. In total, 75 percent of the auction proceeds would be returned to low- and middle-income households. The remainder would be distributed to a clean energy investment trust fund.

Me:  This cap-and-dividend approach has been called “100-75-25-0” policy: 100 percent of the permits are auctioned, 75 percent of the revenue is returned as dividends, 25 percent of the revenue is invested and zero offsets are allowed.

COMMENT

We agree on something!! Now show us where the Republican politicians (not a think tank somewhere) other than the Maine outliers are actually behind the initiative.

Posted by Chi Democrat | Report as abusive

Why are Democrats pushing cap-and-trade? An explanation

Dec 8, 2009 20:32 UTC

Joel Kotkin thinks he knows:

Today’s environmental movement reflects the values of a large portion of the post-industrial upper class. The big money behind the warming industry includes many powerful corporate interests that would benefit from a super-regulated environment that would all but eliminate potential upstarts.

These people generally also do not fear the loss of millions of factory, truck, construction and agriculture-related jobs slated to be “de-developed.” These tasks can shift to China, India or Vietnam–where the net emissions would no doubt be higher–at little immediate cost to tenured professors, nonprofit executives or investment bankers. The endowments and the investment funds can just as happily mint their profits in Chongqing as in Chicago.

So who benefits from this collective ritual seppuku? Hegemony-seeking communist capitalists in China might fancy seeing America and the West decline to the point that they can no longer compete or fund their militaries. A weakened European Union or U.S. also won’t be able provide a model of a more democratic version of capitalism to counter China’s ultra-authoritarian version.

Yet most people in the developing world will not benefit from the suicide of the West. The warmists’ vision is not one of growing prosperity, but of capping wealth at a comparatively low level. De-industrialization means the West falls back while emerging economies grow a bit. The “prosperity gap” may close, but ultimately everyone is left with less prosperity.

COMMENT

Good analysis. These environmentalist types, in my memory, have always been anti-progress. Thirty-eight years ago I recall reading Paul Ehrlich’s Population Bomb and his pleas for a slowing down in economic growth, and now this guy is one of the high priests of the ‘de-development’ movement. Nowadays he’s nice and tenured and likely has a nice fat pension waiting for him when he retires from Stanford. His pal John Holdren (I think that’s right) is an advisor to Barack Obama so watch out!

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The EPA and Obama’s Uncertainty Tax

Dec 8, 2009 11:23 UTC

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.

COMMENT

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

Posted by cainindia | Report as abusive

EPA carbon ruling creates an even bigger ‘uncertainty tax’ for business

Dec 7, 2009 20:41 UTC

Call it the Uncertainty Tax. I mean, it is not enough that the American private sector has to deal with the mercurial state of healthcare, financial and tax reform, now it has to calculate the likelihood and impact of  the Obama administration unilaterally imposing draconian carbon rules? Even the EPA calls such efforts inefficient and economically disruptive. A few other thoughts:

1) Expect loads of litigation.

2) Don’t expect this to nudge Congress into passing cap-and-trade in 2010.

3)  Did I mention loads of litigation?

4)  It this looks likely, Congress would probably strip the EPA of its authority to do so.

5)  If Congress does not act, this could be the beginning of a multi-year effort  to regulate climate emissions. So more uncertainty.

James Pethokoukis is the money and politics columnist/blogger for Reuters Breakingviews. Previously, he was the economics columnist for U.S. News & World Report where he wrote the monthly Capital Commerce magazine column. Pethokoukis was also the managing editor of the magazine’s Money & Business section. He has written for many publications including the New York Times, the American, USA Today, Investor’s Business Daily, and TCS Daily. Pethokoukis is also an official CNBC contributor and appears frequently on that network’s Kudlow & Company, Power Lunch, and The Call shows. In addition, he has appeared numerous times on MSNBC, Fox News Channel, Fox Business Network, CNN, and Nightly Business Report on PBS. A 1989 graduate of Northwestern University where he double majored in Soviet politics and American history and a 1991 graduate of the Medill School of Journalism, Pethokoukis is a 2002 Jeopardy! champion.james.pethokoukis@thomsonreuters.com

COMMENT

The Obama administration is perhaps most remarkable for how it has emboldened the rest of the extreme left. Pelosi and Reid attempt to shove through outrageously dangerous legislation knowing that the anti-American, anti-business president will eagerly sign it. The spokewoman for the EPA could barely mask her glee that this unelected group would soon be forcing draconian regulations on industry and homeowners.

Since the release of the climategate emails the left has confirmed that they are unconcerned with facts or consequences. They march on unashamed with their plan to halt progress and punish success.

Posted by Pat Duggan | Report as abusive

So goes Australia on cap-and-trade ….

Dec 2, 2009 19:52 UTC

This is one piece of non-Hugh Jackman news that is resonating in Washington:

CANBERRA (Reuters) – Australia’s parliament rejected laws to set up a carbon trading scheme on Wednesday, scuttling a key climate change policy of Prime Minister Kevin Rudd and providing a potential trigger for an early 2010 election.

Acting Prime Minister Julia Gillard said the government would re-introduce the carbon trade bills in February to give the opposition Liberal Party one more chance to support the scheme, adding the government was not looking at an early election.

COMMENT

I guess they’re skeptical about evironmental scares after that hole in the ozone turned out to be no big deal.

Cap-and-trade prospects looking dodgy

Nov 27, 2009 18:33 UTC

Kim Strassel is right, cap-and-trade looks terminal for 2010 and beyond. Sure, the EPA could try to push its own draconian carbon regulation. But I think that would cause a firestorm on Capitol Hill. Strassel:

Polls show a public already losing belief in the theory of man-made global warming, and skeptics are now on the offense. The Competitive Enterprise Institute’s Myron Ebell argues this scandal gives added cover to Blue Dogs and other Democrats who were already reluctant to buck the public’s will and vote for climate legislation. And with Republicans set to pick up seats, Mr. Ebell adds, “By 2011 there will hopefully be even fewer members who support this. We may be close to having it permanently stymied.” Continued U.S. failure to act makes an international agreement to replace Kyoto (which expires in 2012) a harder sell.

Why cap-and-trade is ‘dead policy walking’

Nov 18, 2009 14:02 UTC

Carbon cap-and-trade legislation appears to be Dead Policy Walking in Washington. The devaluation of the Copenhagen climate summit – now the goal is a “politically binding” rather than a “legally binding” agreement — reflects the emerging political reality in the United States. Yes, a bill did pass the House of Representatives in June. Also, the Senate Environment and Public Works committee passed a version earlier this month. So President Barack Obama won’t go to the talks in Denmark with empty pockets next month.

Publicly, Senate Democratic leaders say they are only pushing off debate and consideration of a comprehensive climate change bill until spring. But it is hard to get a major bill passed in a Democrat-controlled Senate when the Democratic majority leader of the Senate wants the bill to go away. And have no doubt that Senator Harry Reid would like to see cap-and-trade go away — or at least disappear until after 2010.

This explains why six different Senate committees will consider the bill, the same recipe for legislative inaction that bogged downhealthcare reform. It’s pure politics. The 2010 midterm elections are shaping up to be tough contests for many Democrats thanks to the anti-incumbent mood of a recession-weary electorate. And most signs point to a sustained level of high unemployment.  As Federal Reserve Chairman Ben Bernanke said in a recent speech, “The best thing we can say about the labor market right now is that it may be getting worse more slowly.”

A new Gallup poll finds that 51 percent of Americans see the weak economy or high unemployment as their biggest concerns. Barely 3 percent mention the environment. And Democrats have been unable to sell cap-and-trade as a job creator. At worst, the public sees it as a jobs killer or a costly energy tax. That charge has particular weight in Reid’s home state, Nevada, a high energy-use state. (All those air conditioners!) So Reid doesn’t want to have to vote for it, which he would be compelled to do as majority leader. And neither do moderates like MaryLandrieu, Blanche Lincoln, Mark Pryor, Debbie Stabenow and Jim Webb. They noticed the heat that centrist House members who voted for cap-and-trade took from constituents during Congress’ summer break.

Webb of Virginia may point to one path forward with a new bill he is co-sponsoring with Lamar Alexander, a Tennessee Republican. It would spend $20 billion on five mini-Manhattan Projects to study various clean energy technologies, including nuclear.

It’s a plan that seems more likely to create jobs, grow the economy and help the environment — at least more so than one completely out of sync with the electorate. And it is one also more likely to make it into law. Despite being subjected to years of hectoring from the media, entertainment industry and government, the American public clearly has no appetite for any climate-change plan that involves more taxes, more regulation and a possible lower standard of living.

And if cap-and-trade is dead for 2009 and 2010, it probably has little hope of reviving in 2011 or beyond when Congress is unlikely to be as Democratic or as green.

COMMENT

Carbon cap-and-trade legislation appears to be Dead Policy Walking in Washington. The devaluation of the Copenhagen climate summit – now the goal is a “politically binding” rather than a “legally binding” agreement — reflects the emerging political reality in the United States. Yes, a bill did pass the House of Representatives in June. Also, the Senate Environment and Public Works committee passed a version earlier this month. So President Barack Obama won’t go to the talks in Denmark with empty pockets next month.

Posted by RogerDell | Report as abusive

Here’s what happened to cap-and-trade, and why it’s in deep trouble

Nov 17, 2009 14:03 UTC

I am writing a column on this for later today, but I wanted to toss out a few quick thoughts on the state of cap-and-trade. Other than the die-hard greenies, Dems don’t want this bill anymore than Republicans. It is too easy to frame cap-and-trade as both a jobs killer and a distraction from job creation. Actually, some Rs would love for Dems to push this bill since it makes such a great election issue.

But it’s not happening in 2010, which means it not happening during Obama’s term since even under the most optimistic scenario, the Ds will have less control of Congress in 2011 and 2012 than they do now. And under more dire scenarios for the Dems, they lose maybe 4 Senate seats. Do not underestimate the extent to which the Great Recession has affected the issues agenda and political situation in Washington. And an extended period of high unemployment will only exacerbate that. (Bernanke’s speech yesterday was another indication how this is now the new Washington consensus.) The New Normal in economics means a New Normal in politics, too.

COMMENT

Well Obama also sees the writing on the wall in 2012 and will move to use Executive Orders and Agency regulations to circumvent congress on Many issues including Cap and Trade.. The EPA will be used in controlling Carbon without Congressional oversite or approval. Like Muslims, don’t believe a word that comes out of their mouths, watch what they do.. Like Muslims their playbook also tells them to lie to unbelievers

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