Dingell: ‘Nobody In This Country Realizes That Cap And Trade Is A Tax, And It’s A Great Big One!’
Dingell: ‘Nobody In This Country Realizes That Cap And Trade Is A Tax, And It’s A Great Big One!’
Conservatives are celebrating that influential Detroit lawmaker Rep. John Dingell (D-MI), the former chairman of the House Energy and Commerce Committee, argued Friday that “nobody knows” that a cap on global warming pollution amounts to a “great big” tax. Questioning Vice President Al Gore, Dingell argued that Congress needs to choose between “cap and trade” and an “energy tax” to finance a green recovery:
We’ve got to finance this and we’ve got to enforce it. Cap and trade is one mechanism, an energy tax is another. Every economist says that a carbon tax is a better, more efficient, fairer way of doing it. The Europeans have had two, maybe three fine failures in their application of cap and trade. How do we avoid the mistakes that they made? And how do we come up with something that gives us the best? Nobody in this country realizes that cap and trade is a tax, and it’s a great big one! I want to get a bill that works — how do we choose the best course?
Watch it:
Rep. John Boehner (R-OH), the National Review, the Drudge Report, and other right-wingers have seized on Dingell’s comments. Rep. Mike Pence’s (R-IN) spokesman pushed the comments to Politico, claiming: “Chairman Dingell agrees with what Republicans have been saying all along: the Democrat cap and trade bill is a national energy tax on working families.” However, Dingell has proposed both carbon-tax and cap-and-trade legislation to stop giving polluters the right to continue polluting for free.
Vice President Gore responded that both a carbon tax and market-based cap can address the climate crisis while strengthening the economy:
I have for twenty years supported a CO2 tax that’s given back to the people so that it’s revenue-neutral but accomplishes the desired effect. But I’ve never proposed it as a substitute for cap and trade. I’m in favor of both. And the number of countries that have done the best job of addressing the climate crisis and strengthening their economies have in fact put both in place. But I believe the cap-and-trade approach is the essential first step partly because it is the only basis on which we can envision a truly global agreement, because it’s very hard to imagine a harmonized global tax.
Countries like Denmark, Norway, and Holland which have both a carbon tax and cap-and-trade are indeed weathering the global recession much better than countries like the United States. In fact, Denmark is both the most taxed country on earth and the best country for business in the world.
It is our nation’s dependence on polluting fuels that acts as a tax on society — “a great big one.” As corporations pollute for free, everyone else pays for the disease, asthma, heat waves, droughts, floods, storms, sea level rise, and economic and national insecurity that results. Dingell has spent his political career misguidedly fighting pollution and efficiency standards on behalf of the domestic automotive industry, putting Detroit on the verge of bankruptcy. As millions of Americans understand, it’s time for Washington to repower America with laws that reward work instead of pollution.
6 Responses to “Dingell: ‘Nobody In This Country Realizes That Cap And Trade Is A Tax, And It’s A Great Big One!’”
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There are so many things wrong with this “article.” Here’s my favorite:
“Countries like Denmark, Norway, and Holland which have both a carbon tax and cap-and-trade are indeed weathering the global recession much better than countries like the United States. ”
Implying that “Countries like Denmark, Norway, and Holland which have both a carbon tax and cap-and-trade” are “are indeed weathering the global recession much better than countries like the United States” AS A RESULT OF the tax and cap and trade.
Who’s spinning what now? Brad, seriously, that’s a joke, champ.
April 26th, 2009 at 1:08 amIn a report titled “Policy Options for Reduction of CO2 Emissions,” Peter Orszag (now Budget Director) and Terry Dinan of the Congressional Budget Office meticulously compared cap-and-trade with carbon tax options. They concluded that a carbon tax would reduce emissions five times more efficiently, primarily because of price volatility under a fixed cap.
CBO had no difficulty “imagining a harmonized global carbon tax.” Chapter 3 of the Orszag-Dinan report, “International Consistency Considerations,” describes straightforward ways to harmonize carbon taxes. If nations choose different carbon tax rates, border tax adjustments permitted under World Trade Organization rules authorize higher-taxing nations to enact tariffs to equalize tax rates on imported products to the same levels applied to similar domestically-produced products.
In effect, the U.S. would collect and retain the revenue generated by equalizing carbon taxes on products imported from countries that haven’t enacted their own or whose carbon tax rate is lower than ours. That will provide a powerful incentive for our trading partners to follow our lead.
In contrast, under cap-and-trade, harmonization would require determining the implicit carbon price in a system where carbon prices are hidden and fluctuating. The CBO report observed, “Linking cap-and-trade programs would… entail additional challenges beyond those associated with harmonizing a tax on CO2.” The report noted, for example, that linked cap-and-trade programs could create perverse incentives for countries to choose less stringent caps so they could become net suppliers of low-cost allowances.
Or, the report continued, if a country that did not allow borrowing future allowances linked with a country that did, firms in both countries would have access to borrowed allowances. CBO concluded that “[O]ther flexible design features — such as banking, offsets, and a safety valve — would be available to all firms in a linked system should any one country allow its firms to comply in those ways.”
In short, national cap-and-trade systems would be nearly impossible to harmonize globally because different countries are likely to enact cap-and-trade systems with differing features that when linked would tend to defeat or de-stabilize each other. On the other hand, harmonization of domestic carbon taxes using border adjustments is a familiar and straightforward process for international trade and tax law experts under WTO.
More on the advantages of revenue-neutral carbon tax at http://www.carbontax.org. Video and petitions at http://www.pricecarbon.org.
April 26th, 2009 at 10:43 pmA lot of people are starting to use the argument that Denmark, with a cap and trade system and the highest taxes on Earth is the “best country for business” because of cap and trade and taxes. Attributing causation like this is dangerous.
The argument should rather be that “despite high taxes and a successful cap and trade program, Denmark is the best place for business in the world.”
The message to the American consumer is still the same: a cap and trade system will not hurt the economy, and is necessary because of the environmental impact of dangerous polluting gases.
April 27th, 2009 at 9:54 amTony,
Sorry, I should have read your comment: you beat me to it.
April 27th, 2009 at 9:55 amAnders: Why should it be “despite” high taxes and cap and trade?
Tony: I didn’t assert causation, although the case is strong. Countries with high government spending (aka countries with high taxes) are insulated from the worst effects of the global recession. People in countries with strong social safety nets (aka countries with high taxes) are similarly insulated.
Countries with cap and trade and carbon taxes were relatively insulated from the oil shock, which played a large role in the crumbling of the US economy.
Instead of accusing me of spin, you should make the case that strong carbon regulation has no positive influence on national economies.
April 27th, 2009 at 12:16 pmBrad: Fair point regarding “depsite.” I was simply trying to say that there isn’t really a case for cap&trade and economic growth causation. I would love to see some work on this, however.
April 27th, 2009 at 5:38 pm