08.20.2018

There’s No Such Thing as a ‘Conservative’ Carbon Tax

The so-called “conservative” case for a carbon tax has always been a shell game. Take the Niskanen Center, whose president Jerry Taylor made waves with his white paper on “The Conservative Case for a Carbon Tax” in 2015. “Conservatives should embrace a carbon tax,” he advised, “in return for elimination of EPA regulatory authority over greenhouse gas emissions, abolition of green energy subsidies and regulatory mandates, and offsetting tax cuts to provide for revenue neutrality.” He now believes that the Curbelo bill, which does none of these things, has “found a bipartisan sweet-spot.” And then there is the Climate Leadership Council (CLC), led by luminaries like James Baker, Martin Feldstein, Hank Paulson, and George Shultz. Their own manifesto is called “The Conservative Case for Carbon Dividends,” cleverly eschewing the taxation at their proposal’s heart by emphasizing that its proceeds should go entirely toward dividends paid back to all households. “Any climate solution,” in their view, “should be based on sound economic analysis and embody the principles of free markets and limited government.” Among the crucial pillars they highlighted were that “all the proceeds from this carbon tax would be returned to the American people on an equal and monthly basis via dividend checks” and the need for “the elimination of regulations that are no longer necessary” including “much of the EPA’s regulatory authority over carbon dioxide emissions” and “an end to federal and state tort liability for emitters.” The idea that all tax revenue be rebated to households was especially non-negotiable: “It is essential that the one-to-one relationship between carbon tax revenue and dividends be maintained.” Of course, the Curbelo bill fails these tests. Nonetheless, the legislation earned a strong CLC endorsement as “an important milestone for conservative leadership.” The Niskanen Center likewise released a statement “support[ing] Mr. Curbelo’s effort to bring carbon pricing to the forefront of American climate policy. … The introduction of this bill represents real leadership.” Compromise is inevitable in any legislative process. But what CLC and Niskanen chose to celebrate was not the final product of hard-fought wrangling within and between the parties. It was the introduction of a bill whose text Rep. Curbelo controlled; and whose roll-out both groups participated in.  Groups are welcome to endorse and promote a carbon tax that they know conservatives should and will oppose. What they cannot do is pretend any longer that they are advancing conservative policy, or feign disappointment when conservatives fail to leap aboard their initiative.

Carbon tax proposals are sold as the key to reducing burdensome red tape, even though that tape can be (and has been) cut absent a sweeping new tax regime.
This mess was the inevitable result of endorsing carbon taxes as a concept without ever devising a viable proposal. “Supporters inevitably commit themselves to the project of costly and superficial climate action while achieving no concessions in return,” I warned in 2015. “And this is before Congress gets involved.” Jerry Taylor, for his part, assured conservatives that no such slippery slope existed. The “conservative case” was never actually there, but at least now the nature of the game is clear for all to see. The goal, celebrated in the endorsements, is “leadership”— wherever, apparently, it may lead. Oren Cass is a senior fellow at the Manhattan Institute. He worked previously as the domestic policy director for Mitt Romney’s presidential campaign, a management consultant at Bain & Company, and an editor of the Harvard Law Review. This article appeared on the Manhattan Institute’s Energy 21 website at https://economics21.org/no-conservative-carbon-tax]]>

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