Oren Cass: “There’s No Conservative Carbon Tax”

On these pages over the years, I’ve consistently pointed out that the American public was being misled on the case for a carbon tax. For example, I used the UN’s own reports to show that the popular climate change goal of limiting warming to two degrees Celsius would probably be a cure worse than the disease; i.e., that the costs of government action to mitigate climate change are higher than the benefits. I’ve also spent many posts warning libertarians and conservatives to be wary of claims that a carbon tax could boost conventional economic growth, since the people making this “conservative case for a carbon tax” often misrepresented the literature and ignored obvious political realities. In this context, it was refreshing to see the Manhattan Institute’s Oren Cass recently write a post reaching these same conclusions.

Cass starts by pointing out the moving goalposts in the carbon tax debate:

The so-called “conservative” case for a carbon tax has always been a shell game. Point out that such proposals might not meaningfully address climate change, and defenders claim that they’ll boost economic growth. Note that they won’t boost growth and you’re told that they will save the planet.

More generally, proponents of a carbon tax will deal with one objection in a certain way, but then deal with a different objection in a way that undercuts their first “fix.” For example, to alleviate fears that a carbon tax will slow economic growth, the proponent can promise that most of the new receipts will be used to reduce the corporate income tax. (This is necessary since other types of tax cuts won’t undo the damage of the carbon tax.) Yet when you point out that a carbon tax will be regressive, imposing higher energy and fuel prices on the poor, the proponents promise to distribute the revenue in lump-sum fashion to low-income households.

These are points that Cass (and I) have been making for years now. But the added twist in his recent post is that Cass points out what a sham the “conservative” case for a carbon tax has been all along:

Congressman Carlos Curbelo (R-FL) has introduced a carbon tax bill with none of the properties that proponents had promised to conservatives. It raises taxes dramatically, while refunding little of the money back to households. It slows economic growth. It does not eliminate EPA authority over greenhouse gases or address other climate-related regulations. It will increase if arbitrary targets are not met. But the criers of the conservative carbon tax aren’t outraged, or even opposed. They are delighted. [Oren Cass, bold added.]

Cass gives some examples of what he means. For example, the Niskanen Institute’s Jerry Taylor released a 2015 study which argued that conservatives should accept a carbon tax “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.”

Similarly, Cass reminds us of the Climate Leadership Council (CLC), which has promoted a carbon tax along with this claim: “It is essential that the one-to-one relationship between carbon tax revenue and dividends be maintained” (bold added).

Now since the Curbelo bill (as I explained in this post) is most decidedly not revenue neutral, nor does it roll back all of the other greenhouse gas regulations at the federal level, you might think that the Niskanen Center and the CLC would be opposed to it. But of course that’s not what happened, as Cass documents:

[T]he 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.”

And so we see that the entreaties to conservatives (and libertarians) to hold their noses and support a carbon tax, in exchange for all of these other concessions, were phony from the beginning.

Cass anticipates the possible objection that the political process always involves compromise by reminding his readers: “[W]hat 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.”

Indeed. Those of us who have been following Taylor in particular know that his commitment to revenue neutrality was very short-lived. A mere 36 days after his study touting revenue neutrality, Taylor abandoned that plank and began warming his readers up to the idea of using a carbon tax to pay down the government’s debt. (For those keeping score at home: The only way to use a new tax to pay down debt, is if it’s a net tax hike and not revenue neutral.)

Oren Cass uses the recent Curbelo proposal, and the reaction to it, to underscore that there has never been a serious “conservative case for a carbon tax.” If conservatives want to support such a tax for environmental reasons, we can have that discussion. But they shouldn’t trust the Niskanen Center or CLC when they dangle out a carbon tax as a way to shrink the government. As all the shucking and jiving by proponents of differing variations of a carbon tax shows, it is the carbon tax itself, to those proponents, that is their primary motivation.

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