×
David writes:
I'm interested in your thoughts regarding the wisdom and political viability of "Cap-and-Dividend." Obama is going to have to spend political capital to get both the stimulus and health care through Congress. He is also going to have to spend political capital on trying to get the most optimal Cap-and-Trade bill through (one with 100% auctions, with the proceeds going to fund alternative energy, etc.), which would require a lot of debate and eventually get watered down and include some giveaways to industry. Would it be more prudent to try instead to get a large amount of alternative energy spending as part of the stimulus bill and then pass a very simple Cap-and-Dividend bill, with 100% auction but the funds going to a lump sum rebate to all citizens? This would have an advantage in that it is much simpler both in legislative form (less likely to get watered down) and easier to understand by the general public (greater public support in passage, resulting in spending less political capital that could be used for the stimulus and health care). Would this be both good policy and good politics?I'm actually a huge proponent of this idea. Cap and Trade makes dirty energy more expensive. The better the bill, the pricier dirty energy becomes. Attacking this wouldn't even require creative ads. Opponents would simply need a graph showing median heating prices before and after. Absent some sort of epiphany in which Republicans decide global warming is too important to demagogue*, it's a hard sell. Saying you're going to tax dirty energy to make it more expensive and then use that money to fund clean energy is even worse. Taxing suburbanites to fund hippies trying to generate energy from algae plays poorly in Peoria. The result will be concessions. Safety valves and rebates and preferred treatment for various industries and all the rest. Cap and Trade could become needlessly expensive, totally useless, or both. The cap-and-dividend idea may not solve these problems. But it's a step in the right direction. First, it's simple. Every dollar the government receives for taxing dirty energy is funneled right back to taxpayers. Intuitively, most voters will realize that this can't make their lives more expensive (obviously, if you're a long-haul trucker, this is untrue). Second, the clean elegance of the transfer would make it harder for congressfolk to lard the policy with extras, as doing so would harm its central premise. Would it still be a tough sell? Sure. But not as tough as cap-and-trade. Cap-and-trade, after all, requires you to not only defend the tax, but defend what you're spending the revenues on. Cap-and-dividend requires only that you defend a transfer, and a transfer that comes with a tangible yearly check, at that. It's hard to believe that that wouldn't prove easier.*HAHAHAHAHAHAHAHAHAHAHAHA. Sorry. Sometimes I just slay myself. Drill baby drill!
