By Institute for Energy Research ——Bio and Archives--November 24, 2010
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The midterm election results have given activists a two-year timeout to rethink, regroup, and come up with a new strategy for pushing the government to tackle climate change. That new strategy should abandon Wall Street’s preferred cap-and-trade method in favor of some type of carbon tax that returns money to households, movement leaders are now saying. They find themselves in this new difficult position because absolutely nothing will happen in Congress once Republicans regain control of the House next year and expand their numbers in the Senate. And the election and the emergence of the tea party movement mean previous climate change bills are now history and gridlock will be the order of the day in Washington, at least until the next midterm vote in 2012. That’s the message four congressmen and pro-climate action experts gave to an audience still reeling from the election results of three weeks ago, which saw climate change skeptics do well while some proponents of curbing greenhouse gases were voted out of office.Those who believe that a cap-and-trade program would prove economically destructive—while doing little if anything to benefit future generations in terms of climate—should not assume that a carbon tax will be politically impossible in the future. For one thing, government at all levels will likely continue to suffer recurring fiscal crises over the next several years. The Social Security system is already sending out more in benefits checks, than it is collecting from workers. If unemployment remains high, the Social Security system might never return to the black. Starved for revenue, and threatening major cuts in entitlements, the government might cast a carbon tax as a “win-win” for the public. Furthermore, the battle over cap-and-trade may have erroneously led even free-market economists to believe that an explicit carbon tax carried few disadvantages. For example, critics of cap-and-trade focused (justifiably so) on the fact that it would redistribute wealth into the pockets of wealthy insiders. Since an explicit carbon tax would have visible revenue streams, some analysts might conclude that it is an “efficient” way to deal with climate change and budget deficits at the same time.
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The Institute for Energy Research (IER) is a not-for-profit organization that conducts intensive research and analysis on the functions, operations, and government regulation of global energy markets. IER maintains that freely-functioning energy markets provide the most efficient and effective solutions to today’s global energy and environmental challenges and, as such, are critical to the well-being of individuals and society.