Reconciliation For Carbon Emissions?

CO2 stackThere’s been a lot of news in recent weeks about a legislative method in the US Senate—ironically called "reconciliation"—that would allow a contentious budget bill to be considered without providing opponents with the opportunity to filibuster. The House of Representatives recently passed a budget bill that called for reconciliation on health care and carbon Cap & Trade, even though it’s only a method used by the Senate.

When the House originally passed their version of the bill, there was great consternation on the part of Republicans, despite the fact that they had no issue using reconciliation just a few years ago when they held majorities in Congress. Meanwhile, Democratic Party leaders who had spoken with great rage about the practice back when Republicans tried to steamroll tax cut legislation back in 2005 were surprisingly silent this time around. Go figure.

On April 1st, The Daily Show mocked the hypocrisy of both parties (fair warning: portions of this video may not be suitable in your workplace):

 

Apparently, the Democrats have removed the reconciliation provision for the energy portion of the budget, but are planning on keeping it for the debate on healthcare. So we’ll see a heated battle and possibly a filibuster about Cap & Trade, which Republicans have been calling an energy tax.

Honestly, I have mixed feelings about all this. On the one hand, if Congress is going to use means like reconciliation to get legislation passed, why not go for putting a price on carbon? What’s more important than reducing our dependence on fossil fuels and greenhouse gas emissions? After all, it’s also a health issue.

To be sure, some (though not nearly enough) of the revenue generated through Cap & Trade would be used for investment in clean energy technology. On the other hand, I’m not a big fan of Cap & Trade because the devil’s in the details. Some of the biggies are giving away initial permits for free and plans to provide an allowance for certain industries, like steel, glass, and paper.

I think many environmental organizations have come out in favor of Cap & Trade because they believe it would be more politically feasible. But if Republicans are already calling Cap & Trade an "energy tax," others are asking, why not go for the real thing? Some, like New York Times columnist Tom Friedman, have recently come out in favor of a true tax on carbon. But I have a hard time seeing how a carbon tax of real substance—unlike Rep. John Larson’s (D-CT) "America’s Energy Security Trust Fund Act of 2009," which would start with a low charge of $15/ton—could possibly pass in these challenging economic times.

Of course, there’s another possibility: Cap & Dividend. In a Cap & Dividend system, revenue generated by setting caps on carbon dioxide emissions would be distributed to households. Think of each of us as stockholders who are receiving dividends from the companies whose stock we own.

Championed by Working Assets founder Peter Barnes, Cap & Dividend has been gaining momentum in recent months. Last week, Congressman Chris Van Hollen (D-MD) introduced the Cap and Dividend Act of 2009.

Here’s what the author and long-time environmental advocate Bill McKibben has to say about Van Hollen’s bill:

“This is the most innovative, yet obvious, piece of climate legislation in the 20 years I’ve been following this battle. Van Hollen’s bill sets out a straightforward mechanism for reducing carbon in the atmosphere in a way that will actually be popular with voters.”

For largely political reasons, I’m a fan of Cap & Dividend. It’s more substantive than pending Cap & Trade legislation and far more likely to generate public support than a carbon tax. So, while I find it troubling that Congressional Democrats don’t see putting a price on carbon dioxide as critical as healthcare reform, I suppose I’m glad they removed the reconciliation clause from the budget bill. Maybe in shooting down the Cap & Trade provisions in the bill, Republicans could pave the way to Cap & Dividend.

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