November 14, 2012

In wake of Sandy, idea of carbon tax gets second wind

The Associated Press

WASHINGTON – Climate change is suddenly a hot topic again. The issue is resurfacing in talks about a once radical idea: a possible carbon tax.

On Tuesday, a conservative think tank held discussions about it, while a more liberal think tank released a paper on it. And the Congressional Budget Office issued a 19-page report on the different ways to make a carbon tax less burdensome on lower income people.

A carbon tax works by making people pay more for using fossil fuels that produce heat-trapping carbon dioxide.

The idea was considered so radical that in 2009, when President Obama tried to pass a bill on global warming, that he instead opted for the more moderate approach of capping power plant emissions and trading credits that allowed utilities to pollute more. That idea, after passing the House, stalled in the Senate in 2010 and has been considered dead since.

Even so, the Obama administration has no plans to push for a carbon tax now, said a White House official who spoke on condition of anonymity because there are no talks under way.

The whole issue of climate change was virtually absent during the presidential campaign until Hurricane Sandy hit the East Coast. The devastating superstorm – a rarity for the Northeast – and an election that led to Democratic gains have shoved global warming back into the conversation. So has the hunt for answers to a looming budget crisis.

So the carbon tax idea has been revived by some on both the right and left and is suddenly appearing in newspaper and magazine opinion pieces and in quiet discussions.

"I think the impossible may be moving to the inevitable without ever passing through the probable," said former Rep. Bob Inglis. The South Carolina Republican lost his seat in 2010 in a primary fight, partly because he acknowledged that global warming exists and needs to be dealt with. Now he heads a new group that advocates a carbon tax and the idea is endorsed by former Ronald Reagan economic adviser Arthur Laffer.

The right-leaning American Enterprise Institute held an all-day discussion of it Tuesday. Meanwhile, the more liberal Brookings Institution released a "modest carbon tax" plan that would raise $150 billion a year, with $30 billion annually earmarked for clean energy investments.

The conservative Competitive Enterprise Institute is so concerned that Tuesday it filed a lawsuit seeking access to Treasury emails discussing the idea.

 

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