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The United States needs fundamental tax, spending, and entitlement reforms to grow and sustain its economy and restore fiscal discipline. As the next President and Congress deliberate such reforms, a carbon tax should be at the top of their list because it will stimulate investment, innovation, and economic growth and make the U.S. more competitive.
How would this work? A carbon tax should incorporate three principles. First, it should include both a tax and tax credit. Entities that extract carbon from the ground, import carbon, or emit other greenhouse gases are taxed. Entities that remove carbon from the atmosphere or prevent it from ever entering the atmosphere receive a tax credit. Second, the level of the tax and tax credit should reflect the external costs of fossil fuels, such as the indirect costs of oil imports, air pollution, and global warming. Third, the tax and credit should begin at a reasonable starting level and increase slowly to their full level over several years, so energy consumers have time to adjust to the true cost of energy.
A specific example helps illustrate how a carbon tax would work and what benefits it would bring. In this example, which could be legislated in 2013, both the tax and tax credit start in 2015 at $20 per ton of carbon dioxide and equivalent greenhouse gases, and grow to $100 per ton in 2025 and thereafter, with annual adjustments for inflation.
The full level of $100 per ton reflects the external costs of fossil fuels, which aren't included in the current price of energy. It would add about one dollar to the cost of a gallon of gasoline. The starting level of $20 per ton is reasonable because it increases the cost of gasoline by only 20 cents per gallon starting in 2015. This is well below the fluctuations seen over the past few years.
There are many obvious and a few not-so-obvious benefits of this carbon tax. Because it localizes responsibility to those entities that produce and use fossil fuels, it elicits more responsible actions from both energy producers and energy consumers. This results in the following advantages.
Energy Efficiency -- During the past 35 years, U.S. energy efficiency has improved about 2% annually. The Energy Information Administration (EIA) projects that efficiency will continue improving about 2% annually for the next 20 years. By combining U.S. technological and entrepreneurial prowess with added financial incentives from the carbon tax, the U.S. can improve energy efficiency by an additional 10% to 20% beyond current projections over the next two decades, and much more after that. Such improvements are easily achieved through replacement of inefficient technologies and development of new high-efficiency technologies. Since the U.S. now spends more than $1 trillion annually for energy, each 10% increase in efficiency saves more than $100 billion in annual energy costs. Some of these savings are offset by the added cost of more efficient vehicles, equipment, and buildings, but the advantages of better efficiency far outweigh the disadvantages.
Energy Security -- From 2005 to 2011, U.S. oil imports decreased by one-third, from 12.5 to 8.4 million barrels per day. The carbon tax will continue this trend, enabling the U.S. to become energy independent in about 10 years. It does this primarily by improving energy efficiency and encouraging alternative fuels, but also by increasing domestic oil production. How can a carbon tax increase domestic oil production? By making carbon dioxide enhanced oil recovery economically feasible. The Department of Energy estimates that the U.S. can produce up to 137 billion barrels of additional oil by injecting and sequestering 45 billion tons of carbon dioxide into depleted oil fields. This is enough oil to replace current imports from the Persian Gulf for 200 years. The carbon tax enables the U.S. to achieve energy independence by increasing oil production while simultaneously decreasing oil consumption. Energy independence improves national security and saves more than $250 billion annually in oil import costs.
Energy Exports -- The carbon tax will make the U.S. an energy exporter. When the U.S. achieves energy independence, it will no longer need Canadian crude oil for domestic consumption, but U.S. refineries will ideally continue processing Canadian crude to produce high-value products for sale in world markets. The U.S. will also produce more natural gas and coal than it needs for domestic consumption. With the carbon tax, the U.S. and Canada could be exporting energy and energy products worth $100 to $200 billion annually in 10 years. This will stimulate economic growth and profoundly affect global business and political relationships as companies and countries worldwide scramble to sign long-term contracts for reliable energy supplies from North America. Because the U.S. and Canadian energy industries and economies are closely linked, the benefit accrues to both countries.
Competitive Advantage -- The U.S. has a significant energy cost competitive advantage, because energy is currently much cheaper here than in most other developed countries. For example, the price of natural gas in the U.S. is less than one-half that in most countries in Europe and Asia. This cost advantage exists because the price of natural gas in the U.S. is set by the cost of domestic production, while its price in Europe and Asia is set by the cost of importing natural gas by pipeline and by LNG (liquefied natural gas) ships. A similar but smaller cost advantage exists for U.S. oil and coal. The carbon tax will preserve and extend this competitive advantage. Why? Because of transportation costs, energy is less expensive in energy-exporting countries than in energy-importing countries (absent government subsidies). By making the U.S. an energy exporter, the carbon tax ensures that energy remains less expensive here than in energy-importing countries. Long-distance energy transportation costs are large for natural gas, smaller for coal, and smallest for oil and other liquid fuels, so the U.S. energy cost advantage will be largest for natural gas, smaller for coal, and smallest for oil and other liquid fuels.
Stop Global Warming -- In 2010, the U.S. emitted 6.8 billion metric tons of greenhouse gases. This was offset by 1.1 billion tons of carbon sinks (mostly forests) so net greenhouse gas emissions were 5.7 billion tons. From 2005 to 2010, net annual greenhouse gas emissions decreased almost 400 million tons. The carbon tax will extend and expedite this trend by reducing emissions while simultaneously increasing carbon sinks. This should make the U.S. carbon-neutral in about 50 to 70 years. The carbon tax stimulates development of new and improved technologies that will spur economic growth for many decades. Ideally, these technologies enable the world to become carbon-neutral before the end of the 21st century and stop global warming before it causes severe harm to the world's population, economy, and ecosystems.
Reduce Air Pollution -- Most air pollution in the U.S. is caused by coal-fired power plants, diesel-fueled heavy trucks, and gasoline-powered automotive vehicles. The Harvard Medical School estimates that the cost of air pollution from coal-fired power plants alone ranges from $66 to $216 billion each year, with a best estimate of $193 billion. The cost of air pollution from heavy trucks and light vehicles is less, but still very significant. In other words, U.S. energy users are not paying anywhere near the true cost for their energy. The carbon tax remedies this by bringing all energy costs to their true value by 2025. The investments and fuel switching stimulated by the tax reduces air pollution.
Economic Growth -- Some argue that a carbon tax would be bad for the economy because it will increase the price of energy. However, the opposite argument is far more persuasive. The carbon tax will be good for the economy because it will decrease the true cost of energy. During the past 40 years, the cost of energy for the U.S. has varied from a high of 13.7% of Gross Domestic Product (GDP) in 1981 to a low of 5.9% in 1999, with a recent high of 9.8% in 2008. The true cost of energy is higher, about 13% of GDP in 2011, if the external costs of fossil fuels are included. If current patterns of energy production and consumption do not change, the carbon tax would increase the cost of energy. However, the carbon tax fundamentally changes how energy is produced and consumed. It improves energy efficiency, decreases oil consumption and imports, reduces air pollution, and expedites development of alternative and renewable energy resources. It also encourages shifting from highly taxed coal and oil to non-carbon energy sources and lightly taxed, lower-cost, low-carbon fuels such as natural gas. When all these effects are combined, the carbon tax decreases the true cost of energy to about 9% to 11% of GDP by 2025 and 5% to 7% of GDP by 2050. The resulting secure, clean, and affordable energy stimulates sustainable economic growth.
Tax Reform -- The carbon tax, less its carbon credits, will net more than $2 trillion in new then-year revenue over the next ten years and about $20 trillion by 2050. In addition, by internalizing the external costs of fossil fuels, the carbon tax allows phasing out of unsustainable government mandates, tax credits, and subsidies for alternative and renewable energy resources. This allows the marketplace, rather than politicians, to select energy winners and losers. Combined with other tax, spending, and entitlement reforms, the carbon tax should spark robust economic growth and help balance the Federal budget. Indeed, the carbon tax could be the elixir that enables the Federal government to fundamentally reform the tax code and restore fiscal discipline.
The U.S. is in a unique position to benefit from a carbon tax because of the size and competitiveness of its energy markets, the quantity and diversity of its domestic energy resources, and the breath and depth of its technological, business, and entrepreneurial capabilities. Most other countries will also benefit from implementing their own carbon tax. The U.S. can encourage them by bilaterally eliminating carbon import taxes from countries that have a similar carbon tax in place. Enlightened self-interest will trigger a domino effect, as most countries will want to secure the advantages of a carbon tax and avoid carbon import taxes on their exports to the U.S. market.
The next President and Congress should not miss this opportunity to reinvigorate the U.S. economy with a carbon tax. As a side benefit, a carbon tax will also move the U.S. and the world forward on a path to stop global warming.
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Just what is needed another tax that can be wasted on social programs for political pundents to buy votes with. Cut taxes, reduce government, and quit trying to make citizens more dependent on government. Responsibility-Responsibility-Responsibility........
Jon Stitzel 9.18.12
Jim, you are out of your freakin' mind.
Bob Houston 9.18.12
It was cheap fossil energy that powered our economy into the lead 100 years ago and will power our economy for the next 100 years. A tax to incentivize anti-market choices will pervert growth and have the exact opposite affect you desire. This would be a foolish move just as we have developed the means to recover the largest oil and gas reserves in the world, capable of powering our economy for generations.
Jerry Weathersby 9.18.12
"True cost of energy"
Who determines, or has determined, this cost?
I don't believe we need to let government wonks collect more of our dollars to waste on frivolous programs. This carbon tax fairy tale simply takes money out of the economy that could otherwise be allocated much more efficiently by the market. Government needs to stand aside and let the ones who actually know how to develop our energy resources go to work. Then dependence and cost will be reduced.
Jerry Watson 9.18.12
Doug, Are you paying tax now? I know I am I guess you are not paying income taxes. I know it is waste of typing, Me I am paying income taxes etc. Raising the prices of fossil fuels should create an incentive to conserve and improve. The hope would be these revenues would lower others taxes if not for me then maybe for someone else. My assumption is a certain amount of GDP will be taken by the government and this slice would offset another slice. Unlike your simplistic assumption the tax is automatically additive.
I wish all US taxes were use taxes like a carbon tax so by my choices I could have some input into my taxation. If gas is $10 a gallon becasue of taxes the masses will by more efficient vehicles and live clsoer to work they will likely reduce consumption. If that same $10 is left in their paycheck they can use for other purposes or go ahead and buy the gas with it. It is more of choice than simply taking the $10 away to start with like income taxes.
Jim is out of his mind if he expects anyone to use their brains when it comes to anything with the word tax in it. Taxation is like the weather everyone talks about but no one does anything about it. Jim at least took the time but his thoughts in a written format for others to evaluate rather than just some short snide comments
Jon Stitzel 9.18.12
OK, everyone is entitled to state their opinion and reality is probably somewhere in the middle of all this, so I'm not trying to pick a fight, but let's proceed with Jerry's examples. Gas is $10/gallon. Like many Americans, I already have a fuel efficient vehicle (30 MPG or so). Also like many Americans, I cannot afford to move at the moment without taking a loss on my current home. At $10/gallon, I spent hundreds less each month on everything except gas. Most of the money spent on gas doesn't benefit businesses, it goes to the Federal government. How does this help the economy?
Bringing that analogy to the topic at hand, how does it help the economy to punish companies that provide thousands of jobs? Increasing their tax burden doesn't help anyone but the government, and actually hurts however many people are fired or layed off in order to keep the company afloat.
Government spending does not lead to a more robust economy, specifically because that money has to come from somewhere. Remember, the Federal government does not generate revenue, The only money they have to distribute is money they must take from someone else. More government money means less money in the hands of people who might actually spend it to bolster the economy.
Daniel Beal 9.18.12
This is the most ludicrous article I’ve ever read. There is no basis for an argument that another tax will spur economic growth! How in the world will making energy more expensive provide a boost to our economy?
Let’s assume that you produce widgets at $10 each and energy here is currently running 10% of your cost … $1 each. You’re just barely making this work because you are paying American labor (congratulations on keeping jobs here) and that costs you another 40% … $4 each. Your Chinese competition who uses no pollution controls pays his labor $2 each widget. His energy cost is only $.75 per unit because he pays for no pollution control and he uses electricity produced from the cheapest and most abundant fuel source on the planet … coal. He has this transportation burden you seem to think will offset everything and he suffers a $2/widget cost to get his goods here … on Chinese ships that burn oil without emission controls.
Based upon this analysis your goods cost $5 (plus the cost of materials which for this argument we can assume equal … not really true, but for the sake of argument I’ll grant you the advantage). Your Chinese competition produces the same goods for $4.75 and still you sell enough to make a living for you and your workers.
Now you want to double the cost of energy in the US and do nothing for your Chinese competition? You belong in Government! Maybe along with mandating you buy Government health insurance we can mandate that you buy American goods for a 40% premium. Let’s not call it a tariff because we’d get the Chinese upset. We’ll call it a Homeland Supply Provision and we can probably opt-out those companies like McDonalds because they’ve got a precedent from the National Health Insurance program, so why not this one too?
Charles Hall 9.18.12
Higher gasoline prices would certainly reduce demand, but I would rather the industry take tghe increased revenue from higher prices and use it to develope new sources of oil and research other sources of energy than give more tax to the federal government which would happen anyway with increased company profits. Plus who would divine "the true cost of global warming", assuming it is man made and caused by carbon, a theory many of us have not bought into? EPA I am sure.
C. Hall
Sean Casten 9.18.12
Nice job including the tax & tax credit - too many carbon tax schemes omit this on the naive assumption that a stick is equal to a negative carrot, which is never true. (I've never seen any economically robust argument for how a carbon tax causes a PV installer to see any additional revenue that implies a penalty to dirty sources. e.g., if dirty sources can pass the tax along to their customers, they don't have an incentive to clean up, but if they don't the PV installer can't get the benefit of displacing more expensive power.)
However, I don't understand why you frame this as a carbon tax. What you describe is basically a cap & trade, and there's no good reason why the incentives associated with CO2 reduction should accrue only to those with the ability to monetize the resulting tax credits. Vastly simpler just to create a market where buyers & sellers of CO2 release permits can enter into bilateral agreements and not introduce any additional government entity to mediate that transaction. (Gov't can and should have a market oversight role, but there is no more reason for the gov't to act as an intermediary for CO2 sales than there is for gov't to act as an intermediary for company stock transactions.)
Jerry Watson 9.18.12
Bob Jerry,
First it was innovation not cheap fuel that powered our economy into the lead. Many countries energy resource availabilty was more than adequate to fuel their ecomomies, but it did not. The US is manmade not some lucky break from abundant fuel supplies.
Is the free market efficiently allocating your income taxes? What planet are you from? The market is already perverted by income taxes if nothing else. Do you really believe the market allocates anything efficiently. In the US billions are spent on advertising to make sure efficient allocation is not happening. We spend billions on entertainment like sports that have little if any redeeming value. Efficient allocation of resources by the market place, absurd.
In the US one of our major problems is obesity, in Somalia it is starvation is that another example of efficient allocation by the market place? Maybe I am wrong maybe it is efficient for me to chow down on my second Big Mac while Somalis beg for a cup of rice or to spend enough on a football game to buy enough rice to feed that Somali for a year.
I am not planning on changing but there is little efficient allocation going on around my house and my life style is conservative compared to many in the US.
I just want to decide how I spend the fruits of my labor and with income taxes that does not happen.
I believe a Carbon Tax is a better alternative.
Jerry Watson 9.18.12
Cap and trade why? First to work someone has to given the right to emit so they can sell it. If every unit of emission has to be purchased from the government, it is a tax whether or not a secondary market develops.
The easy way is to tax carbon at the wellhead, mine-mouth or unloading terminal no markets no complex entanglements. Then if the US wants to reward sequestering, pay for sequestering.
Bob Houston 9.18.12
Jerry, you have no concept of history or economics. You are wired like the incompetent bureaucrats that think they are smarter and know better than those of us in free enterprise. The market can produce pencils and canned tuna and put them in the retail store. The government can’t organize a one car parade. Somalians are starving because the fee market stops at their border. Your house must be under the rule of a Commissar if there is not intelligent allocation. Have another Big Mac and read Milton Freeman.
peter snell 9.18.12
"Some of these savings are offset by the added cost of more efficient vehicles, equipment, and buildings, but the advantages of better efficiency far outweigh the disadvantages."
Gosh, Mssrs. Hartung and Anderson, how was your recent HS graduation..?
Seriously, the low-hanging fruit of transport, industrial & commercial bldg efficiency was eaten and digested in the mid-70s thru 90s. There are efficiencies still possible, but their costs and payback periods are shockingly large. i.e. anyone want a $14000 car which now costs $19000 but gets 55mpg? That's only 8 yrs payback; wonder if the driver AND the car will live that long??
bill payne 9.18.12
Energy efficiency and the liberal art 'educated' BS.
in that request ... we detail what those programs are we have testimony that supports it and backing that testimony are part of our exhibits are scientific studies that show these savings are from national laboratories .. ah ..then they are adjusted for our own climate in ? out here ? so its all based on scientific fact and documentation on that. The commission has it own staff to analyze that and well as the other invervening parties.. They come back to challenge whatever ??? attorneys to bring out further facts and eventually it get over to the commission to rules on that.
but Ms. Homan's message is clear.
Testimony is most important. Facts and scientific studies support testimony.
Proper methodology, imo, is to conduct competent engineering and scientific studies of the problem, then prepare a written report with references.
The report authors should solicit written comments about their report.
Report comments should be published for public scrutiny. And the report be revised to include any required changes
The suggested testimony approach seems to come from a different Ms. Homan than the one I knew from the 2008 PNM natural gas Integrated Resources Planning meeting.
Perhaps someone is telling Ms Homan to use the flawed Testimony approach? If so, who? And why?
Please investigate and let me know in writing by September 25, 2012 so that I can report to NMGCO rate payers.
I saw the headline and was intrigued. Unfortunately I do not find your case convincing. I see three significant challenges. 1. Economic Growth - Given the state of the economy to place a tax on a product such as energy will limit economic growth across a broad spectrum of the economy. Now is not the time. 2. Energy Efficiency - A carbon tax will have limited impact on the current rate of energy efficiency. As we saw with the ARRA spending government spending does not equate to significant increases in energy efficiency. 3. Reduce Air Pollution - We all would like to live in a world with less air pollution. However, given the present state of the US medical system we will see no savings. The are far larger issues such as obesity and an a highly inefficient system that drive medical costs. The article is a good attempt but unfortunately the article, in my opinion, falls short of making a compelling case.
Mark Lewis 9.18.12
My god your an idiot.
No one supports your concept. But I would be quite happy to blame you for anything that happens in regard to increased taxes.
John Plodinec 9.19.12
President Obama's former top economic advisor published a paper that showed convincingly that every tax dollar equated to between two and three dollars withdrawn from the GDP (Christine Romer-three weeks before she "resigned"-coincidence?). Some of the expenditures are worthwhile because of the value given (e.g., national defense). Others have some value (e.g., health care) but likely not enough to overcome the economic damage they do. This idea has no discernible value and beyond the general removal of dollars from the private sector will hurt those who can least afford it - the rural poor.
One last sarcastic comment. As the author points out, the US GHG emissions were reduced in 2005-10. What he doesn't say is that this was due to our severe economic distress. Thus, he's unintentionally right about the impacts of a carbon tax on GHG emissions - the economic damage it would do would lead to even further reductions.
Michael Keller 9.19.12
This article is complete nonsense on numerous fundamental levels. 1. There remains great doubt as to whether or not noticeable man-caused-global warming is (a) possible and (b) even a problem. 2. What the US does about CO2 emissions has essentially no impact on global CO2 levels. Mathematical fact. 3. Driving up costs only makes the country less competitive, not more. Basic economics. 4. Most fundamentally, the idea of taxing the country into a better economy is simply not possible. Again, basic economics.
There are NO BENEFITS to the consumer or the country for this inane leftist idea. The only beneficiaries are government bureaucrats and the Democratic Party as they attempt to enshrine themselves as the permanent rulers.
Len Gould 9.19.12
"First it was innovation not cheap fuel that powered our economy into the lead. Many countries energy resource availabilty was more than adequate to fuel their ecomomies, but it did not. The US is manmade not some lucky break from abundant fuel supplies. " -- this is just foolish propaganda. Evidence please. Per NationMaster - National GDP per unit energy, the US uses more energy per unit GDP than almost any other OECD nation, strongly implying a dependence on cheap energy.
Many detractors from the author's thesis base their objections in the simple use of a tax. "A tax removes money from the economy!" they wail. How, exactly? Does not the government then spend the money taken in taxes, ALL within the country (unlike most big business, building factories overseas). A country's level of taxation has almost no effect on the "speed of money", the economist's measure of how may times an individuaL dollar gets counted in the annual gdp.
Jim Beyer 9.19.12
Jim Hartung and Bob Ashworth should really write an article together.... :)
Len Gould 9.19.12
You guys should all take a bit to study social contract theory, esp. eg. John Ralston Saul in The Unconcious Civilization. From Publisher's Weekly " Saul offers a damning indictment of what he terms corporatism, today's dominant ideology. While the corporatist state maintains a veneer of democracy, it squelches opposition to dominant corporate interests by controlling elected officials through lobbying and by using propaganda and rhetoric to obscure facts and deter communication among citizens. Corporatism, asserts Saul, creates conformists who behave like cogs in organizational hierarchies, not responsible citizens. Moreover, today's managerial-technocratic elite, while glorifying free markets, technology, computers and globalization, is, in Saul's opinion, narrowly self-serving and unable to cope with economic stagnation. His prescriptions include eliminating private-sector financing from electoral politics, renewing citizen participation in public affairs, massive creation of public-service jobs and a humanist education to replace narrow specialization. His erudite, often profound analysis challenges conservatives and liberals alike with its sweeping critique of Western culture, society and economic organization. "
The topic is too large to agrue here, but rest assured all you anti-government anti-taxation hounds have simply been suckered (again).
Michael Keller 9.19.12
"A tax removes money from the economy!" they wail. How, exactly?" Wow ... what a stunning statement. Gee, if we follow Gould's leftist logic, why not just tax at 100%. That will surely create a utopia.
A tax removes money from the citizens that they would otherwise use as the citizen sees fit.
The function of the government is to help the citizens, not the other way around, which is the essence of the position of the Gould's of the world.
Len Gould 9.19.12
Michael -- "A tax removes money from the citizens that they would otherwise use as the citizen sees fit. " -- And then (the taxing authority) spends the money back into the economy, JUST AS THE CITIZEN WOULD HAVE, dummy. Your argument is pointless and empty.
More rational would be to discuss WHY present tax rates are, in your opinion, too high. Is too much tax revenue being spent on employment insurance benefits? For supporting disagvantaged children? For operating schools? For supporting weapons research? On what exactly? And if we agree to eliminate your favourite benificiary, what EXACTLY will be the economic results? How will you convince us for example, that your personal choice of purchasing a larger flat-screen TV benefits society or even yourself, more than improving educational opportunities of inner-city kids? Numbers, please, else you're talking wind.
Len Gould 9.19.12
And btw, Michael, that nonsense about painting all those you disagree with as "leftist" is soo last century. Completely out of date. All powers are Corporatist now, Democrats, Republicans, Conservatives, Liberals. All simply intend to benefit slightly different interest groups, which defines Corporatist. See Heidegger, Musolini, Bismark, etc. etc. If you don't see that, you're not even able to see current reality. I'm best labelled a progressive conservative who's concerned about you guys who can't see that we are repeating the mistakes that our ancestors finally had to fight to the death in the 1940's. Time to catch up with the times, buddy LOL.
Jerry Watson 9.19.12
Bob,
You do not know me, or anything about me, I am not sure why I bother to respond to childish ad hominem attacks. My conjecture is I have forgotten more about both history and economics and many other things than you will ever know. The rudeness that individuals seem to find as acceptable in these forms is also surprising it does seem to be a new norm created by internet communication.
You are right the government has never accomplished anything, never successfully waged war, built a roadway, or a bridge. God knows the government had nothing to do with the development of nuclear power, or the REA that ran thousands of miles of uneconomic power lines in the rural areas. I am sure the government was not involved with the LCRA or TVA.
All good thing are created by cut throat competition, we do not need any of those silly antitrust laws or PUHCA, PURPA or the Federal Reserve Board. The US would be much better off with crushing economic swings like the 19th and the early 20th centuries.
You are correct, Laissez-faire and unbridled greed will solve all issues.
One last thing, I am willing put my personal history up against anyones.
Jerry Watson 9.19.12
Len, The US was not bulit in last two weeks, it has been a couple hundred years in the making. It your argument that the Chinese didn't have coal of the middle east oil until modern times?
Len Gould 9.19.12
If you must label me, please use "responsible citizen".
Michael Keller 9.19.12
Gould, your arguments are always centered on the virtues of the government, as a review of your various EnergyPulse comments demonstrates.
The problem is the government is vastly oversized and uses taxes and borrowing, as aided and abetted by politician buying votes with somebody else's money, to feed the government's never ending greed. A carbon tax is just a ruse to further feed the bloated monster.
If you would actually review history, you will find the Nazis, Japs and Commies had a common thread - the government controlling the population. That stands in stark contrast to the US republic, although the left (as embodied by today's Democratic party) is clearly intent on moving the country down the road to greater government control of the citizens.
Michael Keller 9.19.12
Furthermore, the government is inherently inefficient at accomplishing work as a portion of any funds are retained by bureaucrats before deploying the money. Pretty simple to figure out.
Len Gould 9.19.12
Michael. "government is inherently inefficient at accomplishing work as a portion of any funds are retained by bureaucrats " -- ?? Our present large bureaucratic international private businesses are about the most bureaucratic institutions ever invented. And also, I would note, pretty much totally without initiative, creativity, or any redeeming quality. I know, I've worked in many of them (private software contractor who is required to pay 25% to 30% of gross billings to an intermediary agency simply because the corporate bureaucracy refuses to have any dealings with any company as small as mine, even when their tech managers demand my services.
Grow up.
Michael Keller 9.19.12
Len, Ah yes, the truth finally emerges. You are bitter because your business has not done well. Instead of cursing the wind, consider the following:
“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.” ? Theodore Roosevelt
Keep a positive outlook and keep plugging away.
Regards, Mike
Len Gould 9.19.12
Michael, i'm not bitter, in fact have done very well thank you. Sorry to blow that little theory of yours ;) Even the 75% puts me in the same income range as eg. medical GP. You need to stop grasping onto any handy answer that can be bent to fit and start accepting uncertainty, perhaps indefinitely. Some issues cannot be solved with certainty even within our lifetimes. It is only the Corporatist managers of bureaucracies who BELIEVE in ordained solutions and recieved wisdom who have certainty.
Its part of growing up.
Jim Hartung 9.20.12
I look forward to addressing the comments in future articles. But for now, let me just point out that I do not propose a carbon tax as a stand-alone tax increase, but rather “as part of fundamental tax, spending, and entitlement reforms”. Both President Obama and Gov. Romney are on record as supporting fundamental tax reforms, but they have left the details to be worked out after the election. A carbon tax should be evaluated in this context, as part of an integrated economic and energy strategy rather than as a stand-alone tax increase. No one likes taxes. But the key question is: Would a carbon tax make sense as an element of overall tax and energy policy?
President Obama proposes that tax and spending reform should follow the principles of the Simpson-Bowles Commission. This bipartisan commission recommended large spending cuts coupled with (smaller) revenue enhancers to balance the federal budget. One of their recommended revenue enhancers is an increase in the tax on gasoline and diesel fuel. A broad-based carbon tax may be preferable to increasing the tax on motor vehicle fuels. Certainly, this is a subject that merits discussion.
Mr. Romney proposes to cut all corporate and individual income tax rates by 20%, and offset the resulting revenue loss by reducing deductions. Many commentators have suggested that it will be politically impossible to reduce deductions enough to achieve this goal. However, a carbon tax could offset the missing tax revenue, enabling Mr. Romney to implement his proposed tax reform.
As the above discussion makes clear, the tax reform plans of both President Obama and Mr. Romney require “revenue enhancers” to balance the federal budget. So the question is not whether we need new revenue enhancers, but which ones are best. A carbon tax deserves serious consideration, because it allows other taxes to be lower than they otherwise would be, yet still balance the federal budget and address a range of energy issues.
Interested readers may wish to read a Wall Street Journal op-ed that delineates some of the advantages of a carbon tax, from the viewpoint of an economist. It was written by Alan Blinder, a Princeton University professor and former vice chairman of the Federal Reserve. His article, titled “The Carbon Tax Miracle Cure” can be found at the following address:
If we toss out the gov't, we'd have no one protecting our interests in the Middle East and oil would sky rocket.
Oil should be properly priced to reflect the costs of this risk abatement. But of course it isn't.
Although a carbon tax would be problematic, the gov't could do more in having the true price of a good making it to the market place. Up to now, it may have made sense to subsidize oil via defense, but with production increases waning (peak oil) it's time to start stepping away from that.
As to coal, a carbon tax doesn't make too much sense without worldwide buy in. A wise person I know has said about Global Warming: "Yes, it's real, yes we are causing it, and no, there's not much we can do about it."
Len Gould 9.20.12
Agreed Jim. Just would point out that a) all the promises that "everything will be superb just as long as we don't join Kyoto" (well, that's actually a bit of a reverse I suppose, more like "Kyoto will desttroy us, and here, buy some more mortgage paper") haven't panned out that well for the US. and b) If the US was taking that position when Kyoto started, and had signed up, then we would all be in a fairly strong position to negotiate with China and India regarding some effective actions, like a serious workdwide carbon tax on coal.
Richard Vesel 9.22.12
I see that the visceral responses to the idea of "tax" are as typical and expected from those who don't have a clue about the limitations of free market thinking.
We have sewage systems which were funded by taxes, and then by user fees. As a result, the average citizen no longer has to deal with, or fear the consequences, of a grossly polluted environment and water supply. We DO generally pay for the "true cost" of our water. Bad water can kill you in a matter of a few hours or days.
But no one seems to draw a similar analogy with our air. Industry seems to believe that hazardous air pollutants (HAP) and greenhouse gas (GHG) emissions seen as being covered by some kind of right-to-pollute, with an endless avoidance of responsibility and endless lawsuits, which are fought over decades until the government and courts finally impose what should now be simple common sense. If hazardous air pollution and greenhouse gas emissions killed as quickly as bad water, these battles would have been over long ago. The so-called "free market" does not recognize, and is unaffected by the terribly slow consequences of HAP and GHG. The consequences of HAP and GHG do not fall upon the current generation of movers, shakers, and decision makers. That being the case, these people will simply not give a damn, and will also deny, and sow doubt, that there are any problems in the first place. The initial consequences will first fall upon those least capable of adapting to the resulting problems, and then to the next generations of all of us.
The authors proposals are all reasonable in scope and timing. I see no evidence that such tariffs on fossil carbon and other sources of greenhouse emissions,(yes, a nicer word than "tax") would somehow make us net exporters of energy, and that part is (probably) a specious argument to help placate the energy community. Tariff income should be mandated by law to be ENTIRELY be used to fund HAP and GHG emission reduction results, with no possiblity for Congress or the Executive to raid or divert the funds (or borrow against them if there is a surplus, such as in Social Security).
Who stands to benefit economically in the short term? All those employed in energy efficiency R&D, thousands of producers and millions of consumers of EE and emissions reduction solutions, farmers, foresters, and a host of others.
What is the justification for considering this to be an economic stimulant? Money in the economy needs velocity in order to do work (just like steam needs enthalpy), and within certain portions of the overall economic cycle. This tariff would take money out of the financial part of the cycle, and inject it directly into the technology, industrial and non-traditional energy sectors of the economy. An entirely new energy economy can result, based on technology representative of what the 21st century can deliver, rather than what used to work in the 19th and early 20th century.
We cannot afford to HOPE that we will eventually get any kind of a global best result from some technological random walk through the free market system. That will take centuries, and we don't have that kind of time...really, we don't.
Richard Vesel 9.22.12
Mr. Keller,
You should worry less about who the government controls, and more about who controls the government. Len's observations on this are spot on.
Indirectly, it is YOU who is controlled by those that control the government, and much of that control is exercised through self-interested corporate-speak rhetoric. The freedom our forefathers spoke about bears no resemblence the corporate-financed BS that now dominates most major political discourse. The concept of one man, one vote has been replace with one dollar, one vote ... well, ok, a thousand dollars, one vote. Lobbyists are paid for with corporate money, and cockamamey ideas are massaged into arguments that sound rational and reasonable enough to slide into the mind of a Governor or a Congressman (on a thin film of money) - and voila! You have deregulation sprouting from the minds of criminals such as Enron's founders (now dead or still in jail) and those who engineered the recently-collapsed financial house of cards that we are still trying to pick up after.
Malcolm Rawlingson 9.26.12
I was somewhat stunned by your reference to Carbon Dioxide (a purported GHG) as a pollutant. I hope that was an error since without CO2 we would all be very dead indeed since there would be no plant life and if you had not noticed all those green things out there that we all feed on use Carbon Dioxide. Please stop referring to the gas as a pollutant. It is as essential as oxygen. Malcolm
Malcolm Rawlingson 9.26.12
Much of the above rhetoric from Len and others centres around the premise of the big evil corporations whose revenues we should diminished by taxation. I would point out to all of you that hold that view that all public Corporations exist for the benefit of their shareholders....and no-one else. Now who might those shareholders be....the evil rich...but take a closer look ..... the major shareholders of Corporations are the pension plans that we will depend upon in our old age. Yes - you guessed it the major owners of Corporations are the collective likes of you and me via pension plans, mutual funds and in some cases direct investment. The evil rich is you and I. There is also an idealistic perception that the government of today is the same as the Government of yesteryear that built the infrastructure we use today. Sadly I think that is no longer the case and any monies raised by taxes of any sort including carbon tax is likely to be squandered on fruitless endeavours and not on the things that will truly benefit society. And as far as the collapsed financial house of cards - sure you can blame unscrupulous lenders and real estate agents and corporations but is the blame only thiers? - or is it the likes of you and I (the public) that wanted that little MacMansion in the suburbs of LA. and borrowed against the ATM of the house to buy the second BMW. Who is really to blame for that....do not look to carefully in the mirror or you may see who really is to blame. If there was no demand for cheap money there would have been no financial house of cards to collapse. Guess where the demand came from. Malcolm
Jim Beyer 9.27.12
Malcolm writes:
I was somewhat stunned by your reference to Carbon Dioxide (a purported GHG) as a pollutant. I hope that was an error since without CO2 we would all be very dead indeed since there would be no plant life and if you had not noticed all those green things out there that we all feed on use Carbon Dioxide. Please stop referring to the gas as a pollutant. It is as essential as oxygen. Malcolm
I absolutely HATE this line of reasoning. It makes me wonder if the person writing it is simply being manipulative (I hope...) or is just completely stupid. I don't mean to be so harsh, but simple logic should indicate that just because something is essential doesn't mean that too much of it can't cause a problem. Water is essential to our lives, but none of would like to be trapped at the bottom of a lake.
All that being said, I can agree that CO2 is not a pollutant in the normal sense of the word. It is harmless (up to a certain concentration about 5-10%) to humans and generally causes no problems. But that doesn't mean it's not an emission of concern. CFCs are completely harmless to people as well, so why should that be called a pollutant? Well, they found out they were destroying the Ozone layer, so we decided to curtail them. CO2 is at least potentially the same type of thing. You can argue whether the science of global warming is valid, but please don't argue that CO2 "can't" be a pollutant because it is essential to plant life. That's ignorant and illogical thinking.
I agree that a Carbon Tax could/would be squandered. I'm more of a fan that 'sin' taxes should address the sin. So cigarette taxes go to health care, carbon tax to energy development, etc. But back in the 60's Pres. Johnson decided to lump everything together so that now the gov't can steal from SS to fund the day-to-day gov't operations. A shame.
Len Gould 9.27.12
Malcolm.. From NACD Directorship "although unions hold only a fraction of the total outstanding shares in U.S. corporations (no union pension fund ranks among the top 10 investors in any of the top 10 Fortune companies.. )"
I'd also note that according to Professor G. William Domhoff of UC Santa Cruz, the bottom 80% of net wealth holders hold only 7% of all private wealth in the US, INCLUDING homes, pension funds and all other assets as well as stock portfolios. The top 20% hold 93%, leaving nothing unreported that I can see.
I've also seen a reference, though I can no longer find it, that citizens and businesses of S. Arabia alone own >10% of all shares listed on the DJIA.
My take is, that your "every US citizen has an equal shared interest in the stock market, if not personally then through their pension funds" is a lot of nonsense propaganda.
If you have alternative figues, please reference them with a link.
Ferdinand E. Banks 9.28.12
"A carbon tax can reinvigorate the US Economy". I cannot believe that an intelligent man would write that line. And here let me say that I am NOT against taxes and subsidies, but that isn't the issue here. The issue is invigorating the US Economy, and to tell somebody like Obama - and perhaps even Romney - that the answer to their prayers is a carbon tax is...is...well, you know what I am thinking.
