Dingell’s Got the Right Idea

In case you hadn’t heard, Representative John Dingell of Michigan is proposing a carbon tax. He is inviting the public to comment:

Summary of Draft Carbon Tax Legislation

Some have suggested that he isn’t really sincere on the matter. Here is the New York Times’ take:

What Is John Dingell Really Up To?

A tax on carbon emissions, covering everything from gasoline to electricity use, is the climate solution that economists and environmentalists have long dreamed of because it’s probably the most powerful, least bureaucratic way to discourage pollution. It has been favored by everyone from Al Gore to Alan Greenspan — everyone, it seems, except a single elected official of any significance. Until Mr. Dingell came along.

For understandable reasons, though, the economists and environmentalists aren’t quite sure what to make of his conversion. They suspect that he is really a double agent, cynically supporting an infeasible solution — a big tax increase — as a way to maintain the status quo. But they also wonder whether they may be able to use him even if he is trying to use them.

There is no question that Mr. Dingell has given people ample reason to doubt his sincerity. The biggest head scratcher came during a July interview on C-Span, when he said that he seriously doubted that “the American people are willing to pay what this is really going to cost them.” He would propose a carbon tax, he added, “just to sort of see how people really feel about this.”

Since then, though, he has explained away the interview by saying that it’s the job of political leaders like him to persuade Americans to change their minds. He has also been offering eloquent, full-throated defenses of the tax. And here’s the thing: he has a really good argument.

Whether he is sincere or not, at least it opens up a high profile forum for this debate. And this is a very important debate. I think a clear message that gas prices are headed up – so that people can plan for the rise – is the best way to get people to conserve. Had we done this 5 years ago, gas prices might still be setting near $3.00 a gallon, but the U.S would likely be using less fuel. Why? Because the recent price rise would not have caught the general public by surprise, and consumers could have begun adjusting their lifestyles. They would be financially better off for having done so.

Furthermore, a carbon tax makes alternative energy solutions more competitive. This will encourage a wider variety of options, which is much more preferable to the current system in which the government attempts to pick technology winners by providing narrowly targeted subsidies.

Even if Dingell isn’t serious, I applaud him for raising the profile of this issue.

Update: Engineer Poet at The Oil Drum also put up an essay on this today:

Analysis of the Hon. John Dingell’s carbon-tax proposal

He goes into more detail on exactly where the money goes.

10 thoughts on “Dingell’s Got the Right Idea”

  1. You know, it’s also possible that if this had been done 5 years ago prices at the pump would be lower today.

    There is a fuzzy, and human, relationship between price expectations and behavior.

    Right now we experience (essentially) $3/gal knowing that the money goes to “big oil” and “oil exporting nations.” But (see the polls) we are unsure why that price is, or what it should be a year from now.

    Had we known that the price was higher “because it was the right thing to do” and that “it was not coming down” would that have changed consumer preference?

    Maybe. (though, alternate histories are tricky stuff)

  2. The 3000 sqft house clause shows he’s not serious. A yuppie couple in their opulent multi-million dollar urban townhouse keep their full deduction while a middle class family in a $250k suburban home get zero’d out? Yeah, that’ll happen.

    He increases the cost of a Hummer relative to a Prius by about $500 per year and the cost of a poorly insulated house relative to an Energy Star model by a similar amount. But the cost of a 4200 sqft house increases $5000 (or more) relative to a 3000 sqft house right next door, despite energy profiles that might be very similar.

    How about a size restriction on cars above 3000 lbs, phasing in to a full $5000/year tax above 4200 lbs? Makes about as much sense.

  3. Stupid Blogger can’t process href tags properly. (RR, please feel free to delete my previous post.) Here’s what I wrote:

    Dingell’s plan seems like a good one, but I seriously fear that it is a poison bill. In the words of a Gristmill blogger, “the tenor of his message on global warming is politically disastrous”. No kidding.

    (Link to the interview: http://tinyurl.com/3bylaj)

    I appreciate the fact that Dingell wants to be upfront about what his tax package will do, but:
    a) that’s not how politics works, and Dingell’s been in the game long enough to know that and
    b) he’s focusing on the negative impacts rather than the positive ones.

    A carbon tax will cause pain, yes, but his plan would make fuel prices more predictable (i.e. predictably high), stimulate investment in renewable energy, and reduce our trade deficit with oil exporting nations. All these things will be of benefit, and stimulating alternative energy development might just catapult America back into the forefront of the next tech boom (which I believe will be around energy production and consumption). But Dingell says none of this. Instead, he’s got this resigned attitude that he’s got to do his duty (in a desultory manner) and if his constituents decide not to let him, well then, at least he tried.

    I don’t know if this is an intentional (i.e. malicious towards carbon regulation) attitude, or if it just reflects how he feels. But either way, he couldn’t frame his proposals more badly if he tried. And he’s been in politics long enough that he should know better.

  4. Are you nuts? Dingell and Right in the same sentence?

    This is a massive tax and spending increase. The only offsetting taxes are an advancement of the earned income tax credit.

    Giving the money to local mass transit authorities is a monumentally bad idea as well. We’d just get more crap like this unfunny parody of the Colbert Report :

    href=”http://www.ridemetro.org/asf/metrep.asp” Houston MetroTV

    Metro has a history of wasting money. They installed an 8-mile light rail train to replace a popular bus route, reducing the frequency of service. For what they spent each rider could have received a brand new Cadillac.

  5. some form of tax pain is probably the most likely way to modify the consumption; and lead to change.

    whether the tax/change will be the RIGHT one, it wil probably take several iterations to determine. such has been our way thru time. most significant is to begin somewhere; modify as it goes.

    i doubt that those to be hurt/affected most by knowing a $ impact is coming would planahead. the thought process is not ingrained. if it was, they would not be in the position to be thusly impacted.

    LET’S GET THE SHIP MOVING. we don’t have many detail charts for the voyage anyhow.

  6. I still do not understand how the carbon tax proposals will work. It seems that it would only be effective if the government assigned a pollution value to every product that we consume — which is close to impossible.

    If the tax is levied at the source of production, i.e. an extra tax on a coal fired plant, it would have an extremely harsh impact on our manufaturing and export sectors. The remaining manufacturers in this country would flee to other nations without the tax, which not only would hurt our job base, but it could actually worsen pollution since many nations have less restrictive regulations than we already do.

    Some of the ideas, such as a gas-tax, make sense. Obviously we can’t just decide to drive in China in order to avoid the tax. But raising the price from the production side will only shift production away from the US — and we will continue to consume those products, just this time as imports.

    It seems to me the only way to make such a broad proposal work is to levy a significant carbon tax, and renegotiate our current trade agreements, levying tarrifs on imports from nations that refuse to tax carbon themselves.

  7. If the tax is levied at the source of production, i.e. an extra tax on a coal fired plant, it would have an extremely harsh impact on our manufaturing and export sectors.

    We have an export sector?

    Seriously, this is not so hard to handle. You sign treaties with anyone who has a similar carbon tax (not cap & trade). Products from non-treaty countries get an import duty for their ’embedded carbon’. Exports to non-treaty countries get a credit.

    Manufacturers actually like this because imports tend to come from nations with higher CO2 intensity (e.g. China) and the ’embedded carbon’ calculation will always be fuzzy, allowing room for a little pure protectionism that still passes muster with the WTO and such.

  8. Taxing to encourage conservation can be an effective tool. But this should have been done a long time ago, specifically when John Anderson proposed it. But at that time he was dismissed as an idiot who was trying to destroy the US economy.

    The situation is much different now. In point of fact, many Americans of limited means are already hurting at current prices. Further taxing fuel will tighten the screws on them even more. And we know from past experience that the present US government won’t help them.

    Meanwhile, the well-healed portion of the population will continue to consume.

    Another thing to consider is that while higher prices do encourage people to raise efficiency, there is, as with everything else, a point of diminishing returns. Some people can cut down a lot, others are already stretched thin. Further, the petroleum economy was built on the premise of cheap abundant energy. That gave us suburbia, very high dependence on motor vehicles, and an oil-based food production and distribution system that is already creaking at current price levels. Further raise prices and what happens? There is a limit to how high energy prices can go before the system collapses. Either Dingell is not serious, or he has not thought through the ramifications of his proposal.

  9. “Some have suggested that he isn’t really sincere on the matter.”

    What’s the mystery? Why wouldn’t a Democrat be sincere about raising taxes?

Comments are closed.