Which, attentive readers know, is the climate change bill that auctions almost all emission allocations starting on day one, and refunds most of the proceeds to households. Here’s the Economist story. (Technically, it’s just the columnist “Lexington,” but the Economist has a consistency voice and position unlike any other news publication.) Here’s an excerpt:
“Of all the bills that would put a price on carbon, cap-and-dividend seems the most promising. . . . The most attractive thing about the bill is that it is honest. To discourage the use of dirty energy, it says, it has to be more expensive. To make up for that, here’s a thousand bucks.
“This challenges the conventional wisdom in Washington, DC, that the only way to pass a global-warming bill is to disguise what’s in it. Leading Democrats try to sell cap-and-trade as a way to create jobs and wean America from its addiction to foreign oil.”
The standard argument against cap-and-trade, or cap-and-dividend, or doing anything about climate change, is that it will cost money. This is true, although the amount is a lot less than people tend to believe. (According to the CBO, Waxman-Markey would have a “net economywide cost” of $22 billion in 2020, or $175 per household [Table 1, PDF page 15]; the CBO does not attempt to quantify any benefits from slowing down global warming.) Compared to Waxman-Markey, Cantwell-Collins is a simple way to deal with the problem with relatively little micromanagement (CC is 1/36th the length of WM, according to the Economist) and less politicization of initial allocations.
Cantwell-Collins should be the solution preferred by advocates of the free market. Waxman-Markey was crafted to satisfy coal-state Democrats in order to get what is basically a Democratic majority in the House, but whether that can make it through the Senate is a big question. By contrast, Cantwell-Collins should be able to create a coalition behind it that includes non-coal-state Democrats and moderate Republicans who want to do something about climate change. (Note that most large corporations–which once upon a time were the core of the Republican Party–want climate change regulation, because they want regulatory certainty.) It will be opposed by coal-state Democrats and by climate change deniers, of course.
But this depends on those “moderate Republicans” deciding to vote for a real solution as opposed to voting against it simply to prevent the Obama administration and Democratic majority from accomplishing anything. I would bet on the latter.
By James Kwak