Cap-and-trade: A Salon debate

The final day of an exchange between Steve Everley of American Solutions and Grist's David Roberts

Published June 23, 2010 9:25PM (EDT)

Today is the third and final day of our dialogue between two very different voices on the subject of climate change legislation. Steve Everley is manager of policy research at American Solutions and a contributing author to "To Save America: Stopping Obama’s Secular-Socialist Machine," by Newt Gingrich, and David Roberts writes about energy politics for Grist.

You can read Monday's exchange here and Tuesday's here.  Today's dialogue is below. Roberts and Everley will both provide some final thoughts, which will be posted at the bottom later tonight.

David Roberts: I found your answer on climate change somewhat unsatisfying. You accurately note that it's a heavy political lift, most voters don't prioritize it, and it's easier to push for action on other grounds. You go on to ask, "Why would I bother to discuss global warming?" I can think of one reason: It's happening! It's not a poll, it's a real thing in the world.

We're on track to hit 11 gigatonnes of annual global carbon emissions by 2020, if not earlier. If we average that much or more over the coming century, atmospheric concentrations of CO2 could reach 1,000 ppm within our grandchildren's lifetime. The consequences would be cataclysmic and irreversible. The operative question is not whether we can avoid climate change. It is doing damage today, and more is already baked into the system. The question is whether we can head off the worst of it.

Put aside our ideological and policy disagreements for a moment. A simple question, to which I ask the courtesy of a simple answer: Do you accept the conclusions of mainstream climate science as described most recently by the National Academy of Sciences?

Steve Everley: While I disagree with the premise, namely that we can "put aside our ideological and policy disagreements" to discuss global warming (it has become somewhat of a religion for the left, which is perhaps why I now must confess my faith), I will honor your request: I do accept that the climate is changing.

We could have a debate about how much, the intensity of impacts, or a suite of other questions related to what studies we accept or reject, but it would be a distraction. The issue before us is whether we impose a new job-killing energy tax to hamstring progress today so that in 90 years we might have a negligible impact on temperatures (EPA found cap-and-trade in the U.S. would reduce global temperatures only one-half of one degree Celsius by 2100).

The last time we imposed a tax regime of this scale was when the Progressives convinced us we needed an income tax. Four years after the 16th Amendment, Congress raised the top rate from 7 percent to 67 percent, partially to pay for cost overruns in administering the tax itself. Would you have us believe that Congress will not use this new energy tax system to dramatically increase taxes and redistribute wealth over time as Congress does frequently with the income tax?

David Roberts: I won’t dwell on your evasive answer, since our time is short, but frankly it’s bizarre to call climate change a "distraction." It’s the problem we’re trying to solve, isn’t it? If we can’t agree about the nature of the challenge, what criteria can we use to evaluate alternative solutions? It’s like arguing over diets with someone who won’t acknowledge the existence of obesity. Get serious: Either explain why every scientific institution in America is wrong about climate change or explain what you would do to address it.

As for the rest, well, I’m not going to argue over whether America should have an income tax. The 20th century happened; most people have made their peace with it. Your argument consists entirely in repeating the word "tax" as often as possible. Indeed, that seems to be all that’s left of the once-proud conservative intellectual tradition: knee-jerk demagoguery on taxes.

Two questions for you. First, given that carbon pollution imposes costs on society, why shouldn’t those costs be paid by polluters? Why should they receive a vast subsidy from the public?

Second, many conservatives, your boss included, want to offer "incentives" to all sorts of clean energy technologies (which is different, apparently, somehow, from "picking winners"). How should those incentives be paid for?

Steve Everley: If you think it’s evasive to call climate change "a distraction," then your beef is with the likes of President Obama and Sen. John "it’s not a climate change bill" Kerry. It is they who are arguing that introducing a cap-and-trade energy tax system will create net new wealth and net new jobs.

The reason I emphasized "tax" is because we are discussing a tax. Your refusal to answer my question about future congressional abuse of this new tax system suggests you agree with my concern that Congress will use it to raise taxes.

Incentives aren’t the same thing as picking winners because, for example, prizes for a national goal (such as a 100 mpg car) allow everyone to innovate, regardless of industry or status. Cap-and-trade punishes one set of disfavored industries and transfers its wealth to government-favored industries. Your approach also assumes fossil fuel companies are somehow unable to innovate, so we must punish them into extinction. This is why President Obama wants to bankrupt the coal industry.

How to pay for such incentives? Royalties and tax receipts from expanded energy production, an approach routinely rejected by the left, despite its popular appeal.

* * *

Closing Thoughts


David Roberts: Thanks to Steve for a lively debate. It is too rare these days for people with opposing viewpoints to come together and engage directly; I hope this isn’t our last time.

America faces serious challenges. Above all is the one Steve seems keen not to talk about: climate change. Another is increasing dependence on oil just as the world's supply is set to plateau. In coming decades the pursuit of oil will be dirtier and riskier (as we're seeing in the Gulf of Mexico, to tragic effect). The pursuit of coal will follow the same arc.

More immediate are the grievous ongoing effects of recession and 10% unemployment. We're in a politically delicate situation in which we need both short-term stimulus spending and a long-term plan to address the structural deficit. Ultimately, the deficit problem cannot be solved without new sources of economic growth. What will they be? What industries will dominate the 21st century? Given the Herculean work involved in putting the world on a path to low-carbon prosperity, energy is the obvious candidate.

With some political leadership and a smart set of choices, we can tackle multiple challenges at once. For instance, a top priority in the coming five years should be ramping up energy efficiency programs, particularly around buildings. It's a win-win-win: construction trades suffer from crippling unemployment rates, efficiency can lower energy use and carbon emissions at a profit, and reduced demand can lower energy bills even if rates rise. We can also put people to work by funding state public transportation programs and building new low-carbon infrastructure like rail lines and transmission wires.

Longer term, we need a stable source of revenue for the necessary investments in clean energy research, development, and deployment. The obvious source for that revenue is a price on carbon. Unlike capricious government tax credits, a carbon price shifts investment incentives across the entire economy at once, especially as it slowly ramps up over time. It also provides money, if necessary, to protect consumers from short-term bumps in energy prices, reduce other tax rates, or pay down the deficit.

I simply don't share Steve's conviction that we must cling to the dirty energy status quo or our economy will crumble. I have faith that American researchers, entrepreneurs, and workers can overcome this country's challenges, if only we set them to the task.

Steve Everley: As we conclude, let me thank David for a spirited and well-informed debate. In a time of intense partisanship, I appreciate the opportunity to discuss this important issue on rational terms with a person who clearly has an intellectual faculty to be envied. I can only hope my arguments have made the feeling mutual.

What we have been debating is actually about values. Do we value affordable energy, or do we value a European model of high energy prices? Do we value an empowered private sector, or do we value an empowered and, yes, even larger government? Most importantly, do we value creating American jobs today, or do we value making insignificant changes in temperatures ninety years from now?

Supporting a market-based economy, what could be called “the freedom culture,” is a necessary prerequisite for enduring prosperity and protecting the American way of life. Continuing to do this will, in turn, continue to pay the dividends we have already reaped: An expansion of wealth through greater opportunities and higher productivity; an economy that is globally envied and attracts immigrants from the world over; and exciting new inventions and technologies, including those that protect the environment in ways central planners could never conceive.

This is the fundamental reason why opposition to cap and trade is so high. The American system rejects the long disproven notion that we can tax our way to prosperity. The Left may believe in their hearts that cap and trade will create jobs and make life better for everyone, but that is a conclusion taken blindly on faith, not its compatibility with the American system.

Nor is it even based upon empirical research, as Spain and Europe as a whole have discovered. Numerous reputable analyses have indicated that cap and trade will kill jobs, and it is universally accepted that cap and trade will raise energy prices: Even President Obama says so, and the president’s now-former budget director has testified that higher prices are necessary for cap and trade to work. The only mitigating factor for these new taxes is the hope that government will fulfill its promise to redistribute wealth effectively. Again, that must be taken on faith, not history or experience.

As a representative democracy, the American people have the power and freedom to choose, through tradeoffs and establishing priorities, how they want to address a host of problems, ranging from the economy to the War on Terror. On global warming, it’s clear that Americans do not support a policy that will kill jobs and raise their taxes so they might put an insignificant dent in temperatures many decades from now.

Cap and trade is an attempt to redistribute wealth, kill jobs, and let the government define what opportunities are permissible, all of which represent a fundamental rejection of the American freedom culture.

By Steve Everley

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By David Roberts

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Global Warming