Jeff Flake is Freaking Brilliant
The Republicans have lost the knack for being a minority party in opposition. Nowadays, they waste tremendous time and effort playing he-said-she-said with Nancy Pelosi or Jon Edwards, while blithely voting for more pork and trillions in new spending. Obama, after all, wouldn't have his favorite and best tool (TARP) for building a Mussolini-style corporate state without Republican votes.
While it strikes me that a capable opposition would certainly know how to turn a knife in a political scandal, it also should be ready to introduce principled alternatives to key legislation. The best such proposals are ones that attempt to achieve the stated goals of the majority party better and faster than the majority's own legislative efforts.
Which brings us to Jeff Flake, who is becoming a master of this. When Nancy Pelosi and Barack Obama spouted platitudes about openness in government (without really taking any steps to achieve it) Flake came along and introduced bill after bill challenging the Democrats put their money where their mouth is on earmarks and transparency. I have always been a big fan of Congressman Jeff Flake, who represents a district not far away from my home. Though we don't agree on every issue, there are few, if any, politicians whose judgment I trust more.
Flake's most recent initiative is one close to my heart. As readers know, I have good scientific reasons for believing the threat of CO2 emissions has been grossly overstated. However, if we are going to commit to reducing CO2, we might as well do it intelligently, and Flake's proposal is very close to one I have been pushing for some time:
Conservative House members Jeff Flake (R-AZ) and Bob Inglis (R-SC), along with Rep. Dan Lipinski (D-IL), have introduced an alternative to the cap-and-trade proposal developed by House Democrats: HR 2380, the "Raise Wages, Cut Carbon" Act of 2009. Their proposal is for a carbon tax that will gradually increase over time, offset by a reduction in payroll taxes.
Of course I think this is brilliant, because it is my idea as well. But it is also a brilliant opposition strategy. Flake's approach is far better than the cap-and-trade mess the Democrats have gotten themselves in -- not just because it would work better, but because it actually hits key supposedly liberal objectives better than does the Democrat's bill. Specifically:
- Fairness. Sure, everyone is correct that a carbon tax can be politicized, but I do not think it can be gamed nearly as much as cap-and-trade. For evidence, I turn to California. California has both a cap-and-trade legislation, rule-making for which has been thrown to the California Air Resources Board (CARB); and it has carbon-tax-like excise taxes, which we generally call sales taxes. Sure, there are some special case sales tax categories aimed a politically connected groups, but in general the sales tax system in California is simple and mostly fair. More importantly, it is a layup to administer. Contrast that to CARB, which has been slogging away in cap-and-trade related rule-making for years, and has everybody both pissed off and panicked. Should cow flatulence be counted? Should National Forests be able to sell offsets? How do you create any kind of fair offset accounting given the shenanigans in Europe? Should we allow Californians to have black cars? (seriously) This is a perfect A-B test, as the legislators are the same in both cases -- sales taxes are simple and fair, cap-and-trade is a mess.
- Openness and transparency. It is clear that Obama's stated commitment to openness and transparency was all so much BS. But why not nail him to that cross anyway? Few if any of the general public understand cap-and-trade. It is a tax, but it is inherently hidden from view, and passed through to consumers buried in rates in a way that offers politicians maximum deniability. Everyone understands a sales tax, or the gas tax. The system and its costs will be right out front (which is exactly what Democrats secretly DON'T want, which is what makes this a clever opposition tactic).
- Progressiveness. For all their talks about the common man and being progressives, the advocates of cap-and-trade are pushing what is possibly the most regressive tax increase of all time. Again, there is a kind of political money laundering that hides the tax, but it is a tax none-the-less, and will hit the poor the hardest when electricity and fuel prices inevitably increase. Flake's proposal to take the proceeds of the tax and use them to reduce the payroll tax is a great one -- offset one regressive tax with another, while at the same time putting in place incentives for job creation.
Postscript: My 2007 energy plan was as follows (assuming the need to do something about CO2)
- large federal carbon tax, offset by reduction in income and/or payroll taxes
- streamlined program for licensing new nuclear reactors
- get out of the way
stan:
He'd be a damn sight smarter to point out how pathetic the science is and oppose all global warming measures. When the scam finally blows up, voters won't distinguish between the idiots who favored cap and trade and the idiots who favored a carbon tax. They'll be mighty pissed off at every fool who raped them in the name of AGW.
May 14, 2009, 4:14 amHenry Bowman:
One of the reasons to never favor a new tax that will supposedly be offset by reductions in other taxes is simply that the planned reductions in other taxes simply do not happen. It would be somewhat more satisfying if first one set of taxes was reduced, followed by an increase in other taxes, but I cannot recall such an event ever happening.
Republicans simply do not have much say in this matter, having stupidly [and corruptly] blown whatever good will many people saw in the party. It seems obvious that massive reductions in spending are necessary, but Mussolini Obama is having none of that.
May 14, 2009, 5:13 amdave smith:
Henry: I don't know the particulars of Flake's plan, but a conceptually identical plan championed by Greg Mankiw (the leading mainstream republican economist right now) has the pay roll tax cut FIRST followed by an increase in the gas tax. The tax "swap" ends up being revenue neutral since the present values of the tax increase is set equal to the present value of the tax decrease.
May 14, 2009, 6:08 amBart:
A real 'coyote blog': http://www.dailycoyote.net/
May 14, 2009, 7:29 amJames H:
"For all their talks about the common man and being progressives, the advocates of cap-and-trade are pushing what is possibly the most regressive tax increase of all time. "
I keep hearing this, but I think that people aren't thinking about the full game that would play out. There's no way that the Dems want to go down hurting the little guy. The follow-on to this would be a tax rebate or additional earned income credit (this is the one that pays out up to about $5K even to people that didn't pay any taxes at all) to help low-income families with the much higher bills. So taxes for the middle class and up will have to rise.
So, Mr. Joe Middle Class, we need YOU to 1) pay more for energy and everything that is made from it AND 2) pay for the needy folks' additional energy and general inflation as well. Double whammy for the middle class.
Another point about carbon taxes - in order for them to have the desired impact of reducing energy consumption, they would have to make it prohibitively expensive to use the energy. The idea that you can have a big carbon tax and then just rebate it doesn't result in any emissions reduction. This is a great example of "no pain, no gain".
We've reached the point where supporters of AGW could make a graceful exit. The IPCC models have been falsified by actual temperature observations since the AR4 report at a 95% confidence level. Unfortunately, it is too juicy to let go. He who controls carbon controls every facet of people's lives. How can a government concede such a thing? It's also a means to an end. The Dems want "clean energy" with windmills on every hillside and solar panels on every roof (along with the normal generating stations you needed anyway to provide the baseload) and someone has to pay for it. If they concede AGW, then it will be very difficult to convince anyone to pay for such things.
I've been trying to feel out this administration and Congress as well. I see again and again that the means don't matter as long as the end is reached. I don't like this as it destroys the principles that the country is supposed to be founded on. From the handling of the auto bankruptcies to the "fast tracking" of bills and the threat of EPA CO2 regulation, this administration isn't afraid to use any means necessary to achieve the objective. I like what Jeff Flake is doing as reported by Coyote, hopefully they can get a couple of democrats to defect against some of these crazy bills that are in the works.
I'm thinking of writing to my congressmen (both republicans) and suggesting that they join Jeff Flake to have the others walk the talk that they've given us. Thanks Coyote!
May 14, 2009, 7:53 amstan:
"There’s no way that the Dems want to go down hurting the little guy."
Why not? They screw poor black kids in the inner city in favor of powerful teachers unions. They screw people starting out at the bottom of the job totem pole with the minimum wage. They screw poor Asians seeking to get into quality universities. They screw our military personnel fighting on the front lines. They screw young workers starting out in favor of powerful unions. They screw small businesses in favor of big business contributors. They screw the world's poorest in favor of rich environmentalists.
And that's just a small sample of the way that Democrats screw the little guy. They even screw the little guy when they aim at the rich -- see the disaster that followed the luxury tax when half the workers in the boat industry lost their jobs.
That's the problem with Democrats. They're always trying to use govt to screw somebody and the poor and the powerless end up getting it the worst. Even when they explicitly try to help the poor, see e.g. welfare, they end up hurting them instead.
The only people Democrats ever succeed in helping are those rich and powerful enough to buy favors from govt and those who work for govt.
May 14, 2009, 9:37 ammorganovich:
there is one issue with calling cap and trade a tax that bears consideration.
as has become utterly obvious from watching the bill move through congress, this is not going to be a tax. it's going to be a giveaway. everyone is getting waivers. they are getting free credits. only the smallest and least politically connected companies are going to wind up having to buy anything.
this means several things:
1. it will not raise any meaningful revenue
2. it will not reduce CO2 production (assuming you believe it's doing any harm which is very questionable). at best it will cap CO2, and i'd be surprised to even see it do that.
3. it will greatly distort future investment and make it very difficult for new entrants to compete with incumbents. if you have to buy a permit that others get for free, it does bad things to your cost structure.
so, in reality, cap and trade is not really a tax, it's just a very sophisticated form of incumbent protection which is why congress and business alike are fans.
the fact that it's unfair and distortionary are precisely the benefits of the program from their standpoint, not unfortunate side effects. they have a wonderful grand coalition here of congressmen looking to shower largess, existing firms dying to get it, and new firms that make uncompetitive technologies (like GE with its wind turbines) who are looking forward to market distortion that favors them.
it's a political masterstroke, but economically horrible.
May 14, 2009, 12:23 pmRaven:
What this tax needs is a rider that links future increases to actual warming.
If the planet warms as predicted the tax goes up as planned.
If the planet stays the same the tax stays the same.
If the planet cools the tax is automatically revoked.
May 14, 2009, 1:53 pmM. Simon:
My plan: invest in research to lower the costs of AE to below that of carbon based energy.
May 18, 2009, 7:07 amScott D:
The little guy will have some money dropped in his pocket by the reduction in payroll tax. Additionally, it is true that most people who are concerned about the environment are the more affluent. We need to change that. The working class needs to consider riding public transportation to work instead of their truck.
As far as who takes the big hit from this proposal, it would be the overly wealthy coal mine owners and those who blatantly snubbed their noses at the environment with their big investments in carbon proliferating energy sources.
California and Idaho get 1% of their electricity from coal, West Virginia is at 97%, Utah 89% - the big abusers need to be pressured downward. Since West Virginia and Utah produce a lot of coal, they will be hurt. But that is a reality of change, North Carolina, Virginia and Kentucky have lost trillions as government pressure and "negative" taxation have crippled the US tobacco industry. But that was to the benefit of the nation. Is anyone suggesting that we abandon environmental policy that will benefit the nation - just the protect West Virginia and Utah?
May 27, 2009, 7:54 am