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Monday, February 13, 2017
GWPF Newsletter: ‘Dead On Arrival’ - Carbon Tax Push From Former GOP Officials Faces Strong Opposition
Why Old-Guard Republicans’ Carbon Tax Plan Has No Chance
WASHINGTON (AP) — A push by a group of senior Republican statesmen for a tax on carbon to help lessen the effects of climate change is already meeting entrenched opposition from within their own party.
Former Secretary of State Jim Baker went to the White House on Wednesday to gain Trump administration support for the plan, which would place a new tax on oil, natural gas and coal and then use the proceeds to pay quarterly dividends to American taxpayers. They said the payments would amount to about $2,000 total each year for families.
In addition to Baker, former Secretary of State George Shultz and other former officials from the Reagan and Bush administrations support the effort, billed as the Climate Leadership Council. Republicans, the group argued, need to take a leadership role on fighting climate change, a problem for which they said the evidence is growing too compelling to ignore.
A delegation led by Baker met Wednesday with White House Chief of Staff Reince Priebus, Trump adviser Kellyanne Conway and Gary Cohn, director of the National Economic Council. Baker also spoke briefly with Vice President Mike Pence. At his daily briefing on Tuesday, White House Press Secretary Sean Spicer declined to comment on whether Trump might consider supporting of such a plan.
“We have nothing to announce on that,” Spicer said.
Speaking to reporters prior to the meeting, Baker conceded the group faces long odds for political success.
“This makes such good sense from a conservative, limited government, free market, pro-competitive approach, that at the very least we hope they’ll take a look at it,” Baker said. “But we know we have an uphill slog to get the Republicans interested in this.”
Within hours of their announcement, influential conservative anti-tax crusader Grover Norquist took to Twitter to suggest any proposal that includes a carbon tax is dead on arrival at Capitol Hill.
“Now that the GOP can repeal all the anti-energy, anti-job regs—the Left offers to trade those regs for a carbon tax,” tweeted Norquist, president of the group Americans for Tax Reform. “Nice try. No.”
Congressional Republicans have repeatedly beaten back proposals for instituting a carbon tax, which would raise the cost of fossil fuels to discourage consumption. In June, the GOP-lead House voted overwhelmingly in support of a resolution opposing carbon taxes, which Republican leaders have said would be “detrimental to the United States economy” and lead to skyrocketing costs for food, gasoline and heating oil.
A plan by former Republican officials to tax carbon dioxide emissions is similar to one considered by former Secretary of State Hillary Clinton before she launched her presidential bid. She opted not to support a carbon tax after polling showed it would be “lethal in the general” election.
Old-Guard Republicans — including former Secretary of State James Baker, former Treasury Secretary Henry Paulson and former cabinet official George Shultz — met with White House officials to pitch a carbon tax-and-dividend plan to President Donald Trump.
The Republicans’ plan would reduce environmental regulations in exchange for a gradually increasing carbon tax, the revenues of which would be given back to Americans to offset higher costs of living and build support for fighting global warming.
Their plan is similar to one considered by the Clinton campaign in 2015 of imposing a greenhouse gas emissions “fee,” or carbon tax. The campaign opted not to support a carbon tax after polling showed it would be “lethal in the general” election.
A March 2015 Clinton campaign memo looked at a gradually rising $42 per ton carbon tax-and-dividend plan where revenues are handed out to American families in the form of rebates. Families would have to pay, on average, an extra $1,300 in energy costs a year, but would get a $15,73 rebate.
The proposal by former GOP officials writing on behalf of the Climate Leadership Council (CLC) calls for a $40 per ton carbon tax that gives families up to $2,000 in rebates of offset higher energy costs.
The big difference between the two carbon tax proposals is that CLC wants to pair it with regulatory reform. CLC argued “[m]uch of the EPA’s regulatory authority over carbon dioxide emissions would be phased out, including an outright repeal of the Clean Power Plan.”
Clinton, on the other hand, wanted to keep the Clean Power Plan in place, but her campaign memo suggests “using some share of the revenue for corporate income tax reform, and/or link it to a lifting of the crude oil export ban or approval of new oil and gas infrastructure” to build GOP support.
But while CLC Republicans push a carbon tax, Clinton never did because of how poorly it polled.
“We have done extensive polling on a carbon tax. It all sucks,” Clinton campaign chair John Podesta wrote in a 2015 email to campaign aides.
It’s not surprising carbon taxes poll so poorly. Even the Clinton campaign found it would drastically raise energy costs.
Clinton’s tax would have raised gasoline prices 40 cents per gallon and electricity prices 21 percent on top of costs from environmental regulations already put in place by the Obama administration, according to the 2015 memo published online by Wikileaks.
The memo, put together by Center for American Progress senior fellow Pete Ogden, notes that “with the increase in energy costs, the increase in the cost of non-energy goods and services would disproportionately impact low-income households.”
“Higher energy costs for government and for energy-intensive investment materials (e.g. steel, cement) would also likely be passed on to households,” reads Ogden’s memo.
Only a handful of Republicans support a carbon tax. The Republican Party platform for 2016 opposed a carbon tax because it “would increase energy prices across the board, hitting hardest at the families who are already struggling to pay their bill in the Democrats’ no-growth economy.”
Trump came out against a carbon tax on the campaign trail. Trump wrote in a survey by the American Energy Alliance that he opposed a carbon tax and the Obama administration’s “social cost of carbon” estimate.
There's nothing like a new administration in the White House to encourage proponents of discredited and failed plans to try, try again. That's what happened Wednesday when a group of former Republican cabinet members and their corporate brass friends got a 45-minute meeting with top Trump administration officials, including Vice President Mike Pence, to pitch... wait for it... a carbon tax.
That's right, the old idea that keeps pretending it's new again. Carbon tax plans, where companies have to pay levies based on each metric ton of emissions they produce, have been popular with many big businesses and environmentalists alike for almost 20 years. They're often depicted as a "free market friendly" or economically wise path to combat climate change. But there's one problem: The free market, the economy, and most importantly, the voters really don't like the idea at all.
Let's start with the free market, because it took a stab at creating a marketplace for a carbon tax-based economy under the Obama administration with the infamous "cap and trade" plan.
The idea there was that companies large and small would be taxed for carbon emissions, but would be able to hedge against those taxes by buying lower cost carbon offset credits and trading them on an open market when they didn't need them. Enthusiasm about this supposedly brilliant plan led to the opening of the Chicago Climate Exchange backed by big name investors, including Al Gore. But the exchange collapsed and completely closed down by late 2010. That was because even with huge Democratic majorities in the House and Senate, the Obama team couldn't even get its cap and trade bill passed. And, as it is so often the case with environmentally-based businesses and markets, the carbon credit plan held no appeal to the free marketplace without that kind of big assist from Uncle Sam.
Now to the economy, where it's been shown time and again that carbon taxes are the last thing anyone hoping for a better and more equitable economy should want. As with all taxes on suppliers, the companies simply pass the costs on to their consumers. In this case, that includes the middle class and poorer consumers who need heat, electricity, and gasoline. Actually, that fact is not even disputed by liberals and even the staunchest environmentalists. But they argue the costs to the poorer energy bill payers could be offset by corresponding payroll tax cuts and subsidies paid for by the carbon taxes. Brilliant! Except it's not. Lower payroll taxes won't do much to help those who are unemployed or underemployed, and subsidy payments are so often racked by abuse and fraud that they rarely help even the majority of those they were intended to aid. We just don't have enough of a good government track record on this kind of thing to believe a massive new tax credit plan will really work.
And most critically for this administration, voters really have never warmed up to anti-warming carbon taxes. The most recent example of this came from uber-green and blue Washington state, where a ballot measure in favor of a carbon tax failed miserably and only carried one county in November. Voters of all incomes have long known not to trust the government's promises of tax cuts later to offset higher costs and other tax hikes now.
None of this discouraged a group called the "Climate Leadership Council" (CLC) led by former Secretary of State James Baker, former Treasury Secretary Hank Paulson, other prominent Republicans, and some big business types like former Walmart Chairman Rob Walton. They were out there hawking their plan on Wednesday to Vice President Pence, Counselor to the President Kellyanne Conway, top economic advisor Gary Cohn, and Chief of Staff Reince Preibus and came out saying they were optimistic about their chances to win over the administration.
But what is this group really after? Some of the members of this group are true believers in climate change alarm, but it appears that most of them are really just advocates for a government that is bigger and more economically intrusive. You can tell that by their Rube Goldberg-like plans for higher energy bills to be offset by checks sent out by the Social Security Administration, (like that agency isn't dealing with enough already?). And the presence of big time private investors connected with the CLC throws up more than few red flags for crony capitalism.
Indeed, why is it that, while representatives or scientists connected to fossil fuel companies always have their potential conflicts of interest publicized, not as much seems to be made of the enormous personal profits at stake for pro-green advocates who also happen to be investors like Gore or hedge-fund manager Tom Steyer? And with someone like James Baker (who has publicly stated he has serious doubts about human culpability in climate change) as the public face of the CLC in this endeavor, it's hard to believe that improving the environment via new tax schemes is really their number one goal.
A similar set of red flags went up for truly conservative and pro-liberty advocates last week when it was revealed that major U.S. exporters like Boeing, Pfizer, and Oracle were lining up in favor of the proposed GOP/Trump administration border tax on imports. It doesn't get much more crony capitalist than that, and this support for another new tax is cut from the same cloth.
Based on President Trump's statements about climate change and carbon taxes during his campaign, it would certainly seem that getting him to flip flop on this idea is a long shot. But with his border tax plan and corporate tax rate cut proposal irons still on the fire, it is possible a carbon tax idea could come into play as some sort of a trade-off with congressional Democrats. That's probably the CLC's best bet to make this happen.
Wall Street is throwing the most money at U.S. energy companies since at least 2000 amid growing confidence that the industry is emerging from the worst downturn in a generation.
Energy firms raised $6.64 billion in 13 equity offerings in January, drawn in by a rich combination of oil prices consistently above $50 a barrel and a rush to drill that’s doubled the rigs in use in the U.S. and Canada since May. The biggest change from last year: oilfield servicers that provide the rigs, fracking equipment and sand used by drillers.
The most beaten-down sector during a two-year price rout, servicers made up 22 percent of the equity totals in January, compared with 5 percent all last year. "The mood is absolutely different," Trey Stolz, an analyst in New Orleans at the investment banking firm Coker & Palmer Inc., said by phone. "Go back to a year ago and the knife was still falling. But today, it feels much, much better."
Already, companies such as Weatherford International Plc are able to charge more for the use of their equipment and services as explorers race to open the spigots in the fertile Permian Basin of West Texas and other U.S. shale fields, according to Krishna Shivram, Weatherford’s interim chief executive officer.
"We’re seeing signs of improved pricing of roughly 25 percent on average, versus December levels," Shivram said last week on a conference call. "There is considerable optimism."
U.S. firms raised the most money in January selling shares since at least 2000Energy companies in the U.S. far outpaced the rest of the world, raising more than two-thirds of the $9.41 billion in new or additional stock last month, according to data compiled by Bloomberg. New investments emerged around the globe, from the share sale of Thorney Technologies Ltd. in Australia to SD Standard Drilling Plc in Cyprus.
U.S. benchmark West Texas Intermediate crude traded at $52.99 a barrel on Thursday, up more than 20 percent from last year’s average.
South Australia has become a laughing stock — a state that, literally, cannot keep the lights on. South Australians are seething. We have been let down by our state and federal politicians.
Fifteen years ago yesterday, South Australians went to the polls and, ultimately, a new Labor government was installed.
The then-premier, Mike Rann, aggressively pursued a policy to make the state a world leader in the adoption of renewable energy, particularly solar and wind. Mr Rann sold this move effectively, his pitch bolstered by climate change alarm in a nation gripped by drought.
By 2006, he was basking in praise from renowned campaigner and former United States vice president Al Gore, who declared SA was “one of best examples of any state in the entire world where you see how leadership can make a tremendous difference in promoting renewable sources of energy”.
Many in the state agreed, convinced renewable energy would help tackle climate change while, particularly in the case of solar panels, providing affordable power. Mr Rann’s successor, Premier Jay Weatherill, zealously pursued the same agenda, in late 2015 declaring the state was “running a big international experiment right now” on incorporating wind and solar.
Clearly, renewable energy is an important part of Australia’s electricity mix. But SA shows the perils of going too hard, too fast on the energy transition path and placing ideology before pragmatism.
Baseload generators are struggling for economic viability in the face of subsidised renewables or, in the case of Port Augusta’s coal-fired power station, have closed. But renewables are intermittent — meaning they rely on the wind blowing and the sun shining. As Wednesday night’s induced blackouts disastrously show, this means we sometimes simply do not have enough electricity to power the state.
There have been numerous warnings. The Advertiser in 2015 revealed deep concerns about more blackouts and higher prices after Port Augusta power station’s closure, in May last year.
Alarmingly, the first crisis arrived soon after, when key employers were on the verge of shutting down as power prices surged during storms.
Then the entire state was blacked out on September 28 last year. Storms toppling high-voltage transmission pylons were blamed by Mr Weatherill but wind farms were unable to continue producing. This contributed to a statewide shutdown, rather than a confined blackout.
Inarguably, it also showed the reliance on the interconnector to Victoria, which failed. Since then, there have been another two storm-related blackouts, highlighting our fragility.
Then, on a typically hot summer’s night on Wednesday, more than 90,000 households were blacked out to maintain the grid as demand outstripped supply. The gas-fired Pelican Point station should have been turned on but wasn’t. It’s a sign of how little room for error there is in our renewable-reliant energy mix.
SA has become a laughing stock — a state that, literally, cannot keep the lights on. Even more disturbingly, we’ve become a place where big business like BHP Billiton cite the risk posed by unreliable power supply.
Mr Weatherill has backed Mr Rann’s renewable legacy to the hilt. Energy Minister Tom Koutsantonis says we have a right to be angry. Yesterday was their ground zero, the time to admit a serious problem and offer clear solutions, rather than vague promises of an eventual fix. It was a far from convincing performance.
South Australians are seething. We have been let down by our state and federal politicians. They must display true leadership to provide a basic utility — reliable and affordable electricity.
A WORLD-leading scientist has warned Donald Trump may signal the end of the world — and Australia could be first to face the catastrophic consequences.
Michael Mann claims Mr Trump’s relationship to “post-truth” politics and “alternative facts” is much more than just embarrassing for the US and has the potential to destroy civilisation.
Sitting in an office at the University of Sydney Business School ahead of his sold-out talk this week, the Penn State professor says one only has to look at the city’s record January temperatures for proof of how dangerous the President’s attitude is (sic!).
The London-based Global Warming Policy Forum is a world leading think tank on global warming policy issues. The GWPF newsletter is prepared by Director Dr Benny Peiser - for more information, please visit the website atwww.thegwpf.com.
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