Politics

A GOP carbon tax plan would tempt Democrats to betray America’s workers

Summary: Some prominent conservatives have proposed a bipartisan compromise to break the gridlock on public policies to fight climate change. While unlikely to gain Republicans’ support in its present form, a small change would make it attractive: use the new funds to cut taxes for the rich. It would be a win-win for Republicans, and offer Democrats a harsh choice — gain their most-sought policy goal by betrayal of their party’s core beliefs.

Carbon tax

Contents

  1. Proposing the Great Swap.
  2. Origin and reactions.
  3. A Great Betrayal?
  4. For More Information.

 

(1)  Proposing the Great Swap

A new phase in the climate wars began with “A Conservative Answer to Climate Change“, an op-ed in the Wall Street Journal on 7 February 2017, George P. Schultz and JAMES A. BAKER III (both former Secretaries of State) proposed a Federal carbon tax of $40 per ton, with the proceeds distributed back to Americans — combined with loosening of pollution regulations and “adjustments” for the carbon content of imports and exports.

On February 8 the Climate Leadership Council released “The Conservative Case for Carbon Dividends”. Members of the CLC met with Gary Cohen (Director of the National Economic Council) to discuss their proposal. George P. Schultz and Ted Halstead elaborated on it in an article at the National Review on 28 February 2017 — “Enacting a carbon tax would free up private firms to find the most efficient ways to cut emissions.” From that article…

“According to the Treasury Department and several independent studies, the bottom 70% of Americans would come out ahead if our plan were enacted, meaning that they would receive more in dividends than they would pay in increased energy costs. …our program might be so popular with working-class Americans that it would lead them to support continued increases in the carbon tax to increase their dividends, in addition to promoting the clean-energy alternatives that the vast majority of voters, including Republicans, clearly favor.”

Bipartisan love: donkey and elephant

(2)  Origin of the Great Swap, and reactions to it.

Many Conservatives went berserk. No surprise — last June Republicans in the House unanimously voted to condemn a carbon tax. Five prominent conservatives immediately responded with a letter to Cohn explaining why that would be bad policy. My favorite is this crazy exaggeration about the funds produced by a carbon tax — a highly regressive tax — from a National Review article by Rupert Darwall.

“The package is topped off by giving away the entire proceeds of the carbon tax to anyone with a Social Security number. The political bet is that the lure of free money for all…”

This bipartisan policy shift has been proposed before, most notably by the Progressive Policy Institute in their November 2016 report by Joseph E. Aldy: “Long-Term Carbon Policy: The Great Swap“. He described the CLC proposal in “The Great Swap” at Democracy — “Does a deal now gaining momentum across the aisle actually have the potential to break the stalemate on climate change?” Aldy describes the result in delusional terms.

“Republicans would tap into new revenues to support a sweeping tax overhaul. …An economy-wide carbon tax would produce substantial revenues — as much as several hundred billion dollars annually — that could finance significant reductions in existing tax rates. For example, a credible carbon tax could allow for significant cuts to payroll taxes to benefit workers and to reduce corporate income tax rates to promote business investment. It could also finance the infrastructure investment the President-elect has highlighted as part of his incoming Administration’s agenda.”

This will not happen. Republicans top policy priority is cutting taxes for the rich. That’s the big reason they hate Obamacare: it is funded by taxes on the rich (as seen in the redistributive effect of its repeal). It is delusional to expect that the GOP would use funds from a carbon tax to lower payroll taxes for American workers. As for raising taxes to boost spending, that is the opposite of core GOP doctrine; they want to cut spending and cut taxes.

Dark choices

(3)  A Great Betrayal?

In 1964 the Republican Party began its great betrayal, abandoning its century-deep roots as defenders of African-American’s rights — exchanging their honor for political power in the South. They saw the opportunity created by Johnson’s great civil rights legislation. It always comes down to choice.

Now comes the temptation of the Democrats. For a decade they have made the core of their platform public policy measures to fight climate change. A large fraction of them, ignoring the IPCC, consider climate change from global warming an existential threat to humanity. The “great swap” could accomplish that. But the Republicans will demand a price. After all, as Schultz and Halstead said, the GOP does not need the Democrats’ support to lighten regulations on polluters.

“The final argument put forth by our critics is that Republicans would be foolish to trade a carbon dividends plan for regulatory relief, as the party is now in a position to roll back all Obama-era climate measures without giving anything up in exchange.”

The Democrats will have to give up something to get a carbon tax. My guess is the GOP will offer the Democrats a harsh choice: tax carbon if they agree that the bulk of the proceeds go to tax cuts for the rich and corporations. That would complete the Democrats’ great betrayal, begun in the 1970’s, abandoning their long support for America’s workers to embrace polices sought by upper class professionals, managers and academics. That would be a logical decision, since the middle and lower classes are weak and apathetic — while the upper classes are politically mobilized and affluent.

If the GOP makes the offer, how will the Democrats choose? The Republicans faced such a choice in the 1960s. Their decision has made them powerful.

“Choice. The problem is choice.”
— Neo, in The Matrix Reloaded.

For More Information

If you liked this post, like us on Facebook and follow us on Twitter. For more information about this vital issue see The keys to understanding climate change, see posts about Reforming America: steps to new politics, see my posts about income taxes, about the Republican Party, and especially these posts…

  1. American politics isn’t broken. It’s working just fine for the 1%.
  2. On Martin Luther King Jr. Day, let the GOP remember its great betrayal.
  3. Climate activists’ final act, as they move into the last stage of grief.
  4. A look at the future of global warming. Our political response depends on its trend.

Books explaining how we’re trapped by America’s Left and Right.

Read Thomas Frank to learn more about our horrific political situation, trapped as the Left and Right move against us: Listen, Liberal: Or, What Ever Happened to the Party of the People? and The Wrecking Crew: How Conservatives Ruined Government, Enriched Themselves, and Beggared the Nation.

 

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8 replies »

  1. While this is a clever idea, it would seem to require a degree of cleverness and collective guile on the part of the Republican Party that seems to be singularly absent at present. On the Trumpista side, this would probably come across as treasonous collaboration with the Islamofemimarxist Communazis.

    I could see something like this being attempted in ten or fifteen years, particularly if the carbon bubble theory comes true and things do start to deflate for entrenched fossil-fuel interests. Or if (as you’ve theorized) some big-ass weather disaster comes about that can be semi-plausibly blamed on CO2-induced climate change — this might be a way for Republicans to “act decisively” and avoid looking like complete fools.

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    • Leaving,

      Authoritarian regimes are common as dirt in history. They take no special competence to set up.

      Democratic regimes are rare and tend to have brief lives. They require political competence to survive. America has had some close calls, but always found great leaders in times of crisis. Perhaps we’ve lasted two centuries because we have been lucky.

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    • Dana,

      “a degree of cleverness and collective guile on the part of the Republican Party”

      (1) Seeing this as actions of “the Republican Party” is misleading. It would require ten minutes thought — and agreement — by roughly five guys in Congress.

      (2) You are kidding yourself if you believe the GOP went from an almost outcast minority party to the dominate party in America without competence. The Left’s belief in the GOP’s incompetence and their own intelligence has brought the Left to its knees. Historians will laugh at their folly and hubris.

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    • @Fab: You’re very right, but I’m speaking of policy development and legislative guile as opposed to the obvious Republican advantages in organization, party discipline, etc – which keeps winning them elections. The Republicans seem to be having major problems cohering around their primary stated policy aim since 2010 (ACA repeal), and deploying this carbon tax plan would involve compromising with the Enemy and dinging a major constituency — so I don’t think they’d do it, though they might keep it as a rhetorical tool.

      The situation might change in a few years… the star of fossil fuels might dim, or the Republicans might lose the House or the Senate and actually have a greater need to compromise with Ds in order to accomplish Directive 1: Reduce Taxes On Wealthy.

      As for the reaction of the Democrats to such a proposal, I dunno. I imagine it would at least be considered seriously… it definitely would have ten years ago.

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    • Dana,

      “the Republicans seem to be having major problems cohering around their primary stated policy aim since 2010 (ACA repeal)”

      Yes, ACA repeal is their primary stated goal. We can only guess at the thinking of our elites, but I doubt that ACA repeal is in fact their major goal. Perhaps not even a major goal. The taxes on the rich that fund it are disliked. But I doubt that repeal would be a priority if it was funded by the lower classes — for example, by a carbon tax.

      The Right are not fools. They know that tens of millions without formal access to health care are a problem. Many key GOP constituencies love ACA — such as some large corps and especially the health care industry. Which is why it passed. Previous proposals didn’t shower wealth on the HC industry, and were defeated — this lack of cost controls (unlike the successful HC systems of our peers) is why it is proving difficult to fund.

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  2. Good analysis. Seems actually quite likely of a possible scenario. Right in line with recent history in the Senate especially. Simply note the Democrats who voted against the drug importation from Canada. Start with a gent named Booker and another named Bennet. And the list of likely votes is There. As Obama was so fond of, enough PR will pave the way.
    I’d take issue with a characterization of Middle class people as weak and apathetic. The reality is not that so few will stand against the status quo it is that so many will and at great personal peril. Most of us have been trained to go along to get along. Opposition sets you up as a target. That courage does not come without experience and troubles.
    Same as it ever was. Political life is a contact sport.

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    • Breton,

      We can only guess at these things. There are two many variables for accurate predictions. By describing this scenario I intended to highlight the Democrat’s drift away from serving the lower classes in favor of the upper classes. Thomas Frank and a few others have written about this, but it cuts too close to home for the Left to admit it to themselves.

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