Here are three quotes from a superb story by Ryan Lizza on the failed machinations of three Senators, the White House, and policy lobbyists to design a passable program to reduce US carbon dioxide emissions by 17 per cent by 2020. The focus of their efforts was the design of a cap-and-trade mechanism for the American economy.
“[American Petroleum Institute] would not run ads, they would not lobby members of Congress, and they would not refer to our bill as a carbon tax.” At another meeting, the three senators and the heads of the three oil companies discussed a phrase they could all use to market the policy: a “fee on polluters.”“According to people at the meeting, the White House aides and some of the environmentalists, including Carl Pope, the chairman of the Sierra Club, expressed their contempt for the linked fee [oil refineries would pay a fee linked to the average price of carbon over 3 months]: even if it was a fine idea on the merits, it was political poison.”
“The environmental community and the White House, which rarely weighed in on its policy preferences, thought the linked fee was disastrous because it would inevitably be labelled a “gas tax.” At one meeting, Joe Aldy, a staffer on Obama’s National Economic Council, advised Kerry, Graham, and Lieberman’s staffers to kill it.”
—Ryan Lizza, “As the World Burns”, The New Yorker, October 11, 2010
It’s brutally obvious that the environmental movement’s preference for a cap-and-trade regime was politically opportunistic, even while the opportunity had passed. The ease with which its labyrinth of rules could be gamed by special pleaders was of little concern. Its beauty was reflected in what it appeared not to be—in an untruth: that cutting emissions and raising the cost of energy wouldn’t tax consumers, that you could phase out the blessings of coal to coal states and leave them as blessed as ever.
There has been much fruitful interchange between environmentalists and economists, but in designing the cap-and-trade mechanism, they showed only passing respect for the integrity of either discipline. While the “trade” part was allegedly intended to facilitate the most efficient allocation of resources, everyone schemed to ensure that government, congress, and regulators—not the market—would finesse, in detail, how trading in carbon credits would work and what we would end up paying.
For environmentalists worried about public opinion, the only virtue of such a regime over a straightforward and firm carbon tax was that it wasn’t straightforward or firm.
It’s at least reassuring to know that three Senators, executive officials, and lobbyists are still trying to make history and are obviously highly motivated to find those compromises that allow significant change to take place. However, climate change advocates (as other radicals in the past) have to accept that you can’t outsmart the status quo alone in the corridors of power. (Lizza noted that last January the Pew Research Center found Americans ranked the importance of climate change as 21st on a list of 21.)
As a participatory democrat, it is no wonder President Obama let the venture fail. With popular support you can pass a badly compromised bill and leave time to fix the details. Without popular support—including seeing the costs along with a shiny future—politicians keep their heads down and won’t ask the best of each other.