Thursday, April 23, 2009
By PETE SEPP
ALEXANDRIA, Va. — Global warming and increases in atmospheric carbon dioxide seem to be what former Vice President Al Gore calls “inconvenient truths,” but where they end, the guesswork begins. This is just one reason the United States should avoid a “cap-and-trade” regime.
For the last 30-plus years, worldwide temperatures have been rising at a rate of less than one-third of one degree Fahrenheit each decade. But this was preceded by a 30-year cooling period.
Meanwhile, some scientific models show no consensus on how strongly man-made carbon dioxide contributes to melting glaciers, tropical storms, or polar bear deaths. Solar radiation and natural weather patterns may offer some explanations, too.
Despite these ambiguities, supporters of cap-and-trade would empower the federal government to limit carbon dioxide on an industry and company-level basis, and then require entities that can’t meet the restrictions to purchase “emissions credits” on a trading market.
This process seems mechanical, but living, breathing people would be caught in the machinery. To afford enough credits, many businesses would have to pass along the costs to consumers, cut investment returns for shareholders, or slash compensation for workers.
Trading emissions also involves trading political favors to reward friends and punish foes. “Phase 1” of the European Union’s attempt to implement the 1997 Kyoto cap-and-trade treaty has fallen short of targets, because the multinational government improperly priced the credits and has been pressured by member countries for abatements to protect their industries from imports.
Even if Kyoto were to be imposed worldwide, the results would be underwhelming. As far back as 1998, an expert with the National Center for Atmospheric Research estimated that fully enacting the protocol would, by the year 2050, curtail global temperatures by only 7/100 of a degree (Celsius). Yet, that same year Wharton Economic Forecasting Associates warned that Kyoto could have led to 2.4 million lost jobs in the United States and significant reductions in our Gross Domestic Product.
But the fatal conceit of cap-and-traders is believing their plan will take place in a fiscal vacuum. In addition to punitive tax hikes on oil and gas production, President Obama’s budget plan envisions a $646 billion revenue windfall from cap-and-trade, and more taxes for a “down payment” on national health care. Still other yet-to-be-named tax hikes could round out that health agenda.
Medicare crisis
Worse, America’s entitlement programs are in peril. Next year Medicare’s Hospital Insurance Trust Fund will begin devouring its assets and will go broke by 2019. Due to declining payroll tax receipts, the Congressional Budget Office recently projected that Social Security’s Trust Fund will run into the red three years sooner than expected.
Unless leaders get serious about reducing entitlement spending, CBO predicts that over the next four decades income tax rates would have to rise 90 percent across the board to avoid further deficit financing of the federal budget. With unsustainable burdens like these on the horizon, cap-and-trade must be weighed among many policy concerns, not just by itself.
As Danish Professor Bjorn Lomborg noted, free and prosperous societies can afford environmental stewardship better than overtaxed, government-dominated societies whose citizens are forced to scrape by.
Rather than gamble on a discredited cap-and-trade system, officials should advocate environmentally sound reforms that also improve economic productivity. Consider a few:
URestructuring the nation’s air traffic control and highway operations would reduce wasted time as well as emissions from wasted fuel.
URemoving regulatory barriers to developing more emissions-friendly alternatives such as nuclear and hydropower will reduce our reliance on foreign oil, as will careful exploration for more domestic petroleum sources.
ULower taxes can help the private sector cultivate green technologies without government subsidies.
X Pete Sepp is vice president for policy and communications for the National Taxpayers Union, Alexandria, Va. Distributed by McClatchy-Tribune Information Services