Lawmakers show little appetite for carbon tax, at least for now

Posted: Jul 12, 2012

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Carbon emissions

The concept of a carbon tax had a rare moment in the sun yesterday when a former GOP congressman made it the centerpiece of his new effort to get Republicans on board with pushing a climate change policy that tracks with their conservative values.

Former Rep. Bob Inglis (R-S.C.) said his newly launched Energy and Enterprise Initiative would look at ways to internalize the societal cost of carbon and let the market do the rest. Inglis proposes refunding the revenue to consumers directly as a dividend -- as proposed in the last Congress by Sens. Maria Cantwell (D-Wash.) and Susan Collins (R-Maine), or through business or labor tax cuts.

"We're rather ecumenical when it comes to how we're going to return the money," he said yesterday.

Lawmakers did not dismiss Inglis' proposal, but none committed to support it, either.

Sen. Lisa Murkowski (R-Alaska) noted that the Senate Energy and Natural Resources Committee briefly studied the effects of a revenue-neutral carbon tax years ago, "back in the days when we were talking about climate change legislation."

"The fact that it's revenue-neutral does have some real appeal there," she said.

But the current economy makes people skittish about changing the tax code, she said, even if increased taxes on one sector were offset with a tax cut somewhere else.

"As with anything around here, timing is the real key," she said.

Sen. Lindsey Graham (R-S.C.), the Republican who was most closely involved in the last Congress' effort to pass a climate change bill in the Senate, said that he would not support any part of the Inglis proposal.

If the carbon tax offset a cut in payroll taxes, as Inglis proposed last Congress in a bill he sponsored, Graham said he would worry that that bargain would shortchange seniors on Social Security.

"I just don't like that idea of changing the payroll tax structure from wage earners," he said.

No matter what form a revenue-neutral carbon tax would take, it would be unlikely to serve the dual purpose of encouraging Americans to use less fossil fuels and providing a funding stream deep enough to offset the elimination of another tax, Graham continued.

"If you're creating a tax on fossil fuels to get off fossil fuels, then it is an unreliable revenue source," he said.

And then there is the problem of getting Republicans to accept a policy that targets carbon dioxide in the first place, he added.

"I don't think you're going to be able to sell to the Congress, 'Let's start taxing energy companies because of theoretical concerns about global warming,'" Graham said.

"I think you can sell energy independence," he continued, adding that a carbon proposal of any kind would be more likely to succeed as part of a comprehensive energy bill that included more domestic energy production than as part of a tax reform package.

The former was what Graham worked on in the last Congress with Sens. John Kerry (D-Mass.) and Joe Lieberman (I-Conn.), though he withdrew before the other two introduced their bill.

Kerry said yesterday that he could see Republicans eventually supporting a carbon tax swap of the kind Inglis suggests. But he echoed Murkowski's sentiment that it was all in the timing.

"I think you've got to see the results of the election to figure out where the 'tax' word is in American politics," he said.

The only way Republicans would accept that a carbon tax was genuinely revenue-neutral would be if it came as part of the "very broad, complete, comprehensive" tax reform bill both parties have said they want, he added.

On the House side, Rep. Jim Moran (D-Va.) said he was more than happy to accept a carbon tax but not to swap it for another revenue raiser.

"We don't have the luxury of removing any taxes at this point, when we're running a trillion-dollar annual deficit," he said.

Inglis had some Republican support for his carbon tax bill in the last Congress, including from Rep. Jeff Flake (R-Ariz.), who was a co-sponsor and is now a candidate for Senate. Inglis yesterday praised Flake as "a real conservative," something he said is in short supply in Congress right now.

"We have populist rejectionism masquerading as conservatism right now," Inglis said. That is something he knows all too well, having been beaten badly in a Republican primary in 2010 by now-Rep. Trey Gowdy (R-S.C.), a tea party favorite.

Inglis said the Republican rejection of climate science has put party members at odds with their usual allies in the insurance industry, who are concerned about how changing weather patterns will increase their risk of doing business.

But Genevieve Rozansky, a spokeswoman for Flake, said that her boss had supported Inglis' bill as an alternative to the Democrats' cap-and-trade bill that passed the House in 2009. He has no plans to introduce it in this Congress, she said.

GOP strategist Mike McKenna said yesterday that a revenue-neutral carbon tax had long been a popular Republican alternative.

"This has been a thread that has run through conversations for years now, and a lot of Republicans have thought, 'You know what? If it ever looks like we're going to lose on cap and trade, let's toss out a carbon tax as an alternative answer,'" he said.

"It's been in the water for a while," he added.

McKenna said Inglis' effort would be unlikely to revive the carbon tax if Inglis were the only one behind it. But he said other, more influential Republicans had taken an interest.

"It's a coordinated effort, right?" he said. "It's not just like one or two of these guys are blue-skying. They've got the money behind it and are working it."

Gregory Mankiw, an economist and adviser to Republican presidential candidate Mitt Romney, and Douglas Holtz-Eakin, president of the conservative American Action Forum and a former adviser to Sen. John McCain (R-Ariz.) when he was the GOP standard-bearer in 2008, were mentioned yesterday as possible supporters of the effort. Both have expressed qualified support for a carbon tax in the past. But Holtz-Eakin said yesterday via email that he was not involved with Inglis' project.

"I have no idea what Mr. Inglis is up to," he said.

Inglis said that the initiative would make the case that "you can be a conservative and also be open to science."

But there does not yet appear to be conservative money going to fund it.

Inglis' initiative is housed at George Mason University, which named the Rockefeller Family Fund and the Energy Foundation as backers of the project. Neither is a conservative organization.

But Inglis said in an email last night that Holtz-Eakin, Mankiw and others had lent "intellectual support" for the carbon tax and touted an alliance with the R Street Institute, formerly the Heartland Institute's Washington, D.C.-based office, which continues to focus on insurance issues. The Washington office split off from Chicago-based Heartland following its decision to run the now-infamous Unabomber climate change billboard earlier this year.

Inglis said the initiative would also work to forge alliances with national security conservatives and the insurance industry.

He said the Rockefeller Family Fund, like him, opposed the House-passed climate bill. The Energy Foundation, which is linked to Hewlett-Packard Co., is also an appropriate partner, he said, "seeing as how the Hewletts and the Packards were all about free-enterprise innovation."

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