President Obama — or should I say, @BarackObama — tweeted on Wednesday for Americans to pressure Congress into keeping the $2,000 middle-class tax cuts in the face of the approaching “fiscal cliff”: “Call your members of Congress. Write them an email. Tweet it using the hashtag #My2K.”
House Speaker John Boehner, R-Ohio (@SpeakerBoehner) tweeted back: “FYI @WhiteHouse: House GOP voted to stop #my2k tax rate hikes & defend #smallbiz jobs. What spending will Dems cut to stop #fiscalcliff?”
Beyond this hashtagged and refined Twitter trash talk, as the 112th Congress mud-wrestles over the Budget Control Act of 2011 and the fiscal cliff, influential blogs are posting headlines such as “Return of the carbon tax?” and “Carbon tax could be part of eventual tax reform package.”
How is the carbon tax, a nonstarter among congressional Republicans and Democrats alike, slithering out of the budget weeds again? And why, even after the White House downplayed the idea earlier this month, are perfectly sane commentators predicting that “some form of a carbon tax may be the budget and climate policy tool most ready for implementation as Congress begins fiscal cliff negotiations”?
I asked Marlo Lewis, public policy expert at the Competitive Enterprise Institute. He replied bluntly, “The Dumb Party has been known to snatch defeat from the jaws of victory, and carbon tax advocates are nothing if not tenacious.” When he said “the Dumb Party,” he wasn’t talking about dumb Democrats.
“Carbon tax proponents hope they can sugarcoat the tax for conservatives, or at least enough conservatives,” said Lewis. Then, paraphrasing the Heritage Foundation’s David Kreutzer: “This proposed confection has two ingredients. First, the carbon tax is to be a revenue-neutral swap for some even more harmful tax. Second, a carbon tax would obviate the need for regulation of carbon dioxide and for subsidies to low-carbon energy.”
“Wait a minute,” I objected. ” ‘Revenue-neutral’ is supposed to mean that each dollar raised cuts another tax by a dollar. But this is politics. With neutrality, hundreds of billions of revenue dollars won’t be there to fill the special interest troughs. Supportive Republicans would be committing suicide.”
“Exactly,” said Lewis. “and Lisa Jackson certainly won’t tell her Environmental Protection Agency regulators — who use climate fears to pressure the fossil fuel sector out of the national economy — to knock off the regulations. We have a carbon tax now.”
Lewis continued: “A carbon tax was never meant to be a revenue source, but to change behavior, to stop the use of coal, oil and natural gas.”
His point: Tax carbon, consumers can’t afford it, use goes down. But revenue goes down, too — so the feds raise the tax to fill the gap. Use goes down again, revenue goes down again and the tax goes up again. It’s like the mythical dragon swallowing its own tail, only instead of a dragon it’s our only economically practical energy source.
“Nobody knows how to run a complex economy on biomass and wind and solar, no matter how vastly subsidized,” Lewis noted.
“But House Speaker John Boehner, Majority Leader Eric Cantor and Majority Whip Kevin McCarthy have signed a No Climate Tax Pledge. Bad news for those pushing carbon taxes as part of a budget deal,” concluded Lewis.
I asked Americans for Tax Reform founder and pledge author Grover Norquist what he thought was behind this sudden resurgence of talk about a carbon tax.
“Obama is not truly interested in raising taxes on the rich,” Norquist told me. “His real goal is to impose an energy tax as the precursor of a value added tax on American taxpayers. An energy/carbon tax and/or a VAT, in addition to the present income tax, is the only way to fund the permanently larger government Obama is creating before our eyes.”
With even ExxonMobil reported to be giving support to the fantasy tax-for-regulation swap, politicians need to realize the carbon tax is a trap for fools eating their own tails.