EDMOND — Last week the U.S. House of Representatives passed landmark environmental legislation that for the first time will put a price on carbon emissions. The measure, which passed on a mostly party-line vote, now faces an uncertain fate in the Senate. But to many mainstream economists, the problem with this legislation is not that it goes too far, but that it does not go far enough.
The measure promises to reduce greenhouse gas emissions — the same pollution that most climate scientists believe contributes to climate change — 17 percent below 2005 levels by the year 2020. To accomplish this, the bill would set a cap on emissions and distribute pollution credits to polluting firms. In order to exceed the pollution limits placed on their firms, the polluters would need to purchase pollution credits from firms that found ways to reduce their emissions. Thus, for the first time firms would have a financial incentive to reduce their carbon emissions.
To economists, though, the ideal way to accomplish this would be to auction off the pollution permits. Only the polluting firms would be willing to pay for them — essentially forcing the polluting firms to pay for their pollution. The Congressional Budget Office estimates that this would raise nearly $1 trillion during the next 10 years.
If you are thinking that this amounts to a tax then you are absolutely correct. Generally, the economists’ pollution solution is to make the polluters pay a tax. Unfortunately, the climate bill being pushed through Congress does not auction off the pollution permits, but instead gives 85 percent of them away, providing an immense windfall to polluters at the expense of taxpayers.
Even still, some Republicans are complaining that the proposed bill would still raise $159 billion in revenues during the next 10 years — far too high of a cost, they say. It is true that the bill will raise the production costs of polluters, but that outcome does not mean this is a bad idea. In fact, we do this all the time. For example, we do not allow firms to dump pollution into the Oklahoma River because we want to preserve its beauty. Notice, though, that this restriction increases business costs. Without such a restriction, businesses more easily could dispose of their waste, bringing down their costs. Few people, though, would argue that allowing firms to pollute the Oklahoma River is good for society, even if it is bad for profits.
The same can be said about the climate bill. If, as most climate scientists believe, carbon emissions are contributing to climate change and generating significant long-term costs on society, then taxing (even indirectly) that pollution is sound policy. In other words, not all taxes are bad. In fact, such a carbon tax has been endorsed by some of the most conservative economists in the nation as the appropriate governmental response to fight climate change.
Granted, while a carbon tax wins support of economists, the imposition of any tax is unpopular with the general public. But this could have been overcome by using the $1 trillion of revenues to reduce the corporate income tax (one of the most harmful taxes in existence) and the payroll tax (one of the most regressive taxes in existence). In other words, we could raise taxes on polluters, while cutting the worst taxes for the rest of us. To paraphrase New York Times columnist Thomas Friedman, “we punish you for your pollution sins and reward you for your payroll wins.”
The cap-and-trade bill is clearly not a perfect bill. But judging from the closeness of the vote in the U.S. House, it is likely as close to perfect as one can get right now. Hopefully, as the bill progresses through the legislative process it will be improved further by including payroll or corporate income tax cuts. But even in its current form, by forcing those firms who contribute to climate change to pay something for their pollution, it is progress. Sometimes the small, imperfect steps in the right direction are the only steps we can take.
MICKEY HEPNER is an associate professor of economics at the University of Central Oklahoma.
Opinion
A small, imperfect, right step
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OUR VIEW: Feb. 14 vote about ideas
If you read any of the letters to the editor in the past two weeks regarding Tuesday’s District 2 Edmond school board race, then you already know that this election is not about the individual candidates so much as it’s about what type of school board do Edmond residents really want governing their school district?
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What are your presidential 10 Commandments?
As we brace for the upcoming presidential campaign, we should be honest about our responsibility in the process. Before we get pushed, pulled, bribed, frightened, bullied, flattered, fooled or charmed into voting for a candidate, let’s take a mature thoughtful look at what the profile of the president should look like. In order to do that, let’s do an exercise. Sit down with a pencil and paper and draft your proposal for the Ten Commandments to be obeyed by the president. Let me share some of my suggestions.
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What would Reagan do today in Oklahoma?
As we celebrated the 101st anniversary of Ronald Reagan’s birth on Feb. 6, several of us at Oklahoma Council of Public Affairs started discussing what Reagan might do today. Here are some of the ideas we came up with.
- LETTER: School counselor says Roy ready to help all students
- LETTER: Supporter calls Duncan 'a firecracker'
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Consequences of an overregulated nation
Overreaching government regulations are costing jobs and killing our economy. They are a heavy burden on our nation and its citizens — in some cases worse than our nation’s increasingly out-of-control debt.
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LETTER: Supporter: Duncan shows passion for children’s needs
To the Editor:
The families in the Edmond Public School District are fortunate to have Kathleen Duncan as their advocate on the Edmond Board of Education. Duncan has worked tirelessly for the welfare and benefit of the Edmond schools’ students. -
LETTER: Teacher supports Duncan’s re-election
To the Editor:
On Feb. 14 patrons of District 2 have an opportunity to re-elect the current president of the Edmond School Board, Kathleen Duncan. Duncan has served as a board member for 10 years. When people move to the Oklahoma City area, they buy a home here because of the exceptional quality of Edmond Public Schools. This speaks to Duncan’s goal of “Excellence in Education for All Edmond Public School Students.” -
LETTER: Supporter: Duncan understands diverse issues
To the Editor:
Kathleen Duncan understands the diverse issues that effect our schools. She carefully studies the district’s issues and works tirelessly as an advocate for all students. Her votes as a board member have an impact for years to come and she takes that responsibility very seriously. - LETTER: Reader says incumbent's personal agenda in the way
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OUR VIEW: Feb. 14 vote about ideas
