Sunday, September 17, 2017

Carbon Gridlock Redux in Washington State

A year ago—it already seems like another era—an initiative to set up a carbon tax in Washington State, I-732, was defeated by the voters.  The proposal was to use the money for tax reductions in accordance with the standard economic view that taxing “bads” rather than goods generates a double dividend.  I disagree with that (I think the deadweight loss case against taxes is weak), but I agree that carbon prices operate like a sales tax and are regressive, so it’s a good idea to return the money according to an egalitarian formula, preferably equal rebates per person.

But most of the political left sees it differently.  When they look at carbon pricing they see a big new revenue stream that can be used to fund all the things they have been unable to get in a period of conservative (or neoliberal) political dominance.  They want infrastructure, mass transit, community development projects and environmental restoration, and for them returning the money is unthinkable.  So the left in Washington State, including unions, social justice organizations and most of the environmental activist community, opposed 732, denouncing it as a corporate subterfuge.  A carbon tax is always going to face headwinds, but with the left as well as much of the right in opposition, it was doomed.

So here we are again, looking at another round of state carbon tax initiatives for 2018.  The group that organized the left campaign against 732, the Alliance for Jobs and Clean Energy, is drafting their version, which will surely funnel most of the money to the causes (and in some cases the organizations) of their constituents.  But, perhaps in a play to get a bigger voice in the process, the Affiliated Tribes of Northwest Indians, an umbrella group of 57 tribal governments in the region, has just announced it has begun drafting its own initiative, one that earmarks most of the money for environmental purposes, with a chunk dedicated to the tribes.  The prospect is for heated backroom meetings, where the leadership of various organizations push and pull to divvy up the potential carbon cash.  Whether the product of this process can survive at the polls is another question.

As I’ve written before here and elsewhere, I’m appalled at this deformation of carbon politics.  It doesn’t take into account who pays the carbon tax and the effect higher energy prices will have on living standards.  It naively assumes that governments will spend carbon money only on new projects and not shift existing spending in order to free up more funds for whatever they really want to finance.  There is no pretense of democracy in the way it establishes its earmarks.  And it puts the fight to get a piece of carbon revenues ahead of the urgent need to address the climate crisis, with predictable political consequences.  Revenue recycling in the simplest, most transparent fashion is the way to go, but if there are to be earmarks they should be decided democratically.

The politics of carbon activism are tangled in knots, and year after year goes by without serious action to avert an almost unimaginable climate catastrophe.

4 comments:

ProGrowthLiberal said...

"I agree that carbon prices operate like a sales tax and are regressive, so it’s a good idea to return the money according to an egalitarian formula, preferably equal rebates per person. But most of the political left sees it differently. When they look at carbon pricing they see a big new revenue stream that can be used to fund all the things they have been unable to get in a period of conservative (or neoliberal) political dominance."

I agree with you. Washington should have passed this bill. And then progressives should make their case for having Washington to have an income tax to fund infrastructure etc.

chrismealy said...

The problem with using a carbon tax for paying for worthy social projects is that the ideal revenue from a carbon tax is zero. The goal, the only hope for a livable planet, is a zero carbon world. The good thing about cap and trade auctions or whatever is that everybody can see that the cap is going down every year and plan accordingly. Having to progressively raise the carbon tax is going to be terrible.

rosserjb@jmu.edu said...

Nobody talking cap and trade in WA? Too bad.

On a different topic, Peter, I saw that Weinstein has resigned from Evergreen faculty and also received a payment of $500,000 from them. Hope things not too unpleasant there this fall.

Peter Dorman said...

Barkley, I thought of posting on the Weinstein/Heying settlement but decided to postpone a bit to see if there will be an announcement from their side of the story. Right now, I think it's a very good deal for Evergreen: no money out of their pocket, no admission of guilt, and enough lead time to transition the affected students to a new biology program quietly prepared over the summer. But let's see what Weinstein/Heying have to say.

Will the college fare better this year? Too soon to tell. And that's another post too.