Now Hansen has published a new account of “what I really meant”. It is just as muddled as the original. Hansen tells us, for instance, that he knew all along that caps and taxes are reflections of one another:
I do not dispute the economic theory that a cap and a fee are, in principle, equivalent. But cap and trade's complexity allows special interests to take over, killing its effectiveness.
(Actually, caps and taxes are not equivalent in a world of uncertainty, but we will let that pass.) So now the claim is that taxes are simple and pure, while caps are murky and lead only to corruption. This is no doubt true if you compare a perfect, hypothetical tax to an actual, highly compromised cap. If Hansen thinks that a tax system passed by Congress will be the pristine, comprehensive, loophole-free policy of his dreams, he hasn’t had much contact with the IRS recently.
What he can’t seem to get clear on is that he has two entirely legitimate complaints, but they have nothing to do with caps vs taxes. Hansen is against giving away carbon permits and against offsets. I (and many others) agree with him completely. This should be a reason to weigh into the public debate against giveaways and offsets. But no, he says the solution is to switch to a tax—as if there can’t be giveaways (rebates) and offsets (credits) in a system of carbon taxes.
Finally, he dumps on the Cantwell Bill, which proposes a carbon cap without giveaways and offsets—a bill that is as short, sweet and uncomplicated as anything you could hope for. Why? Well, it’s a cap, and, you know, complicated and sure to be stuffed with giveaways and offsets and....