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Yesterday, John McCain disclosed details of his plan to cut the use of fossil fuels—and thus greenhouse gases--through a cap and trade system of mandatory emissions reductions. As we have written, cap’n trade is not the name of a cheesy seafood restaurant. It is Washington-speak for a huge new tax on oil, gas, and coal. This is a good thing, but we ought to talk about it honestly.
Barack Obama and Hillary Clinton have also embraced a cap and trade system—although one that is quite different in key details from McCain’s.Thanks to Kevin Drum at Washington Monthly for noting that both Obama and Clinton have endorsed an auction of these limited rights to pollute. McCain also backs an auction, but only after a transition in which some share of the credits is given away to businesses. The differences between an auction and an allocation may numb the mind, but they are critical. In an auction, the government gets a multi-billion dollar windfall. If the credits are given away, the windfall goes to businesses. Either way, consumers will pay lots more. Another way to cut consumption of fossil fuels is a straightforward carbon tax.
McCain would have a quasi-government entity called the Climate Change Credit Corp. design the details of his system—long after the election. His goal is to slash 1990 emissions by 60% by 2050. Clinton and Obama’s target is 80%.
McCain’s plan seems to have satisfied no one. Conservatives hammer it as a huge energy tax. Which, of course, it is. The left, predictably, does not think it goes far enough. I think they have lost perspective, however. That a conservative Republican like McCain is talking about mandating 60% cuts in greenhouses gasses is an indication of just how far the discussion has come over the past few years. Environmentalist David Roberts takes the better-than-expected view More to the point, Doug Holtz-Eakin, McCain’s top policy adviser,told me in April that climate change will be a top first-year priority for a President McCain—hardly what I expected to hear.
Next month the Senate is supposed to debate a cap and trade proposal offered by John Warner (R-Va.) and McCain buddy Joe Lieberman (I-Conn). The bill has no chance of becoming law this year, but it will be the first opportunity for a high-profile Capitol Hill debate on what could be a profound change in both environmental and tax policy. It will be interesting to hear what senators McCain, Obama, and Clinton have to say.
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