Cap and Trade Politics

The Wonk Room has a post sharing part of an interview they did with Donna Edwards (D-MD) on cap and trade legislation. Edwards supports the bill, but believes revenues should be invested in the development and construction of green technologies. This contrasts with Obama’s budget plan, which distributes revenues from a cap and trade plan as the “Making Work Pay Taxcut.”

But ultimately this is just a question of politics, right? That is, it doesn’t really matter whether the revenues levied from a cap and trade plan “go” to a tax cut or whether they “go” to investment in green technologies so long as revenues are going to both. The logic behind tying cap and trade to a tax cut is that cap and trade is inherently regressive. Lower income families spend a greater share of their income on energy than do wealthier ones, so the tax cut equalizes the burden. Green infrastructure investment will presumably accomplish the same goal by lowering energy costs, but that won’t change the fact that both green infrastructure investment and the Making Work Pay Tax Cut receive federal dollars. Six of one, half dozen of the other.

If you want to have an argument about which one is a more politically compelling choice to marry to cap and trade, that’s fine.  But so long as green infrastructure investment remains a part of Obama’s agenda, it doesn’t really matter where revenues from a cap and trade plan “go.”

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One Response to “Cap and Trade Politics”

  1. Brad Johnson Says:

    Cap and trade is not “inherently regressive.” A cap on carbon emissions drives energy consumption from fossil fuels to renewable energy. A fossil-fuel based economy is inherently regressive — it’s unsustainable, polluting, requires massive capital flows to a very small group of producers. A renewable/efficiency based economy is potentially progressive, directing capital into labor and distributed energy production while reducing the pollution that disproportionately hits the poor. It also insulates the economy from fuel disruption and price swings that also disproportionately hurt the poor.

    The transition can have regressive elements as coal monopolists squeeze their customers instead of taking pay cuts. But cap and trade is not “inherently regressive.”


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