Yesterday, a draft copy of the Senate version of cap-and-trade leaked from the Boxer committee. A public draft is expected today. The bill proposes a 20% cut in greenhouse gas emissions by 2020 as compared to 2005 levels and expanded regulatory authority for the Environmental Protection Agency.
But here’s the fascinating thing: the single biggest issue in cap-and-trade goes entirely unmentioned in the Boxer bill. That issue is, “Who gets the allocations?” Allocations – permissions to emit – will be worth hundreds of billions of dollars. The pure theory of cap-and-trade calls for auctioning them to the highest bidder. The House version of cap-and-trade instead assigned them to the biggest donors.
Colossal fortunes turn on this decision. Yet the Boxer bill offers little information. Apparently 25% of the allocations will be auctioned. The destiny of the remainder is undecided or anyway unannounced. Perhaps it will be decided later, after hearings and, hem, other consultations. In which case, instead of auctioning off the allocations to the highest bidder, they may instead be quietly assigned to the most wired lobbies and the most generous Democratic donors.
23 responses so far
1 JJWFromME // Sep 30, 2009 at 11:52 am
Again, you just don’t like the shift in political economy. Certain interests line up with helping the country’s interests. So what?
And tell us, just how should “the reality based community” organize itself against the revanchist Republican machine and the “God Pod”?:
http://www.guardian.co.uk/Archive/Article/0,4273,4171063,00.html
2 balconesfault // Sep 30, 2009 at 11:59 am
The House version of cap-and-trade instead assigned them to the biggest donors.
This is quite an inflammatory accusation, and is almost certain to be quoted by a lot of people who trust that David Frum would not be making such an accusation without ironclad proof.
I expect we’ll see this proof presented soon?
3 sinz54 // Sep 30, 2009 at 12:07 pm
JJWFromME:
Even environmentalists said that the permits should be auctioned off, not given away to the politically well-connected.
Why? Because among the well-connected is the coal industry, which will get permits to enable them to punt on reducing greenhouse-gas emissions through “clean coal” technology.
You, being a Dem partisan, just see this as part of the political spoils system. But that plays into the hands of opponents of cap-and-trade who say that it’s not about stopping global warming.
4 EscapeVelocity // Sep 30, 2009 at 12:15 pm
Tribalist politics will drive us into oblivion.
Vote for me and I will tax those other people and give you their wealth.
This is why Africa is such a basket case.
The Western Left is a vile evil monstrosity.
Ask not what you can do for you country, but what your government can do for your tribe.
5 JJWFromME // Sep 30, 2009 at 12:16 pm
“I expect we’ll see this proof presented soon?”
Proof? Conservatives conjecture, insinuate, stir up paranoid resentments. Proof, honest readings of facts are things you almost never see from conservatives. With things like climate change, this is a dangerous state of affairs.
Conservatives see scientists getting together and actually studying empirical reality to be some sort of cynical conspiracy of a New Class (indeed, they were muzzled under the Bush administration). They see corporate executives studying that information, and actually determining their interests (which is their job) as heretics:
http://money.cnn.com/2008/03/14/news/newsmakers/gunther_scott_immelt.fortune/index.htm
6 JJWFromME // Sep 30, 2009 at 12:25 pm
“You, being a Dem partisan, just see this as part of the political spoils system.”
I see it as the interests of some companies coinciding with common sense laws. Good companies want a level playing field, so that the best solutions win. The best solutions can’t win if someone is able to profit without bearing any of the costs of the externalities.
7 EscapeVelocity // Sep 30, 2009 at 12:41 pm
I think you should be taxed for breathing, eating, and farting.
8 Churl // Sep 30, 2009 at 12:45 pm
The allocation rules are undefined in the bill that elected legislators get to vote on. This means that the rules will be set by the bureaucrats and lobbyists . Hence the mistrust.
9 balconesfault // Sep 30, 2009 at 1:12 pm
I understand mistrust. It behooves us to demand accountability and transparency from government.
That said, the best format for accountability and transparency isn’t stipulating everything in legislation. There are significant technological and economic issues in play here, and frankly Congress isn’t the best place in the world to settle the minutae of every technological and economic issue. First, it’s filled with people whose understanding technology and the economy are tenuous at best (and I’ll include Dems here – with Kent Conrad proclaiming the other day on the floor that the US should look to successful healthcare systems around the world that don’t have significant government involvement – like the French). Second, legislation is much more prone to being influenced by lobbyist pressure. Third, because a few lines of poorly written specifications in the legislation can generate hundreds of pages in the CFR as bureaucrats (people who are hired ostensibly because they understand technology and the economy) try to make sense of gobbledegook.
Meanwhile, individual provisions in a final regulation as written by bureaucrats will end up being opened to public comment, with a mandate that government consider those comments in detail and justify why they changed or did not change the regulation in response to those comments. And there will no doubt be lawsuits over those bureaucratic decisions.
In short, once a stipulation is put in place by Congress, it can only be challenged on Constitutional grounds, and not over whether it will actually accomplish the broad goals that Congress is trying to address with the legislation, or might even be counterproductive. Bureaucratic decisions, on the other hand, can be challenged over whether they’re actually useful.
10 EscapeVelocity // Sep 30, 2009 at 1:14 pm
Maybe we should just have all powerful Czars control the minutae. Dear Leader will make sure that the peoples interests are served.
11 FosterBoondoggle // Sep 30, 2009 at 2:17 pm
How about taxing carbon? That would solve the spoils problem on the revenue side. But wait, who’s going to vote for that? Not the “conservatives” in the Senate!
Remind me what it is that conservatives actually want to conserve. Not resources. (James Watt, in the Reagan administration, famously said that there was no need for conservation because the end times were near.) Not the health of the environment. Not a balanced budget (except when Dems are in power). Not peace.
12 bm // Sep 30, 2009 at 3:32 pm
Spot on Mr. Frum! The essence of Obamaism is politicization of the economy and crony capitalism (the Chicago political-economic model). The country has long been drifting down this slope under both Reps and Dems, but with Obama we are the tipping point, where it could become the consolidated permanent system of governance. Thank you for shining the light on this matter before the sly distribution of the cap-and-trade spoils actually begins … one thing this crew does not seem to like at all is getting caught in the spotlight, witness how they chucked what’iz-name the Green tzar and how they are now scurrying away from ACORN.
13 JJWFromME // Sep 30, 2009 at 4:03 pm
Climate change? Externalities? Ummm… Hey look over there, ACORN!!!
14 EscapeVelocity // Sep 30, 2009 at 4:05 pm
You should pay for the externalities that result from your breathing.
15 EscapeVelocity // Sep 30, 2009 at 4:07 pm
JJ,
You should find a less obscurantist discriptor than “climate change.”
16 JJWFromME // Sep 30, 2009 at 4:15 pm
Blame Frank Luntz:
http://www.campaigncoverage08.org/?p=198
17 freedomrings // Sep 30, 2009 at 4:19 pm
It’s a travesty that the allocations won’t be auctioned off, but Frum neglects to mention that when this was being discussed a few months ago it was the congressional republicans who were shouting down the idea of auctions as a tax in order to discredit the bill in general. Short sighted to say the least.
18 EscapeVelocity // Sep 30, 2009 at 4:22 pm
Senate committee rejects amendments enforcing immigration check, blocking abortion funding
During his speech to Congress, Barack Obama derided the notion that ObamaCare would pay for abortions and for health insurance for illegal immigrants as “false”, a “misunderstanding” spread by opponents who wanted to derail his efforts to reinvent the American health-care system:
http://hotair.com/archives/2009/09/30/senate-committee-rejects-amendment-blocking-abortion-funding/
19 mycelf // Sep 30, 2009 at 5:34 pm
@escapereality: please try posting nonsense that is at least remotely related to the subject of the post.
20 EscapeVelocity // Sep 30, 2009 at 5:49 pm
Oops, someone moved the topics around on me.
21 sinz54 // Sep 30, 2009 at 8:03 pm
JJWfromME:
But that’s exactly what WILL happen, if permits are just handed off to the fossil fuel industries.
They’ll use the permits to offset the externalities.
22 sinz54 // Sep 30, 2009 at 8:09 pm
fosterboondoggle:
This is what can go wrong when talk show hosts are trusted more than scientists on scientific issues.
Among the GOP base, it’s taken as axiomatic that:
1. Global warming is not happening. It’s a hoax, deliberately perpetrated by Al Gore and anti-American environmentalists who want to destroy the American economy.
2. The U.S. has more oil reserves than the Middle East, and it’s easy to get to. Only liberals and environmentalists are keeping us from tapping it.
3. Taxes should always be cut, never raised.
Every one of these propositions is false. But the GOP base has had these falsehoods drilled into their heads by the talk-show circuit; Limbaugh, Coulter, Malkin, etc.
As Daniel Patrick Moynihan once said: You have a right to your own opinions. But not to your own facts.
23 bm // Sep 30, 2009 at 8:45 pm
Freedomrings at 17 is perfectly right to point to the short-sightedness of congressional republicans on this issue. One can’t overstate the stupidity, ignorance and cynicism of republicans here. Instead of getting ahead of the issue and being able to shape it, they have more or less handed it over to the democrats, who can now use this lever to launch reckless exercises in socio-economic re-engineering and wealth redistribution, with god knows what unintended and unforseeable consequences.
How much better if the republicans could, first, accept the elementary proposition that unchecked greenhouse gas emissions are indeed a real issue (cf. Jim Manzi), and, then, on that realistic basis, go on the offensive against the extremist pseudo-scientific propaganda from quite large sections of the climate change industry, and, second, fashion realistic pro-market approaches to the problem. For example, most economists think that a carbon tax is definitely a superior policy instrument to cap-and trade. If the republicans had any brains whatsoever they could champion a small carbon tax that could be gradually ramped up over the next few decades in a way that gives businesses time to adjust and, possibly, in a way that is budget neutral, by cutting other much more harmful taxes, e.g. those hurting employment. Or, given our looming fiscal crisis, to pay down public debt. Or such revenues could be used to finance tax incentives for innovation in new energy technologies that are the only long term solution to climate change. But no! The morons can’t bring themselves to utter the word “tax”!
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