Shouldn’t the coveted Power Line Green Weenie Award be like those typical sweepstakes prizes where friends and family of the sponsoring company are ineligible to win? Well, since I make the rules, why can’t I suspend them, like Harry Reid in the Senate? Because the winner of this week’s Power Line Green Weenie Award is . . . me!
Well okay, not quite literally me alone, but close enough for government work. A few of you might have noted a ruckus late in the week that emerged out of my office in DC at AEI (my last week as a resident scholar at AEI as it happens), where trumpets blared that AEI was holding secret meetings with greenies to develop a plan to pass a carbon tax in the lame duck session of Congress to fight global warming. Turns out that the whole story isn’t quite what it appeared, as Ramesh Ponnuru noted in his account of the matter. As a general matter, though, I am for these kind of face-to-face meetings with our ideological adversaries, if only to give me the opportunity to tell them directly what miserable pukes they all are. One curious and obvious wrinkle here, though, is that these were private, off-the-record meetings, which is necessary if there are to be candid exchanges. I can’t call these folks miserable pukes on a public panel in the Wohlstetter conference room, fergawdsake. (For the record, though, I actually missed the meetings, so I wasn’t able to pass out my green airsick bags.) So who leaked the agenda? This story didn’t happen by accident. I have my candidate, but you Agatha Christie readers may wish to puzzle over it.
As it happens, though, Ken Green, Kevin Hassett and I did indeed publish a long paper together back in 2007 arguing that a revenue-neutral (no net tax increase in other words) carbon tax was miles superior to any cap and trade scheme, even those theoretically elegant ones that Rob Stavins at Harvard spins off before breakfast, let alone the kind of corrupt, favor-laden, totally unserious cap and trade bill like Waxman-Markey that the Democrats rammed through the House in 2009. We were far from the only conservatives willing to think over the matter. Arthur Laffer, the Godfather of supply side economics, is for it still, as is former Bush Administration economist Greg Mankiw, and George Schulz. And inside our own office, Nick Schulz was along for the roller-coaster ride.
Of course, four things have changed the scene radically since 2007. First, the case for action on catastrophic global warming has collapsed politically. In the wake especially of “Climategate,” the climateers these days resemble nothing so much as those die-hard Japanese soldiers who sharpened their bayonets in island caves for a decade after Hiroshima, refusing to believe the war was over. This should have been made evident, second, by the collapse of cap and trade in Congress, and the slow unraveling of emissions trading in Europe. News bulletin for greenies: it ain’t coming back. And the third and most obvious difference between 2007 and now is this large thing called a bad economy, which violates the Prime Directive: don’t raise taxes in a recession. Fourth, with the failure of cap and trade, the EPA is going to try to regulate greenhouse gases through the Clean Air Act, which even the EPA knows in its heart of hearts is a hopeless venture. Unlike what we mused about in 2007, current carbon tax proposals would add net new taxes on top of the EPA’s regulatory scheme. As the kids might say, “that sucks.”
In the abstract, consumption taxes are superior to capital and income taxes, and any tax reform scheme that taxed consumption and lowered income and capital taxes would be a pro-growth tax reform. The hazard is that we’d end up with both taxes going up, instead of one kind substituting for another. Anyhow, this is the general spirit with which AEI conducts much of its research on fiscal questions. The fact that consumption taxes are regressive is a feature, not a bug, in my mind. As Reagan once said, “Taxes should hurt.” My corollary is that if lower and middle class earners, currently exempted from much of the federal income tax burden, had to pay for all the government they get, they might want less of it. Having less government, and a more pro-growth tax code, is the main object in view.
My frequent partner in crime, Ken Green, last year noted all these changes in repudiating his former flirtation with carbon taxes. In this, he reminds me of Churchill’s great essay, “Consistency in Politics”:
A Statesman in contact with the moving current of events and anxious to keep the ship of state on an even keel and steer a steady course may lean all his weight now on one side and now on the other. His arguments in each case when contrasted can be shown to be not only very different in character, but contradictory in spirit and opposite in direction: yet his object will throughout have remained the same. His revolves, his wishes, his outlook may have been unchanged; his methods may be verbally irreconcilable. We cannot call this inconsistency. In fact it may be claimed to be the truest consistency. The only way a man can remain consistent amid changing circumstances is to change with them while preserving the same dominating purpose. . .
It is evident that a political leader responsible for the direction of affairs must, even if unchanging in heart or objective, give his counsel now on the one side and now on the other of many public issues. . .
A Statesman should always try to do what he believes is best in the long view for his country, and he should not be dissuaded from so acting by having to divorce himself from a great body of doctrine to which he formerly sincerely adhered.
But Green can’t have the Green Weenie; I’m keeping it for myself. (And yes, if you’re wondering, as of now the Power Line West Coast Bureau and Wine Tasting Society is up and running full tilt boogie mode.)
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