Modern environmentalism in combination with the politics of wealth redistribution has made for a good deal of misbegotten policymaking. But for an all-cost-no-benefit proposal, it would be tough to beat the draft legislation distributed last month by Representative Henry Waxman (D., Calif.), Senator Sheldon Whitehouse (D., R.I.), Representative Earl Blumenauer (D., Ore.), and Senator Brian Schatz (D., Hawaii).
The Waxman proposal for a “carbon-pollution fee” would impose a tax on about 7,000 “large emitters” of greenhouse gases (GHG). Despite repeated references to climate change, it is curious that nowhere do the sponsors of the bill offer an estimate of or even an assertion about the environmental benefit of the tax.
That is a telling omission.
Suppose that U.S. GHG emissions somehow were cut in half immediately. If we apply a widely accepted climate model and the midrange emissions path assumed by the United Nations Intergovernmental Panel on Climate Change, the result would be a reduction in global temperatures of 0.1 degrees Celsius over 100 years. Because the variability of annual temperature is greater than that figure, the predicted effect — unlike the resulting economic dislocation — of halving American GHG emissions could not even be measured reliably. Suffice it to say that the effect of the Waxman carbon tax would be far smaller. The tax has no measurable benefit, and so there is no environmental justification for it; the real goal, obviously, is the politicized distribution of new tax revenue.
More subtly, the proposed tax is inconsistent with the underlying climate science. There is no dispute that the impact of GHG emissions on temperature declines as GHG concentrations increase. As the developing world consumes more fossil fuels — the human pursuit of higher living standards is universal — GHG concentrations are certain to rise, meaning that marginal changes in U.S. emissions will matter less and less. The proposal is for a tax that increases every year, but it should decline instead if it is intended to reflect the asserted social cost of GHG emissions. The larger truth is that the U.S. tax should be zero, because it would make no measurable difference in climate patterns even under “apocalyptic” assumptions about the effect of GHG.
In the context of public-finance principles, the tax would be inconsistent with efficient taxation under democratic institutions. Taxes in principle are prices for public services and should reflect the valuations that individuals place on those services. The Waxman proposal offers no plausible connection between the economic burdens that a carbon tax would impose across individuals and the differing benefits of public spending. Furthermore, because the tax would be hidden — shifted onto the prices of goods and services — it would obscure rather than clarify the cost of government. This fiscal-illusion effect would be inconsistent with the pursuit of spending discipline.
The Waxman proposal repeats “carbon pollution” as a mantra, but the evidence of its environmental effect is far weaker than commonly assumed. On June 1, it will be more than seven and a half years since a hurricane of Category 3 or higher magnitude landed on U.S. coastlines — a period of relative quiet not observed since 1900. The global index of tropical cyclone energy is near its lowest level since reliable measurements began by satellite in the 1970s. An increase in hurricane activity in coming decades is far more likely to reflect a reversion toward the mean than the effects of GHG concentrations. The evidence from the past century is that the rate of sea-level increase varies substantially across decades, showing no long-term trend despite rising atmospheric concentrations of GHG. The Palmer Drought Severity Index shows no trend over the period from 1895 to the present.
The various climate models have not been able to predict the warming around a millennium ago, or the Little Ice Age that followed, or the warming that began around the middle of the 19th century, or the cooling from about 1940 to 1980, or the subsequent warming through about 1998, or the absence of a trend over the past 15 or so years. All climate models predict that anthropogenic warming would create an enhanced heating effect in the tropical mid-troposphere, but neither the satellites nor the weather balloons can find it.
In short: The models can predict neither the past nor the present. It is not clear how a carbon tax can be justified on the basis of their predictions about the future.
The comedy highlight of the Waxman proposal is the promise that the revenues will be “returned to the American people,” meaning the constituencies favored by the bill’s proponents. That trite expression obscures the depths of the cynicism inherent in this proposal, driven by a level of mendacity shameless even by Beltway standards. Even if the revenues are formally earmarked for certain programs, the interest groups receiving the promises will discover that they have been used: Under most conditions, Congress can frustrate the earmarking by changing its allocation of budget dollars, thereby unleashing a massive tug-of-war exercise in rent-seeking.
The carbon tax is little more than a profit opportunity for the Beltway. The real pollution is that created by the politics of wealth redistribution, a fundamental corruption of the relationship between the citizenry and the state. It too is man-made, but Waxman has little to say about it.
— Benjamin Zycher is a visiting scholar at the American Enterprise Institute.