AEI Hosts Fifth Secret Meeting to Promote Carbon Tax

by Marlo Lewis on July 11, 2012

in Features

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Today, the American Enterprise Institute (AEI), a prominent conservative think tank, hosted a secret, four-and-a-half hour meeting of pols, wonks, and activists, including several self-identified ‘progressives,’ to develop a PR/legislative strategy to promote and enact a carbon tax. This was the fifth such meeting to advance the “Price Carbon Campaign/Lame Duck Initiative: A Carbon Pollution Tax in Fiscal and Tax Reform.” An annoted copy of the meeting agenda appears at the bottom of this post.

Perhaps not coincidentally, earlier this week former GOP Congressman Bob Inglis of South Carolina launched the Energy and Enterprise Initiative, an organization promoting carbon taxes. Inglis obtained funding for the project from the Rockefeller Family Fund and the Energy Foundation, both left-leaning foundations.

Left-right coalitions can be principled and desirable. For example, I worked with environmental groups to help end the ethanol tax credit, and I work with them now to develop the case for eliminating the ethanol mandate. We collaborate because we share the same policy objective, even if not always for the same reasons. The free marketers want to end political meddling in the motor fuel market and the environmentalists want to end federal support for a fuel they regard as more polluting than gasoline. The common objective is consistent with each partner’s core principles.

But such cases are the exception rather than the rule. In general, when left and right join forces, the appropriate question is: Who is duping whom?

My colleague Myron Ebell sent out an alert about the AEI-hosted carbon tax cabal earlier today. It appears immediately below:

From 1:30 until 5 PM today, the American Enterprise Institute is hosting a hitherto secret meeting to discuss how to enact a carbon tax in a lame duck session this fall or perhaps in the 113th Congress.  I have pasted the agenda below and an article from today’s Greenwire.  Note that this is the fifth meeting that they have held.  Also note that the comments made about the meeting in the Greenwire article (just economists brainstorming) bears no relation to the agenda, which is clearly about plotting political strategy to enact a carbon tax.

As my colleague Marlo Lewis noted, we defeated capntrade by convincing the American public that it was really capntax.  Twenty-odd House Democrats who voted for Waxman-Markey lost their seats.  The Democratic Senate refused to take it up.  It’s political poison, so naturally the more brain-dead parts of the Republican and big business establishment have decided how clever it would be to resurrect the carbon tax and push it as an alternative to regulation.  I don’t notice anything in the AEI agenda about repealing the greenhouse gas emissions standards as part of the deal.  Why don’t we do that first?  Then we can talk about alternative policies if any.

Also note the idea that a deal could be done so that a carbon tax would be offset by reductions in other taxes and would therefore be revenue neutral.  There are multiple problems with the idea of revenue neutrality.  First, it never works.  A new tax will quickly be raised.  Second, the poorer people are, the higher the percentage of their income that goes for energy.  Poor people already don’t pay much or any income tax.  So a consumption tax offset by, for example, cuts in the corporate income tax rate, will be highly regressive.  Third, the only way a carbon tax will reduce fossil fuel consumption is if it’s set quite high.  And the only way a carbon tax will raise much revenue is if it’s set quite high.  Thus they must be advocating European levels of taxation.  Say $5 dollars a gallon of gasoline.  Roughly $500 per ton of coal.

We must kill this incredibly harmful idea as quickly as possible.  We can start by letting our contacts at AEI know what we think of their plotting to foist a carbon tax on America.

This is troubling because the dumb party has an uncanny ability to snatch defeat from the jaws of victory. Stopping Obama’s war on affordable energy is a key GOP campaign theme in 2012, and the base is upset because the Supreme Court just upheld the Obamacare individual mandate as a tax. Yet some GOP influentials now call for an open, unvarnished tax on affordable energy.

The GOP’s only clear product differentiator — and most durable political asset — is its reputation as the no tax increase party. The Inglis and AEI initiatives, if successful, would destroy this asset.

Inglis, by the way, proposed a carbon tax bill in the last Congress. He was roundly defeated in the primary by a Tea Party candidate, now-Rep. Trey Gowdy (R-S.C.). At least in 2010 Inglis could claim that he was offering a less mischievous alternative to cap-and-trade. But cap-and-trade is dead. There is no longer a prudential case to be made for carbon taxes as the lesser evil.

Some proponents claim that a carbon tax can be structured to be revenue neutral. For example, revenues from the carbon tax could be used to lower Social Security (FICA) taxes. So why not tax ‘bads’ like greenhouse gas emissions rather than ‘goods’ like labor? This clever rhetoric glosses over serious risks and downsides.

  • Substituting carbon taxes for FICA taxes would weaken the already tenuous link between Social Security contributions and benefits. It would doom any prospect of transforming Social Security from a Ponzi-like scheme to a system in which younger workers are “allowed to save a portion of their payroll taxes through privately invested personal accounts.”
  • As mentioned in Myron’s alert, a carbon tax is an energy tax and energy taxes are regressive.
  • In a genuinely free society, taxes are used solely for revenue collection to fund essential (limited) government services. That is, taxes are not used to control behavior, reward friends and punish enemies, or pick winners and losers in the marketplace. While all taxes affect behavior and industrial competitiveness, carbon taxes deliberately aim to do so. Consequently, the extent of the tax will be determined not only by fiscal considerations but also by ideological judgments about which industries should win and lose, and by sky’s-the-limit speculation about the ‘social cost of carbon.’
  • Finally, revenue neutrality is a pipe dream, not only because of the way Washington works, but also because many proponents want a carbon tax precisely to increase federal revenue. For example, digital analysis traces the AEI meeting agenda to James Handley, a principal at CarbonTax.Org. Although the Web site talks about ‘softening’ the impacts by distributing revenues to households as carbon ‘dividends’ and about ‘reducing other taxes,’ a key selling point is “generate revenue to help close our looming budget gaps.”

* * *
Price Carbon Campaign / Lame Duck Initiative:
A Carbon Pollution Tax in Fiscal and Tax Reform

Meeting V, Wednesday, July 11, 2012
American Enterprise Institute, 1150 17th Street, N.W.

12:45 – Lunch

1:30 – Background and orientation
1) Welcome from AEI (Kevin Hassett [Director of Economic Policy Studies, AEI])
2) Brief introductions from participants
3) Overview of agenda and facilitation format (Alden Meyer [D.C. Office Director, Union of Concerned Scientist])
4) Background and context for meeting (Tom Stokes[Climate Crisis Coalition Coordinator and Pricing Carbon Campaign])

Session I: Update on posture of key constituencies

1:45 – Congressional Republicans, Romney and Business Leaders
Detoxifying climate policy for conservatives.
Discussants: Kevin Hassett [Director of Economic Policy Studies, AEI], Dave Jenkins [Vice President of Government and Political Affairs, Republicans for Environmental Protection], Eli Lehrer [Research Fellow, Independent Institute and President of the R Street Institute, former Senior Fellow at the Competitive Enterprise Institute, and Vice President at the Heartland Institute], Bill Newman [Legislative Consultant, Clean Air Cool Planet]

2:15 – Progressive/Social justice groups
Discussants: Danielle Deane [Director of Energy and Environment Program, Joint Center for Political and Economic Studies], Tyson Slocum [Director of Energy Program, Public Citizen], Chad Stone [Chief Economist, Center of Budget and Policy Priorities]

2:45 – Economists and deficit hawks
Discussants: Autumn Hannah [Senior Program Director, Taxpayers for Common Sense], Aparna Mathur [resident scholar, AEI], Diane Lim Rogers [chief economist, Concord Coalition], Rob Shapiro [ex- U.S. Under Secretary of Commerce for Economic Affairs under President Bill Clinton, currently Senior Policy Scholar at the Georgetown University School of Business, Senior Fellow of the Progressive Policy Institute, advisor to the International Monetary Fund, director of the Globalization Center at NDN, chairman of the U.S. Climate Task Force, co-chair of America Task Force Argentina]

3:15 – Break

Session II: Framing and selling a carbon pollution tax

3:30 – Initial thoughts on a post-election public opinion and education campaign
Discussant: Kevin Curtis [Program Director Al Gore’s Climate Reality Project; Board of Directors, Climate Action Network]

4:00 – Building bipartisan support and navigating Ways & Means
Discussant: Tom Downey [former Democrat Representative]

4:30 – Honing the case for a carbon pollution tax
Ian Parry [Technical Assistance Advisor in the IMF’s Fiscal Affairs Department] : IMF book on carbon tax in fiscal context
Rob Williams [Senior Fellow and Director, Academic Programs, Resources for the Future]: RFF FAQ
Adele Morris [Policy director for the Climate and Energy Economics Project, Brookings Institute] : November 13th AEI/Brooking/IMF event & July 12th RFF discussion

5:00 – Next steps and Wrap-up
5:15 – 6:00:  Gather for informal conversation and light refreshments

Wascator July 12, 2012 at 10:30 am

Pure insanity. Are they crazy?
Wait, they already answered that question.

JoeThePimpernel July 12, 2012 at 12:37 pm

The usual collectivist schtick; “I see you have some money there. Give it to me.”

stevor July 12, 2012 at 3:00 pm

So, a “conservative think tank” wants to TAX folks on a HOAX? Geez, when the “conservatives” want to take us to a UN’s New World Order state as with the “progressives”, you know we’re really in big trouble!

Scott Harding July 12, 2012 at 3:37 pm

It is infuriating to watch GOP officials “buddying up” to those who do not have our nation’s long term financial interests at heart. Selling out here and there, just like we did to get us in this Obama mess in the first place, will only serve to undermine the fundamental changes necessary to restore personal freedom, personal initiative, and the national liberties that have been eroding ever faster in the face of the veiled fascism that is the progressive movement.

Republicans need to stop playing up to those that would constrain economic development and a return to the leadership role that values freedom, liberty, and truth.

May God have mercy on us if we fail to heed the call to restore these values.

DAN July 12, 2012 at 4:15 pm

Crazy out of touch people. Waisting time and resources trying to meet. The carbon tax will never happen here.

James Handley July 12, 2012 at 7:50 pm

Hi Marlo,

The Carbon Tax Center doesn’t advocate any particular use of the revenue from a carbon pollution tax but we do want the public and policy makers to know it could be a substantial revenue source or a way to reduce other burdensome taxes on productive activity. A carbon tax that also has huge environmental, efficiency and public health benefits above and beyond alternatives such as a European-style Value Added Tax. Our main point is that a carbon pollution tax is the most effective, least-costly, least bureaucratic way to reduce the pollution that’s driving earths climate into dangerous instability, along with “criteria” pollutants that have immediate health effects. We’re effectively subsidizing fossil fuels by leaving those costs out of their prices, making our economy less efficient and stunting the growth of renewable energy that has to compete with fossil fuels that don’t reflect their true costs.

The idea of taxing pollution instead of work, savings or investment is built on bedrock conservative values: free markets (which depend on accurate price signals that include all costs), free choice about how to respond, and stewardship of the earth, an element of every religious and ethical perspective.

James Handley
Carbon Tax Center

brian July 12, 2012 at 10:20 pm

It is clear that external costs of pollution are a good example of market failure. It seems unfair that our grandchildren should be the ones who have to pay the costs of today’s pollution.

Unhiding the hidden costs of carbon emmissions, and making them a part of production costs, seems like economic fairness. I think this would be a good bill.

James Simpson July 13, 2012 at 12:55 pm

Incredible! “3:30 Initial thoughts on a post-election public opinion and education campaign.” These people need educating. Have they never heard of the climate fraud? What is the Heartland Institute doing there???

LambdaIs3 July 16, 2012 at 1:48 pm

Uh, Heartland Institute is climate fraud.

Wake up, extreme weather events worldwide are increasing in frequency, high temperature records versus low temperature records have now reached a 9:1 ratio, permafrost is thawing….. It’s not going to get better without significant actions to reduce carbon emissions and increase carbon sequestration, soon.

The Elephant's Child July 13, 2012 at 3:22 pm

I simply don’t understand. We are to tax one of the building blocks of life because——-? Subsidies for biofuels will no longer make sense, so those will go away, and without subsidy the industry will die. So why would AEI support a carbon tax.

Mary Syron July 13, 2012 at 7:19 pm

My blood pressure is up again!! What we have here are a bunch of suits, sitting around in a conference room, trying to figure out how to rape the American public yet again!
They won’t be happy until they bleed us dry but then what??? Where will they turn when there’s nothing left? People who work for a living, not these over indulgent pansy ass bureaucrats are having enough trouble putting food on their table and keeping up with their bills and their mortgages. Now these “think tank” types want to figure out how to dig a little deeper into the pockets of the people who actually support this country. They don’t like coal, they don’t like natural gas, they don’t like propane, …. what the hell… they want us all to drive itty bitty electric cars, but no one has figured out how to build one that won’t burn the house down, and if it runs, it has to be plugged into an outlet.. which takes electricity… which ….. well you know.
Stand up America. Stand up for your rights, and for your earnings because these people will bleed US dry given the chance.

Tamminator July 14, 2012 at 10:59 am

That’s a who’s who of lefty loons. What the hell is up with AEI???

Holly Martin July 16, 2012 at 9:52 am

“Rob Shapiro [ex- U.S. Under Secretary of Commerce for Economic Affairs under President Bill Clinton, currently Senior Policy Scholar at the Georgetown University School of Business, Senior Fellow of the Progressive Policy Institute, advisor to the International Monetary Fund, director of the Globalization Center at NDN”
Note that Globalization is the ultimate goal of the carbon tax. For more on Rep. Inglis and his “conservative” group:

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