Yes, that George Shultz, President Ronald Reagan’s Secretary of State. But not everyone who served with Reagan was a Reaganite. Reagan’s VP, G.H.W. Bush, famously campaigned on a platform of “Read my lips: No New Taxes.” Not two years later he raised taxes in a 1990 budget deal that torpedoed the economy and sank his presidency.

Yesterday, in an interview puff piece penned by two associates, Shultz, a distinguished fellow at Stanford University’s Hoover Institution, called for a ‘revenue-neutral’ carbon tax. This is unsurprising. As the article reminds us, in 2010, Shulz, partnering with Tom Steyer, a Democrat, “led the successful campaign to defeat Proposition 23, a California ballot initiative to suspend the state’s ambitious law to curb greenhouse gases.”

Nothing in the article indicates that Shultz thinks a carbon tax should replace California’s cap-and-trade regime established by AB 32. Nor is there any hint that Shultz would condition the enactment of carbon taxes on repeal of the EPA’s court-awarded power to regulate greenhouse gases via the Clean Air Act.

This pattern is becoming boringly familiar.

As noted here, earlier this week, former Rep. Bob Inglis (R-S.C.) launched a new institute with Rockefeller Family Fund backing to promote carbon taxes as a ‘Republican idea.’ Inglis said nothing to suggest that he views carbon taxes as an alternative to EPA’s greenhouse gas regulations, or that one of his objectives is to rein in the agency and return control over climate policy to the people’s representatives.

Kevin Hassett, economic policy director of the American Enterprise Institute (AEI), a conservative think tank, took heat this week for hosting a secret meeting on carbon taxes titled “Price Carbon Campaign/Lame Duck Initiative.” The agenda looks and smells like, well, what it is: the outline for a strategy session to build the PR/legislative campaign to enact carbon taxes. Participants included such ‘progressive,’ pro-Kyoto organizations as Union of Concerned Scientists, Public Citizen, and Climate Action Network.

Hassett issued the following statement in response to media inquiries:

In recent years, AEI has been accused of being both in the pocket of energy companies and organizing to advocate a carbon tax. Neither is true. AEI has been, and will continue to be, an intellectually curious place, where products aren’t influenced by interested parties, and ideas from all are welcome in seeking solutions for difficult public policy problems.

That doesn’t cut it. Such self-congratulatory platitudes tell us nothing about where Hassett stands on carbon taxes. If he is opposed to carbon taxes, he should say so. If he supports some kind of ‘grand bargain’ in which carbon taxes replace the EPA’s greenhouse gas regulatory agenda, he should say so. But I doubt that he will advocate such a swap, because the moment he does, the ‘progressives’ — the EPA’s amen chorus – will pick up their marbles and go home. Until Hassett clarifies his position, people will assume the worst, and reasonably so.

Even if Hassett’s objective is to get the EPA out of the GHG regulation biz, the timing of the AEI carbon tax pow-pow could not have been worse. With the unemployment rate still exceeding 8%, now is not the time to call for a massive new tax on energy. Nor is this the time for GOP influentials to launch a carbon tax campaign when the choice facing the electorate in November is largely a choice between a Democratic Party that is anti-energy and pro-tax and a Republican Party that is pro-energy and anti-tax.

But there has always been a wing of the GOP — the “establishment,” “Country Club,” or “Rockefeller” Republicans — who care more about controlling the party than about advancing liberty or even about winning elections. AEI’s Ken Green (a colleague of Hassett’s) hits the nail on the head. In a story on Shultz’s endorsement of carbon taxes, Green told Climatewire:

“There seems to be an eruption of conservatives — very moderate-seeming conservatives, non-tea party, old country club-style conservatives — who are suddenly enamored of carbon tax,” said Kenneth Green, a resident scholar at the American Enterprise Institute.

“I think this is mostly vanity and egotism on the part of these people who are coming forward, to try and reassert the Republican establishment over the tea party revolution,” he added. “I wouldn’t be surprised if we have more of these guys weigh in.”

Update: 5:45 pm, July 13, 2012

BTW, in 2007 Green co-authored a paper with Hassett and AEI’s Steven Hayward (Climate Change: Caps vs. Taxes) arguing that carbon taxes would be better than cap-and-trade, which would be better than an EPA-run system. Today in AEI’s online journal, The American, Ken explains why he “no longer believe[s] that such a tax (or, for that matter, other eco-taxes) can be implemented in the sort of ideal, economically beneficent way that people favoring either individual liberty, free markets, or limited government might sanction.” He concludes: “Even in flush economic times, carbon taxes would be bad policy. When economies are already laboring under too much spending, and are at diminishing-return levels of taxation, implementing a carbon tax would be a mistake.”

Well, Dr. Hassett, what do you think?

Concerning the “Price Carbon Campaign/Lame Duck Initiative” meeting of center-right and ‘progressive’ pols, wonks, and activists yesterday at the American Enterprise Institute (AEI), herewith a few additional thoughts.

Today’s Greenwire quotes AEI economic policy director Kevin Hassett saying that AEI was just playing host and the meeting was just information sharing. Well, okay, let’s assume he experienced it that way, but what about the ‘progressives’ who set the agenda? They must really be into sharing, because this was their fifth meeting. Whatever the AEI folks thought the event was about, the agenda clearly outlines a strategy meeting to develop the PR/legislative campaign to promote and enact carbon taxes.

During the cap-and-trade debate in the last Congress, there was something of a consensus among economists that EPA regulation of greenhouse gases (GHGs) is the worst option, a ‘comprehensive legislative solution’ (i.e. cap-and-trade) has less economic risk, and a carbon tax is the most efficient option. But the ‘progressives’ in the “Price Carbon Campaign” are pushing for carbon taxes on top of EPA regulation.

Because the meeting was non-public and hush-hush, we may never know who said what. Here are some points the ‘conservative’ economists  should have made:

(1) With unemployment still above 8%, the last thing the U.S. economy needs is a massive new tax on energy. (2) The EPA’s UMACT Rule and GHG Standard Rule each effectively bans the construction of new coal-fired power plants. (3) The GHG Standard Rule is a slippery slope that sooner or later will constrain gas-fired generation. (4) Adding carbon taxes to the GHG Rule could snuff out the shale gas revolution, especially if lifecycle analysis demonstrates that natural gas is actually as carbon intensive as coal or more so. (5) The UMACT/GHG Standard/Carbon Tax Combo could play havoc with electricity prices and reliability almost as much as Al Gore’s goofy plan to ‘repower America‘ with ‘zero carbon’ energy sources in 10 years.

In short, the only defensible reason for ‘conservative’ economists to discuss carbon taxes is as a TOTAL replacement for ALL EPA greenhouse gas regulations. But that ‘progressives’ would agree to any such swap is unimaginable. So what really is there to talk about?

Another pre-condition for any ‘conservative’ worthy of the name is that the carbon tax be ‘revenue neutral.’ That is, whatever revenues the carbon tax generates should be offset by reductions in other taxes. But how likely is it that ‘progressives’ would agree to apply Grover Norquist’s no-net-increase Taxpayer Protection Pledge to their beloved carbon tax? Again, unless ‘conservatives’ are willing to sell out, there’s no point in forming a left-right coalition on carbon taxes.

Finally, whatever policy objectives the ‘conservative’ participants might have had in mind, the timing of the AEI-hosted pow-wow was all wrong. Any GOP expression of interest in carbon taxes at this time can only muddy the election-year battle lines between what may loosely be called the pro-tax/anti-energy party and anti-tax/pro-energy party. It is also entirely unclear at this point what kinds of concessions might have to be made in 2013 to rein in the EPA. For example, a clean sweep in the November elections might make the GOP strong enough to limit the regulatory fallout from Massachusetts v. EPA without endorsing carbon taxes.