Kevin Drum

Yet More Climate Change Bad News

| Tue Jan. 27, 2009 1:14 PM EST

YET MORE CLIMATE CHANGE BAD NEWS....Today brings yet more news that global warming is worse than we think it is:

Even if by some miracle the nations of the world could bring carbon dioxide levels back to those of the pre-industrial era, it would still take 1,000 years or longer for the climate changes already triggered to be reversed, scientists said Monday.

....Over the long haul, the warming will melt the polar icecaps more than had previously been estimated, raising ocean levels substantially, the report said.

And changes in rainfall patterns will bring droughts to the American Southwest, southern Europe, northern Africa and western Australia comparable to those that caused the 1930s Dust Bowl in the U.S.

...."The policy relevance is clear: We need to act sooner, even if there is some doubt about exactly what will happen, because by the time the public and policymakers really realize the changes are here, it is far too late to do anything about it," [said Kevin Trenberth, head of climate analysis at the National Center for Atmospheric Research].

James Inhofe and Rush Limbaugh say this is all just a big hoax. But they'll be dead before the worst of the changes hit, so I guess they don't really have to care, do they?

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Honeymoon Politics

| Tue Jan. 27, 2009 12:32 PM EST

HONEYMOON POLITICS....Matt Yglesias comments on the likelihood that Democrats are going to drop contraceptive funding from the stimulus bill:

As with a lot of Democratic concessions on the bill thus far, what seems to be missing is the "pro quo." Where are the members of the House saying "yesterday I was inclined to vote 'no' on this, but thanks to this change I'm voting 'yes.'" Bargaining is smart. I even think magnanimity on the part of a new majority is smart. But when you bargain, you get something. And I don't see what Obama's gotten for his business tax cuts nor do I see what he's getting for selling out low-income women's access to contraceptives.

I guess there's no telling on this. Maybe Obama will surprise us and get his 80 votes in the Senate after all. Or maybe the "concessions" Democrats have made so far have been things they didn't really care much about in the first place. And I guess there could also be some political benefit in making a bunch of compromises, getting no Republican support, and then being able to sell a story to the media about how the GOP caucus is still just a bunch of Rove-era dinosaurs hopelessly stuck in the hyperpartisan past. We did everything we could, but they just wouldn't budge. Very sad.

At least, I hope one or more of these things is true, since it would mean there's at least some thinking going on about this stuff. My real guess, though, is that Obama and the Dems are still living in a fantasy world. "How long do you think Obama's honeymoon will last?" Marian asked me last night. "Honeymoon?" I shook my head. "I don't think he ever had one." At least, that's pretty much how it looks to me.

CBO Scores the Stimulus Bill

| Tue Jan. 27, 2009 2:45 AM EST

CBO SCORES THE STIMULUS BILL....So what does the Congressional Budget Office really think about the stimulus bill currently wending its way through Congress? Answer:

CBO anticipates that implementation of H.R. 1 would have a noticeable impact on economic growth and employment in the next few years.

Specifically, they estimate that in the spending portion of the bill, $477 billion out of $604 billion would be disbursed either this fiscal year or in the next two fiscal years. That's 79% of the total.

I guess opinions can vary on this, but that strikes me as pretty good. What's more, most of the spending that comes in FY2012 or later is either for projects that simply take more than two years to complete (highways, school repairs) or infrastructure improvements that have long-term paybacks (renewable energy programs). There are a few other items in the out years that are more arguable, but they add up to a pretty small portion of the bill.

Overall, then, it looks like the spending part of the bill is maybe 90% clean as short-term stimulus. And on the supply side, nearly 100% of the tax cuts are allocated during the next 18 months. Given the realities of the appropriations process, I'm not sure the White House could have done much better than this. Looks like pretty good work from the economics team.

Stimulus Pills

| Mon Jan. 26, 2009 3:24 PM EST

STIMULUS PILLS?....Conservatives are pretty good at picking tiny pieces out of big bills and making hay with them (remember midnight basketball?), and it was in that spirit that John Boehner spent the weekend complaining that the $800 billion stimulus bill includes $200 million in spending on contraceptives. Today Steve Benen provides the details of what's really in the bill, and concludes:

It's likely that Boehner, Drudge, and others hope that they can simply say, "Democrats want to spend $200 million of your money on contraceptives" and the howls will be so loud, the money will be stripped from the spending bill. As is too often the case, they're assuming the public won't hear, or care about, the details.

True, but I suspect this is mostly just a base play. Most of the public probably won't ever hear about this, but you can bet that every religious right newsletter in the country will get the news out to their readers. And they'll know that John Boehner is working to keep family values safe.

Whatever. But here's the funny thing: culture war issues aside, this is probably pretty good stimulus. If you eliminate the requirement for states to get Medicaid waivers in order to fund family planning, lots of low-income women will take advantage of it, and they'll probably take advantage of it pretty quickly. That's a boon for the contraceptive industry and all the fine people who work in it. Just be sure to buy American!

Regulating Carbon

| Mon Jan. 26, 2009 1:34 PM EST

REGULATING CARBON....Noah Millman writes today about the best way to regulate greenhouse gases without having the regulations fatally undermined by special interest lobbying:

Well, let's look at the alternatives from the perspective of which is most likely to be deformed by special interests. It's pretty easy to see how a big government investment in alternative energy could become a boondoggle giveaway to connected business interests that does nothing to reduce carbon emissions. Meanwhile, a cap-and-trade scheme is often marketed as being preferable to a tax on carbon because of the additional business associated with the "trade" side of the scheme, and because the existence of a market in emission permits and offsets would ensure the most efficient allocation of the "resource" of net carbon emission.

....I suspect that a small-government egalitarian would say that the best solution, from the triple perspective of trying to avoid regulatory capture by special interests, maximize personal freedom and autonomy, and actually reduce carbon emissions, is to slap a tax on carbon and return 100% of the revenue raised to the people, ideally in the form of a per-capita birthright dividend, something I speculated about here by analogy with Alaska's Permanent Fund.

Noah goes on to say that libertarians are more open to this idea because of their natural distrust of big government. Liberals, who lack that distrust, end up promoting other ideas because they don't take regulatory capture seriously.

In general, maybe there's something to that, but it's wrong in this specific case. In fact, ten or fifteen years ago liberals widely believed a carbon tax was by far the best way to implement some kind of carbon pricing scheme. Many of them still do, and most liberal economists believe that a tax is fundamentally more efficient than cap-and-trade. So why is cap-and-trade so popular on the left these days?

Technically, cap-and-trade has one1 big advantage over a tax: it's a cap. With a tax, you have to set a rate and then hope that carbon emissions go down as much as you think they will. With cap-and-trade, you set a firm cap, and as long as enforcement is adequate you know you'll meet that cap. The "trade" part is merely there to get back some of the efficiencies that you would have gotten automatically from a tax in the first place.

But that's not why cap-and-trade has become so popular among liberals. The reason it's become so popular is that conservatives and libertarians have teamed up to make the word "tax" so toxic that there isn't an environmentalist in the country who thinks we can get a carbon tax through Congress. Remember Al Gore's BTU tax in 1993? It went down in flames and took the Democratic Party down with it. And since then things have only gotten worse.

So: you want a carbon tax? No problem. You can get liberals on board pretty easily: all you have to do is promise them that conservatives and libertarians will climb on board too. And you want a rebate to taxpayers? Again, no problem. Every single liberal carbon pricing plan includes at least a partial rebate, and many include a 100% rebate. If the conservative/libertarian axis decided to give up on its 30-year anti-tax jihad, we could pretty easily end up with a compromise somewhere in the middle.

But that won't happen. And that's why cap-and-trade is the future of carbon pricing. It's conservatives and libertarians who got us here, not liberals.

1There are other differences too. But this is the main one.

Desperately Seeking Conservatives

| Mon Jan. 26, 2009 12:53 PM EST

DESPERATELY SEEKING CONSERVATIVES....I see that today's Bill Kristol column in the New York Times will be his last. Good. He was boring.

But who should the Times replace him with? It shouldn't be a "liberal's conservative," it should be a genuine, dedicated, smart, reality-grounded, conservative's conservative — someone who will drive liberals crazy. Who best fits that bill?

UPDATE: I was going to add something to this post and then decided not to bother. But I guess I should have. So, in response to Matt's criticism, what I meant is: a conservative who drives liberals crazy because he makes such compelling and hard-to-refute arguments for conservative ideas.

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Getting Serious About Climate Change

| Mon Jan. 26, 2009 12:19 PM EST

GETTING SERIOUS ABOUT CLIMATE CHANGE....Barack Obama says he will direct the EPA today to take another look at its refusal to allow California to set stricter tailpipe CO2 standards than the feds:

President Obama will direct federal regulators on Monday to move swiftly on an application by California and 13 other states to set strict automobile emission and fuel efficiency standards, two administration officials said Sunday.

....Beyond acting on the California emissions law, officials said, Mr. Obama will direct the Transportation Department to quickly finalize interim nationwide regulations requiring the automobile industry to increase fuel efficiency standards to comply with a 2007 law, rules that the Bush administration decided at the last minute not to issue.

To avoid losing another year, Mr. Obama will order temporary regulations to be completed by March so automakers have enough time to retool for vehicles sold in 2011.

This shouldn't come as a surprise: during the campaign Obama said he would change course on California's application, and now he has.

For my money, though, it's the second part of this that's the most impressive. EPA was pretty much bound by court order to reconsider its CO2 position anyway, but ordering a temporary fuel efficiency regulation right away so that changes could take place in 2011 instead of 2012 shows a refreshing sense of urgency about energy and climate change policy. By itself it doesn't have an enormous impact, but then, almost nothing has an enormous impact by itself. Nonetheless, tighter mileage standards are one of the best tools we have for reducing the growth of greenhouse gases, and the fact that Obama is serious about this suggests that — as promised — he's serious about the rest of his energy package too. Happy days.

Fed Up

| Mon Jan. 26, 2009 2:55 AM EST

FED UP....Barney Frank wants to give the Fed more regulatory power:

Congress is moving to create strong new oversight of the financial sector that would likely give the Federal Reserve authority to examine the workings of a wide range of companies in an attempt to address one of the key failures that led to the financial crisis.

But the initiative, which could be finalized in the House by spring, is raising concerns about whether it would muddy the Fed's traditional mission and concentrate too much power in a single federal body.

This is just an initial gut reaction on my part, but I don't really care much for this idea. Rationalizing our hodgepodge of regulatory agenices is a good idea, but the Fed chairman already has enormous power over the economy — too much power, perhaps — and placing both monetary authority and a vastly increased centralized regulatory authority under a single person strikes me as a pretty severe case of putting all our eggs in one basket. I'd prefer instead to see the Fed streamlined a bit, with an entirely new agency taking over the super-regulatory role if that's the road we go down.

I'm open to arguments on this, of course. But the instinct to create a single, vast, centralized oversight agency whenever something goes wrong — like the Office of the Director of National Intelligence created after 9/11 — deserves to be resisted. It's the kind of thing that makes people think they're solving a problem when they're really just redrawing the org chart. It also makes dissent harder, and that's no good thing. We could probably use more of that, not less.

Factoid of the Day - 01.25.09

| Sun Jan. 25, 2009 1:45 PM EST

FACTOID OF THE DAY....From Mark Kleiman, who has some advice on crime and drug policy for the Obama administration:

Doubling the tax on beer (from a dime to twenty cents a can) would reduce the assault rate by at least 5%, and maybe as much as 20%.

More advice at the link.

Pricing Carbon

| Sat Jan. 24, 2009 3:05 PM EST

PRICING CARBON....A few days ago I linked to post by Sean Casten about the implied cost of CO2 reduction in the Illinois legislature's recent deal to subsidize a "clean coal" plant in Taylorville. It came to about $400 per ton of CO2, which is fantastically higher than anyone would pay if it were done openly, rather than as part of a byzantine maze of corporate giveaways.

Sean is back today with another interesting post that looks at the cost of CO2 reduction implied in the hodgepodege of tax credits and loan guarantees that are scattered around the legislative landscape right now. Depending on who you are and what's on offer, it turns out that your reward for getting a ton of CO2 out of the atmosphere ranges anywhere from $15 to $253. This, of course, is nuts, and Sean asks:

What might a world look like that did provide a consistent policy signal on CO2? One, we would deploy a host of technologies that are cheaper and more diverse than those we currently deploy in the name of CO2 reduction. Two, we would deploy a host of technologies that cannot possibly be contemplated by those who's knowledge of possibilities is limited to those possibilities we are currently deploying. In other words, all of us.

It's all well and good to have programs that motivate people to develop and deploy technologies that reduce greenhouse gases, and carbon pricing can be an effective part of a broad regulatory program to do that. But if we're going to use carbon pricing as part of our toolkit, we're way better off simply setting a price and letting people figure out for themselves which technologies to develop, rather than having the government pick and choose for us. Not only would that get rid of absurdities like subsidizing ethanol at a higher rate than wind (it ought to be just the opposite), but it would open up the playing field to anyone who can come up with a bright idea for reducing greenhouse gases, not just those who have a big enough lobbying presence to get a break for their particular industry. The result would almost certainly be cheaper and more efficient than a patchwork of targeted tax breaks, and would also promote the development of technologies that no one is even thinking about today. It's time to start.