A few weeks before the election, I had a conversation with a friend who works for an environmental organization about the possibility of a carbon tax being implemented in the U.S. during the next four years. To me, the prospect seemed unlikely, regardless of who won last Tuesday. He seemed more optimistic — but then, he’s much better with economics than I am.
His optimism may have been warranted. From Bloomberg, reports that a carbon tax could be considered as a deficit-reduction tool.
Barack Obama may consider introducing a tax on carbon emissions to help cut the U.S. budget deficit after winning a second term as president, according to HSBC Holdings Plc.
A tax starting at $20 a metric ton of carbon dioxide equivalent and rising at about 6 percent a year could raise $154 billion by 2021, Nick Robins, an analyst at the bank in London, said today in an e-mailed research note, citing Congressional Research Service estimates. “Applied to the Congressional Budget Office’s 2012 baseline, this would halve the fiscal deficit by 2022,” Robins said.
This from a guy who is working for a bank in Britain, so his finger might not be that close to the pulse of what the White House is thinking. But he’s not the only one saying it. From Reuters:
[A] recent report by the Congressional Research Service [suggests] a $20 per ton tax on carbon emissions could halve the U.S. budget deficit over time.
Such a tax would generate about $88 billion in 2012, rising to $144 billion by 2020, the report said, slashing U.S. debt by between 12 and 50 percent within a decade, depending on how high the deficit climbs, the report said.
A handful of former Republican policymakers — ones most likely to reject new or higher taxes as a matter of principle — has been touting its potential to raise revenue for a cash-strapped federal budget.
Note that it’s former Republican policymakers talking up a carbon tax. That’s why I’m skeptical.
Current Republican policymakers, not so much. Yesterday, Speaker of the House John Boehner (R-Ohio) was asked about the threat posed by climate change. As reported by USA Today:
Boehner was less warm to renewed Democratic calls for climate change legislation reinvigorated in the wake of Superstorm Sandy, which crippled the Northeast. “I don’t think there’s any doubt that we’ve had climate change over the last 100 years. What has initiated it, though, has sparked a debate that’s gone on now for the last 10 years,” he said. “I don’t think we’re any closer to the answer than we were 10 years ago.”
Boehner is the key to the House taking action. In a press conference earlier today, he said as much.
Clever Boehner answer: “When the President and I have been able to come to an agreement, there’s been no problem getting it passed in house”
— Joseph Weisenthal (@TheStalwart) November 9, 2012
If Boehner doesn’t see the need to jump into action on the climate, it’s unlikely he’ll be willing to go for a tax on carbon dioxide at any amount.
Maybe I should have made a bet with my friend that this would never happen. If and when he pays up, I’ll make it easier on him by explaining that it’s his carbon-tax tax.
Update: The White House denies that it is considering a carbon tax. Dammit. I hadn’t made that bet yet.
This post is part of our November 2012 theme: Post-election hangover — whither the climate?