Is Cap-And-Trade Dead This Year?

Following conventional wisdom, especially in Washington, is often a fool's errand. Groupthink can be wildly wrong, even if "everyone knows..." or "everyone believes..." something to be true. But every now and then, the conventional wisdom turns out to be right. Which may be the case for the punditocracy's predicted doom for cap-and-trade legislation intended to reform America's energy policy. If this proves to be the case, it will be the first major Obama priority to fail in Congress.

This scenario may have a silver lining -- if cap-and-trade is jettisoned, health care reform may actually pass this year. This may seem like apples and oranges, but that is often true with congressional priorities. But, for the first time, Congress is apparently throwing up its hands and admitting that they just can't keep up with President Obama's fast-paced agenda.

The view that cap-and-trade is dead (at least this year) is becoming widely held. Pundits on the right are predicting its demise with barely-restrained glee, and pundits on the left are predicting its demise with open dismay; but it's getting harder and harder to find anyone in Washington of any political stripe who isn't in agreement on the basic story -- no cap-and-trade law will be passed this year.

At this point, I have to agree. Cap-and-trade could rise zombie-like from the grave and surprise us all, but it's not exactly a safe bet right now. Because Congress has already sent two very strong signals that it does not intend to move forward on the issue this year. The first of these signals was that the revenues which cap-and-trade would have created for the federal government were pointedly left out of the budget blueprint. Now, this blueprint has not been finalized yet, even though slightly different versions have passed both the House and the Senate. But after Congress gets back from yet another of its many vacations, a committee will meet to hammer out one bill that both houses can pass. So there's still a chance, but a very small one, that cap-and-trade revenues could be put back in.

But the second signal Congress sent was the real death knell for cap-and-trade this year. Because "moderate" Senate Democrats worked very hard to make it impossible for cap-and-trade to pass -- and for Republicans to take the blame for it. If you think this sounds like craven politics-as-usual rather than "change we can believe in," well, you'd be correct. Because (while the budget blueprint bill isn't finalized yet) the agreement seems to now be that health care legislation will be eligible for "fast-track" rules (which only require a majority vote in the Senate), but cap-and-trade will not be fast-tracked, and will require the usual 60 (since Republicans will be sure to force such a vote). Which will be an impossible standard to meet for the bill.

In other words, Democrats are all but admitting that they're killing off cap-and-trade for this year's legislative season. And that, when the time comes, they will be blaming the Republicans, even though their own cowardice is the real culprit.

Now, I am not arguing the merits of cap-and-trade here. There are actually quite a few different flavors of cap-and-trade; different schemes as to how to best implement the idea. I'm not arguing for or against any of these plans, or even for or against the basic idea itself. I am merely observing the political realities and headwinds. Which appear stacked against cap-and-trade legislation.

President Obama has four core agenda items, as he will tell anyone who asks. The first is not really of his making -- fixing Wall Street and the economy. The other three are the priorities he ran on -- education, health care, and an energy policy which can carry us into a future where we are not dependent on foreign oil. Right now, of course, his first priority is dealing with the economic crisis. His second priority -- which he has ingeniously tied to the first -- is health care. He has done a masterful job of framing by stating over and over that "fixing health care is an integral part of fixing the economy." The American people are already behind the idea of fixing health care, but portraying it as essential to fixing the economy further undercuts the naysayers, before they even open their mouths. But Obama's third and fourth goals are energy and education. While nobody is talking much about education right now, it may become a bigger issue later in the year. But it is looking like energy policy is going to have to wait until next year... or the year after (since next year will be midterm election season).

Now, I admit that this could all change, and change quickly. Gas prices could spike again, and the public could start screaming for "something to be done." But that "something" may not be a cap-and-trade system. Republicans have already decided on their framing for cap-and-trade, and it is going to be an effective argument even if gas prices do spike. They're calling it a "lightswitch tax." And when energy prices are high, portraying cap-and-trade as a tax (raising the price even higher) may not be supportable politically.

The likely upshot, even if public pressure isn't at a high (due to gas prices, or whatever other reason), is that either nothing will get done this year in Congress (other than a lot of hot air being expended -- a seemingly endless energy source on Capitol Hill), or that a watered-down "energy policy" will emerge that will essentially continue the status quo. Perhaps enough good things will be included in a bill which limps through Congress that Obama can claim at least a partial victory on the issue politically, but at this juncture the conventional Washington wisdom may be correct -- cap-and-trade is dead, for this year. But if Obama does manage to get real health care reform passed, he will still have had a pretty good year by doing so.

Of course, that's not really good enough. America needs a new energy policy. We need to wean ourselves off of foreign oil. We need to move into a future that is different than the status quo. But it is looking like we will also need to wait another year or so before this happens.

 

Chris Weigant blogs at: ChrisWeigant.com

 

Comments

[Eco20-20]

Let's talk about numbers. When the chips are down everyone wants clean air and water. These are important and nice things that everyone wants and deserves. But there are some very important things that everyone needs to consider.
I am talking about coal and the proposed idea of a carbon tax or cap and trade.

Coal plants are abundant in the United States. According to the Department of Energy they produce around 49% of the energy that we use. Coal also produces an enormous quandary for both citizens and politicians alike. That is, burning coal produces a large amount of pollution and co2. However it also makes up a significant portion of the energy we use at an affordable price.

How do we switch from coal without severely crippling our economy further? Some will answer that the tax will only hurt a few states. That answer on the surface is correct, but let the auto industry serve as a case study. The woes of a few states can easily lead to the woes of the nation.

The numbers: Michigan gets 60-65% of its electricity from coal, Wisconsin; 40-45%, Pennsylvania; 55-60%, Illinois; 45-50%. The whopping numbers come out of Indiana and Ohio; 80-90%.

- http://www.eco20-20.com/Coal-Holding-Our-Economy-Together.html

[LewDan]

I guess our attention span is even shorter than I thought.

Its nice everyone is concerned about $6.00 a gallon gas but I'm talking about people dying in the streets.

Energy independence will save us money, be good for the economy and environment. Cap and Trade as a means to energy independence can wait and alternatives deserve considerat­ion...

But Cap and Trade about reducing carbon emmisions effecting climate change and global warming. Hurricane Katrina was an example the effects of climate change. Remember..­. Bodies floating in the street? People stranded on rooftops? No food and water? -- THAT'S what I'm talking about. -- On a global scale... And addressing climate change CAN'T wait.

No point railing at Republicans, Wall Street financiers or CEOs, WE, as a nation, as a people, are the problem. We're too selfish and self-centered to really care what kind of world we leave our kids and grandkids. We're too short-sighted to avoid the disasters 10-20 years down the road because all WE care about are our own comforts, our own pocketbook­... today...

"Yep son, we have met the enemy and he is us." - Pogo

[Mildmannered]

I think that a carbon or gas tax is much simpler and less subject to manipulation. But when you say the word "tax" most people go crazy so it is out of the question now.

[Mildmannered]

thomas l. friedman on cap and trade:

http://www.nytimes.com/2009/04/08/opinion/08friedman.html?ref=opinion

[SallyVCrockett]

I disagree that anything called a tax is political suicide. I think an electorate which understands a revenue-neutral carbon tax--a tax rebated to them in the form of a rebate or with a tax-shift approach--already supported by the majority of leading scientists, economists and opinion leaders--can be a political winner, especially when compared to the debacle that has become the cap and trade debate.

[Mildmannered]

you are giving the electorate too much credit

[Jim Welke]

Cap and trade should be done now. We are "taxed" every day by our failure to confront the issue of wasteful energy consumption in this country. We squander energy because we don't pay the real costs for it up front. Coal destroys the environment where it is mined, where it is burned, and where the ash is disposed of. Coal rains mercury and radioactive isotopes on the land and water. That has a cost. Coal ash piles up, leaches toxins into streams and groundwater, and occasionally breaks its containment levies and destroys rivers, valleys and towns. That has a cost.

Cap and trade will force utilities to confront the true cost of bad decisions rather than forcing taxpayers to subsidize them. It will incite investment in economical and sustainable alternatives (which will create decent jobs implementing efficiency measures and alternative energy sources). And yes, it will cost energy providers and ratepayers some money, but those costs could be effectively negated by improved efficiency. It will cost money, but it will create a non-toxic future with decent jobs for many more people than the coal industry currently employs. So ignore the venal rhetoric of profiteering Republicans (see "Modern Republicans" http://cyclopsvue.blogspot.com/2009/04/modern-republicans-republican-party-no.html) and urge Congress to implement cap and trade now.

[enochsmoky]

The Democrats should be glad this very expensive and marginally beneficial proposal is not going to be passed this year. Maybe they will try to pass some even sillier legislation like the Employee Free Choice Act, renewal of the Fairness Doctrine or Slave Reparations. Those issues ought to really unite the country! This kind of legislation is not what most Americans thought they were getting when they voted for some vague promise of "change" back in November.

[Mildmannered]

"change" included closing Gitmo, making the U.S. less dependent on foreign oil, making health care accessible to more of the population and so forth -- it did not include Slave Reparations

[Truthahn]

If it can't get passed now, with Dems' political capital as high as it is, it certainly won't get passed in the heat of the midterm campaigns in 2010. Dems in coal-burning states know very well that cap and trade is indeed a tax, and it will disproportionately affect their constituents. The Obama admin is projecting revenues of $80 billion annually from cap and trade. That money won't materialize out of thin air. It's going to come out of somebody's pocket. That's a tax, plain and simple. And it is not unreasonable to call it a "lightswitch tax". If you live in a state that gets electricity from coal, you will literally be paying for cap and trade every time you turn on a light in your house.

[SallyVCrockett]

I agree that we need comprehensive climate legislation soon. But I'm willing to wait until next year if it means openening up the debate to the alternatives to cap and trade--spe­cifically, to a revenue-neutral carbon tax.

[LewDan]

We don't actually beleive in Global Warming? Rhetoric we won't be guided by science?

If true, this's another example of government's inability to govern. The environment's not going to wait, may be too late already.

"Representatives" choose which citizens (those who give them money) are "constitue­nts." Urgent issues, Katrina, the economy, global warming, may be dealt -- may not. That's not responsible government. That's not doing the job they're elected to and are paid to do.

Having learned nothing gambling our economy, and losing, we'll gamble our environment, and possibly, our survival. And, WE'LL GAMBLE INEPTLY! You DO NOT gamble if you can't afford to lose. You DO NOT gamble everything, go all-in, on every bet. And you DO NOT keep doubling your bets everytime you lose.

Clearly politicians don't beleive in science or Darwin's theory. Unfortunately scientific facts are not optional. Gravity happens whether you beleive or not. Darwin may not beleive in us. If we insist on being too stupid to survive -- we won't. Darwin applies whether you beleive or not.

Don't put away those pitchforks and torches. Politicians put politics ahead of country, ahead of our survival..­. Revolutions may be required. Its called fighting for survival. If we're too "civilized," too lazy and stupid to do it... WE ARE DOOMED.

That's not fear-mongering, that's reality.

Economy collapsed because Wall Street and political short-term personal profit trumped long-term systemic survival..­. AND WE'VE LEARNED NOTHING!