Montana Democrat Sen. Max Baucus, chairman of the Senate Finance Committee, announced that interest in a carbon tax is “creeping up” and that “everything is on the table.”
“There are more members of the Senate now who openly talk about that than I have experienced. It is creeping up a little bit. Is that going to rise to the level of where it is a very strong, serious provision? I don’t know. But I am not going to pre-judge it,” Baucus said at a Christian Science Monitor event.
The Senate Finance Committee takes up the issue next week, but Baucus is unsure if a carbon tax could gain real momentum.
Republicans in the House have introduced a resolution opposed to the carbon tax, and a bipartisan group of senators voted in March to oppose a carbon tax in an amendment to the Senate Democratic budget plan.
Michigan Republican Rep. Dave Camp, chairman of the House Ways and Means Committee, said, “I don’t support a carbon tax.”
“It is not going to come from the Republicans,” said Michigan Republican Rep. Fred Upton, who is chairman of the Energy and Commerce Committee. “We are going to do our very best to make sure that this is not a mole that pops up again.”
Next month, the Senate Environment and Public Works Committee will take up carbon tax legislation introduced by California Democratic Sen. Barbara Boxer and Vermont independent Sen. Bernie Sanders. Their bill would put a gradually rising tax on carbon dioxide emissions to help fund green energy projects.
Democrats have been selling the carbon tax to conservatives as a way to address global warming and reduce the deficit. According to the CBO, the Boxer-Sanders bill would raise $1.2 trillion over the next decade and 60 percent of that revenue would be used to offset higher energy bills.
However, Republicans and many in industry argue that a carbon tax would be a tax on nearly all goods, since most goods are produced using fossil fuels.
“It’s not just energy prices that would skyrocket from a carbon tax. The cost of nearly everything built in America would go up,” said Louisiana Republican Sen. David Vitter. “Let’s not lose sight of how big of a dud cap and trade was in 2009, or as it came to be known, cap and tax. This is really no different.”
“The carbon tax is a bad idea,” said Jay Timmons, president and CEO of the National Association of Manufacturers, adding that manufacturing output could tumble 15 percent if a carbon tax were to be imposed.
According to NAM, a $20 per ton carbon tax rising at a constant rate of 4 percent per year would reduce emissions by only 30 percent by 2053, and reduce the GDP by $97 billion in 2023.
Furthermore, a study by the Institute for Energy Research found that a revenue-neutral carbon tax would be a “cure worse than the disease.”
“The dismal record of the U.S. government in implementing efficient climate change policies is hardly evidence in favor of a massive new carbon tax (or cap-and-trade program),” said the study’s author, IER senior economist Robert Murphy, in an accompanying statement. “[S]uch a new program will be abused in the political process, and will not be tailored to the recommendations of climate scientists and environmental economists.”
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