Dem Senators Use Conservative Think Tank To Promote A Carbon Tax

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Michael Bastasch DCNF Managing Editor
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WASHINGTON, D.C. — Democratic senators found an unusual place to announce their legislation to tax carbon dioxide emissions: a prominent D.C.-based conservative think tank.

The American Enterprise Institute (AEI) hosted an event on a carbon tax which Sens. Sheldon Whitehouse and Brian Schatz used a platform to announce legislation taxing carbon dioxide emissions from fossil fuels.

The senators argued their choice of unveiling the bill at AEI was a sort of olive branch to conservatives on global warming. Both Whitehouse and Schatz argued a carbon tax could be used to solve global warming, simplify the tax code and ease regulatory burdens on businesses — clearly trying to appeal to conservative sentiments on “big government.”

“This could become a big economic win,” Whitehouse, the Rhode Island Democrat who introduced the carbon tax bill, told the audience at AEI.

“Congress needs to step in,” echoed Schatz of Hawaii, who is the bill’s main co-sponsor.

Whitehouse and Schatz argued the lack of a carbon tax is a $700 billion a year “subsidy” to the fossil fuel industry because it doesn’t have to pay for the costs of driving global warming. The senators also argued the carbon tax could be a starting point for talks on tax reform, which they hope will attract Republican support.

“In many respects this is an opening bid,” Whitehouse said.

The Whitehouse-Schatz bill would impose a gradually rising tax on CO2 emissions while offering credits for things like sequestering emissions. The tax would start at $45 per ton of CO2 emitted in 2016 and gradually rise until the U.S. had achieved 80 percent emissions reductions. Whitehouse claims the tax would reduce U.S. emissions 40 percent by 2025.

“A carbon fee can repair that market failure by incorporating unpriced damage into the costs of fossil fuels,” Whitehouse told the audience, using oddly conservative rhetoric. “Then the free market—not industry, not government—can drive the best energy mix is for the country, with everyone competing on level ground.”

The senators claim their tax would raise $2 trillion in revenue over 10 years and would be coupled with a reduction in the top marginal corporate tax rate from 35 percent to 29 percent. Whitehouse added that the bill would also give $750 billion to American households and $400 billion in benefits to retirees on Social Security.

The bill would also set up a $20 billion block grant to states for “low-income needs, rural households, and transitioning workers,” Whitehouse said.

“West Virginia, for example, could use money to train coal workers for the technology jobs of the future,” he added. “Rhode Island, on the other hand, might choose to make homes more energy efficient. And we have a reporting mechanism for the public to track where the money is going, to assure it’s all going back to the American people.”

Interestingly enough, Jay Faison was also at the AEI event. Faison is a wealthy North Carolina businessman who recently announced he was going to spend $175 million trying to convince Republicans to support policies like a carbon tax to fight global warming.

While AEI was excited to host the Democrats (the think tank’s president introduced them), not everyone in the audience was convinced the lawmakers could be trusted on this issue. More than one audience member brought up the fact that Whitehouse recently wrote an op-ed suggesting global warming skeptics be prosecuted under the Racketeer Influenced and Corrupt Organizations Act.

David Kreutzer, an energy economist with the conservative Heritage Foundation, asked the senators if they knew the impact of reducing 80 percent of U.S. CO2 emissions would have on temperature. They could not say the exact impact on temperature, but argued reducing CO2 would be good for the climate.

“Just reducing [CO2] will have an effect for sure,” Whitehouse said.

Conservatives and Republican lawmakers have not been that receptive to the idea of a carbon tax. Some on the right, including former Republican Rep. Bob Inglis and economist Jerry Taylor of the Niskanen Center, have embraced the idea of taxing carbon in exchange for lowering income taxes and repealing some regulations.

But for the most part, conservatives have remained staunchly opposed to the idea. One such conservative includes former AEI economist Steven Hayward, who left the think tank in 2012.

Hayward is opposed to a carbon tax and disagreed with AEI’s decision to serve as a platform for a carbon tax being pushed by Democrats.

“It’s one thing to host an event with scholars and other experts about controversial policy proposals; I used to invite prominent figures from the IPCC and elsewhere in the climate science establishment when I was at AEI,” Hayward told The Daily Caller News Foundation. “But it’s quite startling to see AEI give a platform to an egregious demagogue like Sen. Whitehouse, who calls for criminal investigations of people who disagree with him while implying that people with dissenting views hold them only out of bad or corrupt motives.”

“There’s something bizarre about liberal politicians instructing conservatives how they’re supposed to think about an issue,” Hayward added.

Hayward was one of three authors who wrote a 2007 study arguing a carbon tax would be a preferable to a cap-and-trade system if the U.S. wanted to aggressively reduce its emissions.

Hayward and his co-authors wrote: “[W]e conclude that if aggressive actions are to be taken to control GHG emissions, carbon-centered tax reform–not GHG emission trading–is the superior policy option.”

Two of the three authors of that paper, Hayward and former AEI economist Kenneth Green, have since come out against a carbon and are no longer with AEI.

AEI did not immediately respond to TheDCNF’s request for comment.

Update: AEI responded to TheDCNF’s request for comment, saying “AEI does not hold institutional positions and is an advocate for academic freedom.” The AEI event also included a debate between Niskanen’s Taylor and AEI’s Benjamin Zycher. In the debate, Zycher heavily criticized the Democratic senators’ carbon tax. Taylor, on the other hand, defended a carbon tax.

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