The GOP Triangulates

Is a carbon tax in America’s future?

Two days after the election, a movement is afoot to achieve an audacious Democratic goal. The weird part is that the people behind it are Republicans.

In a Nov. 9 Wall Street Journal op-ed, former Bush speechwriter David Frum suggested that President Bush propose a carbon tax. N. Gregory Mankiw, former chairman of the Council of Economic Advisers in the Bush White House, suggested the same thing in an Oct. 20 op-ed in the Journal, and former Fed Chairman Alan Greenspan talked it up in late September. Harvard’s Martin Feldstein and Weekly Standard contributing editor Irwin Stelzer like the idea, too. Slate “Moneybox” columnist Dan Gross took note of this unexpected GOP trend in an Oct. 8 New York Times column (“Raise the Gasoline Tax? Funny, It Doesn’t Sound Republican“).

On a purely theoretical level, it’s not at all inconsistent for a Republican to advocate a carbon tax. Conservatives prefer taxing transactions to taxing income because it’s a way to avoid progressivity; rich and poor get taxed at the same rate. (In his op-ed, Frum makes no bones about wanting to use the carbon tax to “split the opposition” and to lower taxes on “work, savings and investment.”) Even libertarians recognize that if one person’s activities impose costs on society as a whole (in this instance, by contributing to global warming), then that person ought to compensate society. This is what’s known as a Pigovian tax, named after an English economist of the early 20th century named Arthur Pigou. Mankiw has pronounced fellow advocates of higher energy taxes, who include liberals like Paul Krugman, Robert Frank, and, most famously, Al Gore, the “Pigou Club.”

But that’s all theory. In the grubby world of practical politics, Republicans are loath to come out in favor of any tax (except perhaps the flat tax, with which they’d like to replace the current income tax). They oppose energy taxes in particular because they’re loved by the GOP’s natural enemies (environmentalists) and hated by the GOP’s natural allies (energy companies and manufacturers). In 1992, Republican politicians were quick to pounce on Democratic vice presidential nominee Al Gore for proposing a carbon tax in his book Earth in the Balance; it was Exhibit A proving that Gore (whom Bush père nicknamed “ozone man”) was a dangerous fanatic. Early in his administration, when President Bill Clinton proposed a variation on the idea based on heat content as measured in British Thermal Units, the energy industry and its Republican allies in Congress (along with a few Democratic ones) disemboweled it in record time. As recently as 2000, conservative commentator Michael Barone mocked Gore’s enthusiasm for a carbon tax as a “central planning solution” linked to “the New Deal politics of his father.” Today, recognition that global warming even exists as a man-made problem is far from universal among Republicans, and many of those who concede that the scientific proof is now fairly strong still resist doing anything about it.

But the politics may be shifting. If Republican gurus are warming to the idea of a carbon tax, it’s very possible that their acolytes in Congress will soon do likewise. Would the Bush White House go along? Given his new political circumstances, Bush might be smart to “triangulate” with the opposing party on this and other issues, just as Clinton did after he lost Congress in 1994. It’s a style Bush is said to have followed when he was governor of Texas, and he followed it early in his first term when he collaborated with Democrats on the No Child Left Behind education bill. But compromise hasn’t been in Bush’s bag of tricks for many years, and, unlike Clinton, Bush may now have too little time left in his presidency for him to see much benefit in playing nice. And as a Texan who once worked in the oil business, Bush may see the carbon tax as a particularly distasteful policy option, in spite of its regressivity. Still, environmentalists can take hope in the fact that Bush no longer has a chief of staff who used to lobby for the automobile industry—and who knows what Karl Rove has been whispering into Bush’s ear since Election Day? “I am convinced that a CO2 tax … is rapidly becoming politically feasible,” Gore wrote a decade and a half ago. He couldn’t have been more wrong then. But he may be right now.