The great democratic giveaway

I have said before that I am pro an energy bill that would include a carbon tax, and I would be pro an energy bill that would include a cap-and-trade program if 100% of the permits were auctioned off.

Most people agree that in an ideal world, where the word "tax" didn't carry so many negative political consequences, a carbon tax would be the way to tackle climate change. Most people also agree that the next viable option would be a cap-and-trade program where 100% of the permits are auctioned off. The third option would be a cap-and-trade program where a portion of the permits are auctioned off. And the fourth option would be a cap-and-trade program where all of the permits are given away to the companies and industries that politicians decide are most worthy of the permits, usually deciced by lobbyists or what industries and companies carry the most weight for those politicians who have the most power. I think it is difficult to argue that this hierarchy is incorrect (unless you are a politician).

The bill we currently have is in between three and four, much more heavily weighted towards four. 85% of the auctions are being given away. Some liberals recognize the problems with this giveaway, but they take a pragmatic approach by saying that this is the only bill we will be able to achieve politically. According to them, options one through three listed above would all be impossible. This is an interesting argument.

If you are for a bill promoting climate change you have to decide whether you agree with a flawed bill that at least makes some progress on climate change, or whether the progress the bill makes is not enough to offset the great flaws in the bill. I side with the latter argument. I can't support a bill that gives away 85% of the permits. We are finally at a point where the public is willing to accept some sort of carbon tax, and Obama, who repeatedly campaigned for a different kind of politics, is reverting back to the standard politics of giveaways, favors for the politically connected, and pressure from lobbyists. I do not find this acceptable. I find it very dissapointing that those that were so in favor of Barack's "different" approach to politics are so willing to accept the cap-and-trade bill in this form.

Greg Mankiw points me to a good post by Donald Marron outlining the money we are giving up by giving away these permits.

The number one thing you should know about this bill is that the allowances are worth big money: almost $1 trillion over the next decade, accord to the Congressional Budget Office, and more in subsequent decades

The bill in its current form gives way too much power to the government to pick and choose the winners, exactly what conservatives should be against. And, to make it even worse, it misses a huge opportunity to use some of the incoming funds for better causes.