In an editorial on federal climate change legislation, the Wall Street Journal editorial page maintains the…er…standards for thoughtful commentary and journalistic integrity to which we are now accustomed:
When cap and trade has been used in the past, such as to reduce acid rain, the allowances were usually distributed for free. A major difference this time is that the allowances will be auctioned off to covered businesses, which means imposing an upfront tax before the trade half of cap and trade even begins. It also means a gigantic revenue windfall for Congress. [Emphasis mine.]
This, of course, is almost completely backwards. The price impacts—the “tax” that the editorialists decry—are imposed by the cap itself, not by the auction. Distributing allowances for free still imposes a “tax.” The problem is, free allocation is like imposing a tax on consumers—and then handing all the tax receipts directly to big fossil fuel companies! It would be, quite literally, a gigantic revenue windfall for some of the largest and most politically connected companies in the nation, all at the expense of consumers.
(I can almost hear the thought processes of the writer: “How can I make a massively regressive corporate windfall sound like a good idea? I know—I’ll just say that auctions are a windfall for Congress. Everybody hates Congress. Yeah, that’s the ticket…”)
Apparently, though, this is more than a rhetorical tic. In WSJ-land, a massive transfer of income from middle- and low-income folks to the well-off counts as sound public policy.
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After all, when they’re not denouncing auctions as “tax,” they’re saying that the the “clean” way to use auction revenue is to cut corporate taxes:
A cleaner tax swap would compensate for the new tax on business by cutting taxes on investment—such as slashing the 35% U.S. corporate rate that is the second highest in the developed world.
There’s not much else to say here. Climate change is already one of the most regressive forces on the planet: storms, droughts, heat waves, and tropical diseases fall most heavily on people of limited means. But the WSJ ed board would heap insult onto injury—and turn cap-and-trade into a system of punishment for the poor, and a major boon to the rich. But to their credit, the editorialists board do get one fundamental point right: the whole debate about how to distribute the right to pollute is a debate about money, and who gets it. Too bad their solution is to take money from the poor, and give to the rich.
But for that opinion outlet, what else is new?