Whatever Shall We Do With All Of This Money?

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Will Truman

Will Truman is the Editor-in-Chief of Ordinary Times. He is also on Twitter.

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  1. Avatar LeeEsq
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    says:

    The money should be spent on mass transit in order to encourage forms of transportation that are less harmful to the environment than driving.Report

    • Avatar veronica d in reply to LeeEsq
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      I support this, but it does help urban people more than rural people. So that should be kept in mind.Report

      • Avatar Will Truman in reply to veronica d
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        More to the point, it helps whoever happens to be near the transit being built, at the expense of people who are not near the transit.

        That’s a natural side effect of government spending of most types, of course, but this is a special case where we should avoid winners and losers in my view.

        It also potentially creates the problem of ongoing maintenance cost from a funding source that we hope will dwindle over time.Report

      • Avatar LeeEsq in reply to veronica d
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        Roads and freeways help people who live near them more than they help people not near them.Report

      • Avatar Will Truman in reply to veronica d
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        I don’t advocate spending the proceeds of the carbon taxes on freeways, either, for many of the same reasons (plus a couple more, minus a couple). Carbon taxes are a particular case where we ought to be especially wary of a policy that picks winners and losers.Report

      • Avatar Dan Miller in reply to veronica d
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        I think part of the point is to enable there to be more urban people in the future (which, since they have much smaller carbon footprints as a rule, makes sense). Population distributions can shift over time.Report

      • Avatar Will Truman in reply to veronica d
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        Which would still benefit primarily the fraction of the country that lives in transit areas and those with the ability and willingness to move there, on the shoulder of a regressive tax that everybody pays.

        All of which pointing to using global warming remediation as a tool to impart social changes that benefit its supporters whether any significant remediation occurs at all.Report

      • Avatar Kim in reply to veronica d
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        Will,
        compare to incentivizing the “global warming realists” who would otherwise get rich off the devastation and desertification of the coasts.Report

      • Avatar Saul Degraw in reply to veronica d
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        @will-truman

        Rural America is already really subsidized at the expense of urban America. It is often urban dwellers who have their money go to help rural communities stay alive beyond their natural death.Report

      • Avatar LeeEsq in reply to veronica d
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        Most major metropolitan areas in California and the United States have some form of rail-based transportation. In California that includes the LA area, the San Francisco area, and the San Diego area. Thats nearly half the states’s population. Spending money to expand existing mass transit systems in California doesn’t aid a fraction of the population at the expense of others. It helps the majority of the population.Report

      • Avatar Will Truman in reply to veronica d
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        Saul, I have no problem removing a lot of those subsidies, though a lot of it is the product of how urban voters actually want it. But if you want to sell me on a carbon tax, you’re unlikely to do so with a windfall that goes to preferred beneficiaries.Report

      • Avatar Will Truman in reply to veronica d
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        Lee, that makes it a decent argument for California specifically, though California did not actually choose to spend all the money that way. Which brings us to my ultimate concern, which is that this will be “free money” for various pet projects of all sorts and willing up more general funding gaps. See Burt’s comment below.

        But for the US as a whole? It’s a more questionable proposition. What percentage of Californians actually live in a metro area where either they can take advantage of existing transit or would be if the money were geared towards that purpose? How much money would it require to hook the entire populations of the metros up to it (if we’re going to count entire populations)? That’s California. How much transit can we provide for the entirety of the US with a national tax? What percentage of the nation’s population can we benefit with that? Not just by counting “metro areas”, but by counting the percentage of the population within the metros that will either have access to rail or will have traffic so significantly reduced by said access as to have achieved significant benefit?

        Provide me with a plan and I will think about it. My concern, however, is that it will ultimately come down to “We will build what we can with whatever money we have (excluding money siphoned off for other purposes)” and that will benefit the few greatly at the cost of the many.Report

      • Avatar Dan Miller in reply to veronica d
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        The problem is that from a standpoint of global warming, urban populations are preferred for a reason. Small apartments generate much less CO2 than large single-family homes. Transit trips (to say nothing of walking or biking) generate much less CO2 than driving 20 miles to work in a single-occupant vehicle. Just because beneficiaries support something doesn’t mean it’s automatically a bad idea or not worth doing.Report

      • Avatar Will Truman in reply to veronica d
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        Urbanites would benefit (or pay less penalty) from paying less carbon tax. Importantly, everyone who uses less power benefits (or pays less penalty) instead of those living in preferred places.

        It’s not necessarily bad policy when benefits are unevenly or unfairly distributed. Nor when beneficiaries are among the biggest supporters of a policy. The problem, for me, is that it’s quite easy to support solutions to a problem when the solutions are desirable whether they significantly attack the problem or not.

        I am honestly quite skeptical of the efficacy of the carbon tax or mass-finance of urban public transportation to significantly mitigate the problem. It doesn’t help when taking the proposed actions give its proponents a lot of what they want anyway. Which leaves me willing to support a carbon tax, but on the condition that the proceeds go towards something I am more amenable to than urban transit.Report

      • Avatar Kim in reply to veronica d
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        Will,
        ooookay. How about building codes?Report

      • Avatar Kim in reply to veronica d
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        Will,
        tighten them to prevent energy slums.
        Provide money/loans for upgrades, where needed.Report

      • Avatar Will Truman in reply to veronica d
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        My overriding thing is that I don’t want this to become a piggy bank. Even for projects I would otherwise support, and/or ones that have an environmental component.

        The answer to the title of this post is, more or less, “nothing.”Report

      • Avatar nevermoor in reply to veronica d
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        @will-truman

        Why not? Assuming we believe free-market incentives work, the carbon tax has already provided one benefit merely by being collected. The fact that it can provide a second benefit afterwards is gravy, and I don’t understand why the second benefit shouldn’t be something that we already want to do.Report

    • Avatar dand in reply to LeeEsq
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      The money should be spent on mass transit in order to encourage forms of transportation that are less harmful to the environment than driving.

      You mean like when google provides it’s employees with free shuttle buses? Oh wait when that happens the same people who claim to favor reduced carbon emissions start trowing rocks at the people who ride the bus.Report

      • Avatar LeeEsq in reply to dand
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        That helps but I was thinking about mass transit that runs on electrical power, is available for everybody in the area, and has multiple stations and operates seven days a week.Report

      • Avatar North in reply to dand
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        Correction, a tiny subset of self absorbed idiot kooks who may also support reducing carbon emissions start throwing rocks at the people who ride the busses.Report

      • Avatar Jim Heffman in reply to dand
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        “You mean like when google provides it’s employees with free shuttle buses?”

        Or they could give their employees free tickets to Caltrain and BART and Muni, which already exist and could use the money, but then Google employees would have to mingle with the common people and they just wouldn’t be as productive.

        Although when you consider that the Google buses have wi-fi and all the employees connect to it while riding, basically what’s happening is that Google has created a bunch of mobile offices so that its employees can be working from the instant they step out their door in the morning to the moment they arrive home in the evening. Everything part of the Google, nothing outside the Google, all for the Google.Report

      • Avatar Jesse Ewiak in reply to dand
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        Careful, @jim-heffman, you’re starting to sound like a leftist like me.Report

  2. Avatar Brandon Berg
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    A-yup. This is one of the major reasons why conservatives and libertarians are skeptical of carbon taxes. Global warming aside, I’d love to see carbon taxes displacing income taxes even if only because fossil fuels are such an important part of the supply chain of just about everything that it would mean shifting taxation away from production and towards consumption generally.

    And yet these wastes of oxygen (but hey, at least they’re keeping some carbon sequestered!) seem to be intent on showing us that they really do care more about tightening government’s stranglehold on the economy than they do about reducing carbon emissions.

    I’m not keen on a per-capita rebate, because it does nothing to reduce marginal tax rates, and would be a net increase in redistribution. IMO it would be better to split it between an increase in the personal exemption and a reduction in marginal rates, or a pure marginal-rate reduction that’s moderately skewed towards the low end.Report

    • Avatar Kim in reply to Brandon Berg
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      Hold on a second — the government’s stranglehold on the economy?
      It seems to me that the government has been MORE than responsible for a good deal of the GDP growth (blame Greenspan!)– and that the GDP growth has been outpacing population for the past fifty years.Report

  3. Avatar Saul Degraw
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    I think spending it on in-city mass transit and the general education fund is a good idea in order to encourage more public transportation. They are building a train that goes from Marin to Sonoma. Perhaps it is time to finally get BART going into Marin.Report

    • Avatar Burt Likko in reply to Saul Degraw
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      How do you get it to the other side of the Golden Gate? I presume by being a spur to the lines servicing Contra Costa County? Will the existing bridge take the weight?Report

      • Avatar Saul Degraw in reply to Burt Likko
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        The same way you get to the East Bay, you go underground.

        Marin was supposed to be part of the original BART plan but the people of Marin vetoed.

        Hopefully this map is not a forgery that voids my point:

        http://farm5.staticflickr.com/4103/4948160089_a660741b62_b.jpgReport

      • Avatar Burt Likko in reply to Burt Likko
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        Looks expensive. Then again, what isn’t?Report

      • Avatar James Hanley in reply to Burt Likko
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        It could be done, but it’ll be a hella lot more expensive than tunneling to OAKuven the terrain.

        But in a perfect world they’d create a train/auto tunnel to Marin and the Golden Gate Bridge would become a bike/pedestrian route.Report

      • Avatar Saul Degraw in reply to Burt Likko
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        @burt-likko

        In and Out Burgers?Report

      • Avatar Saul Degraw in reply to Burt Likko
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        @james-hanley

        You can already bike and walk on part of the Golden Gate Bridge but I think only one way and it is into Marin. It is a thing to bike into Marin and take the Ferry back.Report

      • Avatar LeeEsq in reply to Burt Likko
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        It will be cheaper than California’s high speed rail.Report

      • Avatar James Hanley in reply to Burt Likko
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        I’ve biked the bridge both ways mutiple times, but maybe the rules have changed.

        I do wonder how many years ferry and bus service could be subsidized for the cost of digging a tunnel to Marin?Report

      • Avatar James Hanley in reply to Burt Likko
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        According to Wiki:

        ] Although Marin County originally voted in favor of BART participation at the 88% level, the district-wide tax base was weakened by the withdrawal of San Mateo County. Marin County withdrew in early 1962 because its marginal tax base could not adequately absorb its share of BART’s projected cost. Another important factor in Marin’s withdrawal was an engineering controversy over the feasibility of running trains across the Golden Gate Bridge.

        …Initially, a lower level under the Golden Gate Bridge was the preferred route. In 1970 the Golden Gate Transportation Facilities Plan considered rapid transit links to Marin County via a tunnel under the Golden Gateor a new bridge parallel to the Richmond-San Rafael Bridge but neither of these plans was pursued.

        Report

      • Avatar LeeEsq in reply to Burt Likko
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        The original BART plan was a thing of beauty. It would have linked most of the major and many of the minor communities in the Bay Area. It would was also designed with the ability to get to different parts of the Bay Area without having to transfer through San Francisco.Report

      • Avatar James Hanley in reply to Burt Likko
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        Lee,

        May I recomend to you James Scott’s “Seeing Like a State?” He has a good critique of these seemingly beautiful grand plans. (E,g., Brasilia).

        And of course that thing of beauty, even in its redacted form, was a major contributor to urban sprawl.Report

      • Avatar Dan Miller in reply to Burt Likko
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        I can confirm, the Golden Gate Bridge is two-way for both pedestrians and cyclists (although I usually took the ferry back, because screw riding up those hills twice).Report

      • Avatar LeeEsq in reply to Burt Likko
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        James, I think there is a big difference between building a new city out of skratch when you have a particularly serviceable capital and building a mass transit system to connect alredy existing communities in a densely populated metropolitan. The later is really no different than building an expsansive highway system to connect existing communities rather than rely on dirt roads.

        The politics behind Brasilia is interesting. There were plans to build a more geographically cenered capital since Brazil became a republic. The problem was that they didn’t have the money for this until the high point of modernist architecture and city planning. That meant that Brasilia was subjected to some particularly bad planning ideas that were endemic in the mid-20th centruy in capitalists and socialist countries.Report

      • Avatar James Hanley in reply to Burt Likko
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        screw riding up those hills twice)

        Riding uphill out of Sausalito against the wind was not exactly the best part of the trips.Report

    • Avatar Jim Heffman in reply to Saul Degraw
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      “Perhaps it is time to finally get BART going into Marin.”

      Or a BART to downtown San Jose, as opposed to a BART that stops fifteen miles away from the city center (and a fifty-dollar taxi ride away from the airport.)

      Or Caltrain electrification, which would have the benefit of saving money and being a net pollutant reducer (no more diesel locomotives.)Report

      • Avatar Troublesome Frog in reply to Jim Heffman
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        Yes to all of these things.

        My dream would be seeing a full BART ring around the bay through San Jose and back up into San Francisco. Easier transit from the airport, transfers between SFO and SJC, commute options from the eastern bedroom communities to the western tech jobs that don’t involve fighting across 237, and generally increased flexibility and efficiency.

        I’m sure they’ll get right on that once they’re finished building a top-of-the-line football stadium to replace an existing football stadium.Report

      • Avatar LeeEsq in reply to Jim Heffman
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        @troublesome-frog BART that was the original plan from 1957. The finished BART was supposed to look like this:

        http://grommit.com/blogs/ranga/wp-content/uploads/2011/12/bart_plan_1957.jpg

        This was a marvelous plan. It connected every community in the Bay Area and it for transport between different parts of the Bay without having to go through San Francisco. It would have been a true network. If California and the Federal government funded transit like the funded highways during the mid-20th century, it would have been possible to build.Report

      • Avatar Patrick in reply to Jim Heffman
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        I remember when San Jose did the light rail, and they chose to do their own light rail instead of connecting with BART (and, indeed, decided at the time to have the light rail end pretty far away from BART).

        That was my first introduction to “Jesus Christ, local government can be parochial and stupid.”

        It’s going to happen about 35 years later than it should, but it looks like it’s finally gonna happen.Report

      • Avatar James Hanley in reply to Jim Heffman
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        If California and the Federal government funded transit like the funded highways during the mid-20th century, it would have been possible to build.

        That’s what lack of military applications gets you.Report

      • Avatar Troublesome Frog in reply to Jim Heffman
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        Can you imagine how much cheaper and easier it would have been to do it 35 years ago than it will be to do now? And how much utility we’d have gotten out of it over that amount of time, especially considering the ridiculous traffic snarls we get down here?

        Traveling around DC and using the Metro system makes me weep for what BART could have been if more communities had taken it seriously.Report

      • Avatar James Hanley in reply to Jim Heffman
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        It’s something of a reminder that California used to be a conservative state, eh?Report

      • Avatar LeeEsq in reply to Jim Heffman
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        James, soldiers and police could ride trains in order to shoot down protestors or invaders from a safe distance. ;).Report

      • Avatar LeeEsq in reply to Jim Heffman
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        James, North California was already leaning Democratic by this time and even when San Francisco was a conservative strong hold it had a bohemian, pragmatic bent. Southern California was another issue. It was a big Bircher strong hold.

        Troublesome Frog, it would be a lot cheaper to build decades ago. It actually matches current settlement patterns pretty well. With a little luck, the areas around most stations would be built up rather than park and ride.Report

      • Avatar James Hanley in reply to Jim Heffman
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        Lee,
        And San Francisco got Bart. But San Francisco is not synonymous with Northern California,* nor even with the Bay Area.
        ___________________
        *In fact one of the sticking points in discussions about splitting California into multiple states is that SF doesn’t want to be stuck with LA, but Northern California doesn’t want to be stuck with SF.Report

      • Avatar Troublesome Frog in reply to Jim Heffman
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        My house is at a pretty much optimal distance from the upcoming Milpitas BART station(s) (close enough to get to it by bike and just far enough away that it’s NIMBY), so I’m watching the South Bay roll out with great relish. Being able to travel a few minutes to a BART station and then chill out the whole way to San Francisco is a sweet deal compared to a drive up the peninsula followed by a battle for parking.

        If they actually find the money to continue it on to Santa Clara, that would just be amazing for those of us with family members who commute to the tech hot spots. And I suppose it would be great for the households who don’t, assuming they use the gridlocked roads around here like everybody else. It would be almost like civilization.Report

  4. Avatar Damon
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    Gee, wouldn’t the point of a carbon tax be to use the funds raised to reduce carbon footprints? Say like, moving away from coal or whatever? Nah, just like the Transportation Fund in my state being used to fund current budget overruns, this will be a slush fund. Which points out the real intent versus the obsensible point: it’s just to raise taxes and spend it on what the elected officed want to spend it on.Report

    • Avatar Jonathan McLeod in reply to Damon
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      The point of a carbon tax isn’t necessarily to raise revenue to fund carbon footprint-reducing initiatives. It could just be to discourage certain activities and/or try to capture the costs of pollution and place it on the polluters.

      That being said, some carbon taxes (and other taxes) do have “specific” purposes, but that’s a legislative decision, not an inherent nature of the taxation.

      Personally, I’d always prefer just treating it as part of government revenue (money being fungible and all). If there are carbon footprint-reducing measures that are desirable, I’d want to fund them regardless of tax revenue (with the caveat that revenue levels can affect the desirableness of some spending projects). If the added revenue makes it easier to ease other tax burdens, that’s also a nice option.

      It’s true that you don’t want to grow reliant on a (hopefully) dwindling revenue stream forever, but that’s really an issue of sound financial governance.Report

  5. Avatar Michael Cain
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    I might suggest that the first thing they do with it is retire the rather hefty amount of debt the state took on to keep the utilities going during the electricity debacle back in 2000 and 2001. I know the total is north of $20B, I think more than $30B.Report

    • Avatar Kim in reply to Michael Cain
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      Thanks! But why retire debt when inflation is coming? Shouldn’t you wait until after the inflation?Report

      • Avatar North in reply to Kim
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        Why do you think inflation is coming? Did Larry Kudlow hijack your keyboard?Report

      • Avatar Burt Likko in reply to Kim
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        Sometimes, @kim , you raise really really good points. This is one of them. The whole point of using bonds to pay for stuff is to use tomorrow’s cheaper dollars as opposed to today’s more valuable ones.

        Pay the bonds when they come due. The route to freedom from debt is: don’t issue any new ones.Report

      • Avatar Kim in reply to Kim
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        North,
        I read CalculatedRisk. McBride follows most of the markets, and has been pretty solid about predicting things based on numbers and not ideology.Report

      • Avatar Michael Cain in reply to Kim
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        The former state budget analyst in me says that it’s always a bad idea to borrow money to pay current operating expenses — unless you can borrow in a currency that you can print. IIRC, California is like most states and has a balanced operating-budget requirement, and stretched the definition like crazy to turn “buy electricity to use today” into some sort of capital expense that they could borrow money for. OTOH, I will grant that the people who wrote the balanced budget requirement into the state constitution probably didn’t anticipate the possibility that the lights were going to go out and stay out indefinitely unless the state stepped in with big bucks.Report

      • Avatar Troublesome Frog in reply to Kim
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        Sounds like it’s time for certain people to make a ton of money trading on their knowledge of future inflation, because the markets aren’t seeing it.Report

    • Avatar James Hanley in reply to Michael Cain
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      This is really the best idea. It removes a major fiscal constraint, allowing the state to use its regular budget more effectively. Second best would be using it on capital projects, preferably fixing old infrastructure rather than creating new infrastructure* so you’re minimizing regular outlays rather than creating new on-going costs. Worst would be to commit it to regular budget programs or create new ones, creating costs for which a political constituency will demand on-going commitment after the funding source dries up. That’s a great way to put the state in a serious future fiscal bind.
      ____________
      *A new capital project is ok if it’s one the state was going to do anyway, and this funding substitutes for bonds the state would have issued to pay for it. But the state should resist doing something not necessary enough to have been in its plans anyway, especially if it would create substantial new continuing costs.Report

      • Avatar Patrick in reply to James Hanley
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        Second best would be using it on capital projects, preferably fixing old infrastructure rather than creating new infrastructure* so you’re minimizing regular outlays rather than creating new on-going costs.

        I’d put this one first in front of the other.

        I admit, the problem with putting this one first is that whole “rather than creating new infrastructure” bit will get rubbed out in some revision.

        Another project is redoubling the solar subsidy initiative. Allow citizens to defray X of their property tax bill by solar panel purchase, and cover the shortfall to the general fund with the carbon tax money.

        Accounting for population, density, and weather… California is probably the best state in the nation in which to encourage solar outright. If we could get up to 45% of our day electricity usage off of panels that would be a huge amount of free lunch.Report

      • Avatar James Hanley in reply to James Hanley
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        I didn’t have such a strong preference for debt paydown that I couldn’t get behind this. Really, its primary advantage, as major infrastructure repair projects could also require debt, is that it would be harder to waste any of it (although the new debt would probably be cheaper). And your solar initiative is a form of infastructure development, even if indirectly so.

        Of course there’s another alternative we haven’t considered…bitcoins!Report

      • Avatar Patrick in reply to James Hanley
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        And your solar initiative is a form of infastructure development, even if indirectly so.

        There is one problem with decentralizing the grid this way in California, in that we don’t have sufficient earthquake insurance state-wide.

        If you’re going to schluff off power generation from a few monopoly power companies down to the citizen level (something I think is great for all sorts of reasons, not the least of which is efficiency and the aforementioned free lunch), you’re going to want to make sure that enough of those panels have sufficient insurance that they can get back online after a big one.

        If citizen-level solar plants are generating 45% of your power, and you have a big quake, that’s a lot harder to restore in a timely fashion than one messed up base load plant or repairing a dozen high cap lines that run into town from out in the desert somewhere.Report

      • Avatar Kim in reply to James Hanley
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        solar
        freakin’
        roadways
        Report

      • Avatar James Hanley in reply to James Hanley
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        But against that you have to balance off the potential of taking down a much larger power source affecting a much larger number of people. Earthquakes do variable damage to adjacent structures, so it’s less likely a whole city, or even a whole neighborhood would all be powerless.

        Anyway, I don’t think we’re really looking at disconnecting people from the grid. Solar will be supplemental, reducing the base demand. The more specific concern may be remembering that we need to ensure sufficient reserve capacity.Report

      • Avatar Will Truman in reply to James Hanley
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        Of the various “spend it on environmentalism” plans, I am probably most amenable to “Let’s install solar panels”… but I’d want to see more specific plans, know who will be eligible to benefit, and so on. If the barriers to benefits are not too great, that could definitely be a worthwhile project.

        For California. It gets tougher on a national scale.Report

      • Avatar Patrick in reply to James Hanley
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        Yes, the national scale issue is a whole different problem.

        In California, you basically have about 95% of our power consumption taking place in urban areas that are basically completely un-utilized for solar, in spite of the fact that we’re (a) sunny all the time (b) usually consuming most of our power in the daytime, so the base load problem is fairly well understood and could be decoupled from the peak load pretty easily (I think, disclaimer: this part is my making a SWAG), and (c) there are no requirements for easements or access or right of way when it comes to distributed solar generation.

        (Plus, you throw panels on your roof, and the direct sunlight no longer hits the roof, which has the additional bonus in that it cuts down on your air conditioning costs, which represents an enormous chunk of our during-the-day-power consumption, particularly in the summer)

        Basically, it should be a no-brainer.Report

      • Avatar nevermoor in reply to James Hanley
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        I fully endorse the idea of using the money in ways that don’t create recurring costs. Infrastructure repair is a great way to do that.

        Of course, the reason I like the idea is that I think we should be doing infrastructure repair anyway. It’s sorely needed, would have stimulative effects, and borrowing is really cheap. (Which is part of why I don’t understand Will’s issue above)Report

      • Avatar Will Truman in reply to James Hanley
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        Because I’m not really amenable to taking money from a regressive tax and using it to fund transit (in places that already tend to be economically prosperous, to boot). It’s not free money that came from nowhere. It’s money that came out of the pockets of everybody, and not in an equitable fashion. I’m pretty uncomfortable with turning around and spending that money on a selective basis in many places that already tend to be among the nation’s wealthier jurisdictions.

        More abstractly, I am wary that instead of doing much of anything to alleviate global warming, this will primarily be a revenue stream for preferred projects. Discussions about how we should spend the money on this and that heighten that concern.Report

      • Avatar nevermoor in reply to James Hanley
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        a regressive tax
        Essentially all “sin” taxes are regressive, because any broadly-adopted economic behavior represents a far larger portion of a poor person’s budget than a rich person’s. If we want to be more progressive in our taxation (and we should!), lets add another tax bracket (or several!). Or implement wealth taxes! Or do any number of directly progressive things!

        It’s not free money that came from nowhere.
        True. It’s money that has served its carbon-reducing purpose by being collected. Now we have it. Why on earth is it preferable to do “nothing” (which I guess means a Scrooge McDuck vault) than to put that money to ANOTHER productive use? And if nothing isn’t preferable, why on earth isn’t “something we would also be willing to borrow for” better than “something we didn’t want before we had this money”?

        instead of doing much of anything to alleviate global warming, this will primarily be a revenue stream for preferred projects
        So you do not believe that increasing the cost of carbon pollution will reduce the amount of carbon pollution? Why not?Report

      • Avatar Will Truman in reply to James Hanley
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        says:

        By “nothing” I mean give it back to the people (either in the form of tax cuts or a flat per-capita divvy).

        I don’t doubt that carbon taxes would have some impact on our usage. Where I’m uncertain is that it will have enough of an impact to substantially effect AGW as a whole. It’s a global collective action problem without a governing authority.Report

      • Avatar nevermoor in reply to James Hanley
        Ignored
        says:

        Is not “cutting taxes” (or its budgetarily-identical cousin direct rebates) just another example of using the money “to fund things we support”?

        Just for a different “we”?Report

      • Avatar Will Truman in reply to James Hanley
        Ignored
        says:

        I consider letting people spend money as they see fit as different than spending money for people, but even if I didn’t there is this distinction: Absent a carbon tax, I don’t favor cutting taxes. Absent a carbon tax, urban transit advocates still want more urban transit funding.Report

      • Avatar Lyle in reply to James Hanley
        Ignored
        says:

        Re patricks comment on solar and nationwide. Here in Tx we have hail storms which Ca in general does not have a lot of. Sometimes Baseball sized or bigger hail. I really have not seen how well the panels would perform on them. And add tornadoes and straight line winds. (Where I live windstorms have meant 4 roofs on a lot of houses in 30 years).Report

      • Avatar nevermoor in reply to James Hanley
        Ignored
        says:

        “letting people spend money as they see fit”
        Which people? If it’s the same people you just taxed, you’ve ruined the taxation scheme. If not, you’ve redistributed money in some way (presumably according to your preferences). Which means you’ve used the money to support some other goal (for example, making our tax structure more progressive).

        Absent a carbon tax, I don’t favor cutting taxes. Absent a carbon tax, urban transit advocates still want more urban transit funding
        I’ll freely grant that when people see new revenue they want to spend it on things they already wanted to spend money on. What I don’t understand is why that’s illegitimate. I think we as a nation are crazy not to be borrowing vast sums at this moment in the economic cycle to repair/upgrade crumbling infrastructure. If we get extra revenue, I think we’d be double-crazy not to use it for that purpose. You’re expressing a status quo bias (revenue generation is exactly right now, so if we get more in we should return it directly to people), but I don’t see what that’s inherently more legitimate. Or why this is a different argument from what to do with any other state money.Report

      • Avatar Will Truman in reply to James Hanley
        Ignored
        says:

        The tax itself is using the levers of government to influence behavior. I am wanting to leave it at that, though, and not using the levers again to reward people for living along a proposed route in Salt Lake City at the expense of someone who uses less energy but lives in Twin Falls. The fact that this is not free money means that anything worth justifying by using this money ought to be just as justifiable by using general funds, borrowing money or raising taxes more expressly for this purpose. We should not be spending the money because we just so happen to have it. That’s where I start wondering if just-so having the money isn’t the goal here.

        It’s not “illegitimate” to use it as a revenue stream, but the more it is about it being a revenue stream, the less interested I am in the project and the more suspicious I am that the bulk of the program is going to be jockeying for the money, determining out how to disperse the money, and figuring out how we’re going to keep funding when and if less carbon taxes are collected.

        If this is primarily about using the tax lever to encourage people to use less carbon, then it shouldn’t be problematic at all to simply give the money back to the people in one way or another. If this is primarily about being a revenue stream, then obviously it’s extremely important that the money is spent in the right places. I am close enough to the border on the whole issue that this distinction matters quite a bit to me.Report

      • Avatar nevermoor in reply to James Hanley
        Ignored
        says:

        @will-truman
        The tax itself is using the levers of government to influence behavior. . . . The fact that this is not free money means that anything worth justifying by using this money ought to be just as justifiable by using general funds, borrowing money or raising taxes more expressly for this purpose.
        Fully agree with this.

        I think we are disagreeing in two places. First, you see tax cuts/rebates as materially different from other government spending. I don’t. Second, you consider spending priorities that are changed by the existence of new income as more legitimate than pre-existing spending priorities (although maybe that position has changed because of the quoted sentences above). I don’t.

        I feel pretty comfortable with my position on the first one because the difference between “we mailed a check to everyone for $500” and “we amended the tax code to include a refundable tax credit of $500” is semantics. And “we amended the tax code to reduce the burden on the lowest bracket of income by $500” is just semantics plus a regressive kicker for folks with a sub-$500 tax burden.

        I’m not saying it’s clearly wrong to want to spend the money that way (though I personally would prefer a different strategy). I’m just saying that the dichotomy between your way being “doing nothing” with the money and other forms of spending being “creating revenue streams”.Report

  6. Avatar Burt Likko
    Ignored
    says:

    One thing to bear in mind is that what Republicans want only matters to the extent that Democratic officeholders choose to consider what Republicans want as a courtesy. Party discipline is pretty strong in Sacramento and for something like this, Democrats have a large enough majority that they can do whatever they want, whenever they want, without plausible fear of substantial electoral consequence.

    Now, in practice they often find it easier to voluntarily include Republicans in debates, and not crack the whip on every vote, so it’s not like voters in the safe Republican districts are completely disenfranchised. But if the GOP were to float the makers/takers narrative in response to a tax refund proposal, they would surely get exactly nowhere.

    But it’s not clear to me that the Democrats running the show in the Legislature particularly want a refund. I think they’d rather “invest” the money in education, particularly physical plants and salary hikes — although IMO, if we’re going to spend this money, transportation and prison infrastructure need it more than the schools.Report

    • Avatar North in reply to Burt Likko
      Ignored
      says:

      That sounds like a really really bad idea, salary hikes and more school buildings? What do they do if the carbon tax income diminishes and isn’t the carbon tax income supposed to be used to, ya know, address AGW?Report

      • Avatar morat20 in reply to North
        Ignored
        says:

        Hm. Texas ran into that problem, since they devoted lottery money to the school fund. Which was all well and good until Texans stopped spending so much on lottery tickets and scratch offs, due to sudden recession.

        And then have never really picked back up.

        I don’t think the money was ever as much as the rosy state predictions anyways. I suspect carbon taxes are, at least in the short run, more predictable but the idea is the money should taper off over time as carbon use is minimized.

        Which means you should use the income for something fairly short term, like repairing or building infrastructure on maybe a 10 year time frame.Report

      • Avatar notme in reply to North
        Ignored
        says:

        North:

        They will do what Dems do best and raise the tax rate on carbon until no business can exist there.Report

      • Avatar Patrick in reply to North
        Ignored
        says:

        They will do what Dems do best and raise the tax rate on carbon until no business can exist there.

        Yeah, business-unfriendly California certainly drives companies away in droves. It’s been the mantra since forever.

        Oddly enough, it doesn’t seem to quite match the data.Report

    • Avatar Will Truman in reply to Burt Likko
      Ignored
      says:

      That’s more-or-less how I expect it to unfold at the national level, as well. Either the GOP will prevent it from happening, of the Democrats will push it through without Republican input, in which case why not spend the money exactly how you would prefer? (Which would not, include, giving it directly to people in any form.)

      Unlike the federal government, the Cali government could actually directly cut taxes in ways that would not be regressive, if they were so inclined. Obviously, they’re not.

      All of which feeds my suspicions.Report

  7. Avatar Road Scholar
    Ignored
    says:

    I’m a Georgist regarding tax policy and since the atmosphere is a commons and these taxes or fees are most properly seen as a usage fee, the most proper disposition is a per capita rebate or dividend. So, number two on your list.Report

    • Avatar Mike Schilling in reply to Road Scholar
      Ignored
      says:

      California gave significant tax rebates back during the 80s. One problem is that they’re taxable income, so a sizeable fraction of it becomes a transfer to the feds.Report

      • Avatar Will Truman in reply to Mike Schilling
        Ignored
        says:

        Yeah, sometimes fed tax incentives are warped.

        For California in particular, I might prefer going after sales tax. Doesn’t actually solve the federal tax issue (since sales taxes are not usually deducted) but doesn’t have the regressive/progressive component that cutting income taxes would and is a simpler way of going about it than a rebate system.Report

      • Avatar Mike Schilling in reply to Mike Schilling
        Ignored
        says:

        Unless I’m missing something, it does solve the federal tax problem, precisely because unlike income taxes, sales taxes are not deducted, so a lower sales tax doesn’t turn into taxable income.

        Also (he said, purely disinterestedly), the money could be used to lower tuition at UC.Report

      • Avatar Will Truman in reply to Mike Schilling
        Ignored
        says:

        I… am not sure. But it’s more convenient for you to be right, so I’ll just assume that you’re right.Report

      • Avatar Mike Schilling in reply to Mike Schilling
        Ignored
        says:

        Oh, were you talking about a sales-tax-based rebate? Yes, the federal treatment of that would be a complicated question. I was thinking about lowering the rate.Report

      • Avatar Will Truman in reply to Mike Schilling
        Ignored
        says:

        No, I was thinking about lowering the rate. I was thinking that the extra spending you can do is taxed because it’s from fed-taxed income, whereas money spent on behalf of you by the state government isn’t taxed because it’s deducted from your federal income tax if it was derived from income taxes. But since we’re talking about spending done on your behalf based on a carbon tax, which is not deductible, I think you’re right.

        I have no idea if I am making sense here. I had to think it through with scenarios involving hamburger taxes and state-subsidized sodas.Report

  8. Avatar morat20
    Ignored
    says:

    Hmm. I wonder how California’s rather…constrained…budget priorities (all those ballot initiatives) factor into this?Report

  9. Avatar Michael Cain
    Ignored
    says:

    Re the little figure showing the fuel splits for different carbon fee levels… I think the EIA’s nuclear forecast with the $25 fee is just crazy. They’re talking roughly a doubling of nuclear output in a hair over 20 years. There are two new reactors under construction, no others that I know of that are even licensed yet. The two under construction in Georgia required federal guarantees on $8B in debt in order to obtain financing. The US would need on the order of 50 even if the new reactors are individually ginormous to reach that level of output. Nuclear remains politically unpopular in many states. The western states will almost certainly fight tooth and nail to keep out any spent fuel repository for eastern reactors. I don’t see any way that many reactors come online in that short a period.Report

    • Avatar Lyle in reply to Michael Cain
      Ignored
      says:

      The issue of nuclear depends on the electric utility model in place in a state. The old model does mean that the utility can build the plant and stick the ratepayers for the cost during the up to 10 year building process. The dis integrated (retailer, distribution, generation) model makes it much harder. The retailer can’t really know what power from the plant will cost when done, so it will not sign long term contracts for the power 10 years out. The generator can’t get financing without the contracts so Ca wont’ see many nuclear plants unless the state finances them.Report

      • Avatar Michael Cain in reply to Lyle
        Ignored
        says:

        Building new nukes in the West is problematic for a number of reasons besides financing. Various aspects of the operation are politically unpopular. Some of that’s understandable, since the West has first-hand experience with a bunch of the bad aspects of nuclear materials. Coastal locations are becoming less and less likely as we get improved information about just how extensive the geologic fault networks are; inland locations run into the problem of finding cooling water (for the steam (or other gas) generating loop, the reactor proper has a closed loop). You can air-cool the generating loop, but there’s a significant efficiency hit for that, particularly during hot weather. It’s not just tree-huggers pushing renewable energy in the West — there are real physical constraints on thermal plants.Report

  10. Avatar notme
    Ignored
    says:

    Will:

    Do you really believe that the Dems in CA will really give people money back? More likely they and Gov. Moonbeam will find some social program to spend it on. This Forbes contributor suggests that CA spend money on water infrastructure instead wasting it on high speed rail or stem cells.

    http://www.forbes.com/sites/thomasdelbeccaro/2014/07/10/californias-low-on-water-time-to-fine-the-water-resources-board-not-its-citizens/Report

    • Avatar Mike Schilling in reply to notme
      Ignored
      says:

      Gov. Moonbeam

      The 70s are calling, and they want their vapid insults back.Report

      • Avatar notme in reply to Mike Schilling
        Ignored
        says:

        Per the article, “A 2004 $3 billion stem cell bond program ($6 billion with interest) that has produced no approved therapies…” Why spend the state’s money on practical stuff like water when we can do stuff like that? Sounds like Moonbeam at his finest.Report

      • Avatar notme in reply to Mike Schilling
        Ignored
        says:

        “I long ago gave up trying to figure out what Gov. Moonbeam stands for or believes in,” Mr. Royko wrote in April 1979, “besides getting his pretty mug on TV and confusing people into voting for him.” He added that Mr. Brown was an “intellectual hustler,” who “can jabber so nimbly that no one can figure what he’s talking about.” Royko was right when he gave him that name.

        http://www.nytimes.com/2010/03/07/weekinreview/07mckinley.html?_r=0

        Though I will say that I could be wrong about Brown’s support for the stem cell money, he has talked it up quite a bit as being a great thing for CA.Report

      • Avatar Will Truman in reply to Mike Schilling
        Ignored
        says:

        Notably, Royko later disowned it:

        Royko eventually retracted his statement, and in 1991 in the Chicago Tribune, he called the moniker “null, void and deceased.” He called it a “meaningless throwaway line.”

        Report

      • Avatar Troublesome Frog in reply to Mike Schilling
        Ignored
        says:

        As much fun as it is to watch somebody who clearly doesn’t know anything about California spout nonsense, here are some useful things to know:

        1) Jerry Brown was not the governor in 2004.
        2) The stem cell program was a ballot initiative.
        3) Royko doesn’t seem especially proud of that one in hindsight.

        Anyway, I always understood the “moonbeam” insult to come from the fact that he supported the totally crazy idea of deploying an emergency satellite communications system kind of like the one we use to this day.Report

  11. Avatar Stillwater
    Ignored
    says:

    Will Truman,

    This is an excellent post. Really. Well thought out (exclamation points!!!!), well reasoned, well intentioned.

    I share with you an irritation at the idea that this tax ought to simply be added into the total, spendable, coffer of revenues. That doesn’t mean I’d like to see lower taxes or rebates or anything in particular. I just hang onto the belief that if gummint is entitled to this extra revenue, then that entitlement derives from the positive utility derived from spending that money. I’m pretty convinced that as a people, we American’s – and our various governments – in general – don’t find ourselves appropriately limited by that sentiment.Report

  12. Avatar Maribou
    Ignored
    says:

    In general, I agree with you about the tax rebate option. (Also, FWIW, plenty of socialist countries sometimes do flat rebates of various types. I used to get one as a very broke college student in Montreal.) I REALLY wish we had sugar tax rebates in Colorado.

    My concern is that we are actually *running out* of the fossil fuels that carbon taxes are (largely) taxing the use of (and which California mostly imports from elsewhere). That’s not really a partisan political position – whether you think tar sands are ingenious or horrible, we are still scraping the bottom of the fossil fuel barrel. So something in my strategery-minded brain thinks that means we should use the tax to pay for R & D on finding or innovating non-fossil-fuel energy sources (at least in states where solar or wind is not a profitable option) – not purchasing existing sources, because they aren’t sufficient outside of special cases like California -but just pour it all into trying weird new RELATED stuff. It seems tidier, math wise. And in theory, if people use fewer fossil fuels (ie the carbon tax actually works), our need for alternative energy sources will be less pressing, so it wouldn’t cause a dependency problem. Also in theory, if any of the R&D pays off, it will lead to less counter-productive state income increases as California firms make money on selling these innovations, that California can tax.

    Unfortunately, having grown up in a province where patronage is a part of daily life, I can easily imagine that R&D approach turning into an utter disaster…. plus there’s the Pollyanna-ism involved… which pushes me back toward the rebate side.

    So I wobble back and forth.Report

    • Avatar Will Truman in reply to Maribou
      Ignored
      says:

      @maribou

      (Also, FWIW, plenty of socialist countries sometimes do flat rebates of various types. I used to get one as a very broke college student in Montreal.) I REALLY wish we had sugar tax rebates in Colorado.

      That’s one of the funnier things about this, to me. That option is incredibly socialist. And yet, when I bring this up in conversations, it is so often met with at best a lukewarm response by people who lament this country’s lack of wealth redistribution. It seems like a lot of people who would ordinarily like the idea of giving poor people more money to spend don’t like it as much when it’s juxtaposed to the government spending money for them.Report

      • Avatar Kim in reply to Will Truman
        Ignored
        says:

        I’ve been keeping pretty quiet, but I agree. So long as we’re doing something that doesn’t punish the poor, it’s a pretty good idea.

        Holdin’ open the door that there are better ideas — money’s pretty cheap right now, if inflation is truly knocking on our door…Report

      • Avatar Michael Cain in reply to Will Truman
        Ignored
        says:

        Like “socialist” Alaska, that sends an annual check to every household in the state? Funded out of oil royalties and severance taxes which, conveniently, are very largely paid by people who live in other states. Wyoming runs the same scam with coal, although they didn’t negotiate nearly as good a deal with the feds as Alaska did.Report

      • Avatar Will Truman in reply to Will Truman
        Ignored
        says:

        From what I understand of them, I’ve got no problem with the “socialist” solution for royalties and severance taxes.Report

    • Avatar Michael Cain in reply to Maribou
      Ignored
      says:

      It’s not that we’re running out, but rather that increasing (or in some cases, maintaining) the flow of fossil fuels is getting more expensive quickly. Global conventional crude production peaked in 2005; organizations like the EIA, who have a political ax to grind, have shown increased production by reporting “crude plus other stuff”, with the other stuff looking less and less like real oil. The current glut of natural gas in the US is from tight sources, which require drilling lots of new wells every year to maintain the current production rate. The US has a lot of coal left, but there are peripheral issues — eg, Montana’s lignite has lower energy content per ton than Wyoming’s sub-bituminous, so you have to run longer heavier trains in order to deliver the same heat content. Coal’s present decline is driven by both the aforementioned NG glut, and the increasing cost of dealing with all of the nasties that result from burning it that aren’t CO2.Report

  13. Avatar Francis
    Ignored
    says:

    The single smartest thing the State can do — and it’s directly related to global warming — is to finish the State Water Project by installing cross-Delta pipes to move Sacramento River water directly into the south-of-Delta SWP system. Everyone who knows even a little about California’ water system knows that the current arrangement is unsustainable. The levees are aging, the environmental impacts of the current system are staggering and a single earthquake could devastate the water supplies for virtually the entire state. Rising sea levels, attributable both to global warming and sinking land, will force changes even if nothing is done voluntarily.

    But it’s an enormously complex engineering problem with significant social and environmental impacts. Which means it will be enormously expensive. So smug libertarians can sit back and take pot shots at the entire plan, the cost overruns, the mitigation plans and California in general. Still worth doing, though.Report

  14. Avatar KatherineMW
    Ignored
    says:

    British Columbia has a very well-designed carbon tax that was intended to be revenue-neutral (it’s in fact become revenue-negative), and incorporates a combination of tax cuts and tax rebates. The current rates are equivalent to $30/tonne of CO2 emissions. I don’t drive, and I’ve gotten carbon-tax rebates ever since it passed, so I’m pretty sure I’m making money off it.

    The tax cuts and rebates don’t “undo” the effects of the carbon tax; they do prevent potentially counterproductive effects of a carbon tax (e.g.: someone with an old car has to pay more, therefore has less money on hand, therefore can’t afford not to buy a new car with lower emissions). I think it’s pretty-well designed, except that it doesn’t include emission from industry, and has a rebate for greenhouses, so it’s excluding some of the major producers of greenhouse gases.

    I wouldn’t mind a carbon tax that increased revenues (education, health care, and social services could all benefit from more funding), but revenue-netrality may be useful in reducing public opposition to the idea and enabling it to pass.

    It was implemented by a conservative government (the Liberal Party, but don’t let the name fool you – they’re our conservative provincial party), in a somewhat Nixon-goes-to-China situation – the tax affected corporations quite strongly, but the Liberals had given the corporations enough tax giveaways and other benefits in their earlier years in government that the corporations were willing to put up with it (and really didn’t have another party they could back – the NDP are leftist and the Conservative Party are wacky fringe populists).

    (Frustratingly, the BC NDP initially decided to oppose the carbon tax, because it was unpopular and thus seemed like a good stick to hit the Liberals with, regardless of its actual merits. They’ve changed that position now that people have gotten used to the tax, but are now opposing an increase in BC Hydro rates, even though increased energy prices are the only thing that’s going to get people to use less energy. My party annoys me sometimes.)Report

    • Avatar KatherineMW in reply to KatherineMW
      Ignored
      says:

      Wow, the carbon tax has been more effective than I thought, if this article is correct:

      British Columbia’s carbon tax has resulted in a 17.4-per-cent reduction in greenhouse gas emissions, according to a new study being released Wednesday as premiers gather in Niagara-on-the-Lake, Ont., to discuss a national energy strategy aimed at – among other things – lowering carbon emissions.

      That reduction, occurring from 2008-2012, is in comparison to a 1.5% increase in carbon emissions in the rest of Canada over the same period, which seems to indicate that BC policies are a substantial contributor to the change. A substantial 17% gas tax in Vancouver, where a large portion of the province’s population live – combined with higher parking prices – is likely also having an effect.

      http://www.sustainableprosperity.ca/article3685

      Further evidence is that, “BC’s aviation fuels, which are not subject to the carbon tax, did not diverge from the Canadian pattern, supporting the argument that the carbon tax really did have an effect. And BC’s disconnect from the rest of the country was evident for all taxed fuels, not just gasoline; so the argument that BC’s divergence is caused by increased cross-border shopping for gasoline is not supported.”

      http://www.sfu.ca/sustainability/talking/energy/2013/bc-s-carbon-tax-after-5-years.html

      David Suzuki, probably Canada’s most prominent environmentalist, has called the BC carbon tax “the best in North America and probably the world”. When David Suzuki, who’s definitely on the left, and the Financial Post both support a policy, that’s a strong indication that it’s working.

      http://thetyee.ca/Opinion/2014/03/12/BCs-Carbon-Tax-Shift/

      http://business.financialpost.com/2012/07/05/4-key-reasons-why-bcs-carbon-tax-is-working/?__federated=1&__lsa=6718-296d

      I think a carbon tax is much more streamlined (and market-based, which should be a plus for conservatives) than trying to create a cap-and-trade system. I’d like to see one implemented Canada-wide, but that won’t happen until we can get the federal Conservatives out of office – they’re determined that climate change doesn’t exist, because its existence would be inconvenient.Report

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