Observers of politics this week saw two of Obama's biggest legislative initiatives crash and burn. We'll maybe not burn, but at least they crashed. First, house democrats have proven unable to find any compromise on a bill to regulate carbon emissions. This isn't a shock; if you're a democrat from a state that mines coal or pumps oil, it's going to be political suicide to vote for any sustantive measure that will reduce the consumption of oil or coal. The only way to reduce the consumption of these two commodities is to increase their cost, and increase it a lot. When gas doubled from $2 to $4 a gallon, American's bought less gas. SUVs sat on car lots while the Prius built up a long waiting list. The simplest and most direct path to cutting gasoline consumption would be a gas tax of about $2 a gallon that would push todays cost of gas closer to the $5 mark, with a built in clock for raising rates: every year, the tax increases a dime.
No one who wants to be reelected would vote for this, but it would be a simple way of meeting part of the goal. The mechanism for collecting the tax is already in place, so there's no additional beaurocratic costs. And, this proposal might actually cut the deficit instead of increasing it.
However, gas is only a fraction of the problem with carbon. The big problem (assuming you view carbon as a problem) is coal. My electric bill averages about $80 a month. I'm not sure that most people appreciate how inexspensive that figure is compared to all the benefits I derive from it: Cool air in summer, hot water year round, information at my finger tips 24 hours a day, the freedom to read at night, the ability to pop corn in three minutes flat, and a giant box full of food that stays cold all year round. Electricity is modernity, and in the US, electricity is coal. If you want American's to conserve electricity, you need to raise the cost, and raise it a lot. The challenge that faces most alternative power sources aren't technological, but economic: Coal is simply cheaper than its competitors, and will remain so in the US and China for a long time, since both these countries are sitting on huge deposits of coal.
The direct path to making coal less attractive than its competition is to tax it at a substantial rate. If my electric bill doubled next year, I'd be forced to change some of my habits. For instance, I routinely wash my clothes with warm water. I could save a few bucks a month just by only using cold. I could save even more by using a clothesline to dry some select items of clothing... towels and blue jeans take a lot of energy to dry, for instance. Also, I could turn off my computer the 20 hours a day I'm not using it. When I replace my refrigerator, I'd select one with the lowest energy star rating. LED light bulbs might suddenly seem cost effective.
But, again, the direct path isn't being discussed in congress. Nor should it. I think most American's recognize the economic costs of a direct tax. If you double their gas bill, they will drive to stores less often and spend less money when they get there. Double their electric bills, and they'll again be cutting back in other areas. The effects ripple through the economy as stores and restaurants cut staff. It's economic suicide to double our energy costs directly.
So, the bill that congress has to craft is one that doubles our costs while making the blame fall elsewhere. They want us to come out of this angry at Exxon and Duke Power, not them. But, even if they manage to shift the blame, they can't ignore the political consequences that will fall on them if the recession deepens and unemployment goes even higher. So, I think that the eventual outcome with be that they pass a bill too long for anyone to read that actually does nothing at all. For instance, it's not difficult to pass a law saying that our carbon emissions must be cut in half by 2050, then leave all the paths to that goal vague, toothless, and slated to kick in years from now. I think that when Obama runs again, he'll have a climate bill he can point to as an accomplishment... I just don't think it will actually accomplish anything.
I started by saying that two initiatives crashed and burned this week. The second was health care. I'm going to save my thoughts on this for my next post. Unlike our energy policy, I think there's a smart, politically popular path available to the goal of controlling health care costs. Stay tuned.
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