Today, fourteen Democratic senators, led by Sen. Tom Harkin (D-IA), affirmed their allegiance to the profits of polluting industry at the expense of the health and jobs of their constituents. In a letter to Senate leaders, a bloc of senators with powerful coal interests in their states called for “fair emissions allowances in climate change legislation.” Their definition of “fair,” unfortunately, turns out to be full taxpayer subsidies for global warming polluters. They call for the free allocation of pollution permits to electric utilities to be distributed “fully based on emissions.”
In the letter, the Senators write:
We believe it is essential that we strive to formulate legislation that equitably distributes transition assistance across individuals, as well as states and regions and economic sectors. We urge you to ensure that emission allowances allocated to the electricity sector – and thus, electricity consumers — be fully based on emissions as the appropriate and equitable way to provide transition assistance in a greenhouse gas-regulated economy.We thank you for your efforts to build consensus on the critical issue of energy and climate legislation.
The change we recommend would contribute to a more balanced and equitable bill for the Senate’s consideration, and a better strategy for America.
The Senators who have signed onto this inaccurate and deeply disingenuous statement are:
The signatories on the letter defending coal-heavy polluters are Senators Tom Harkin (D-IA), Al Franken (D-MN), Roland Burris (D-IL), Byron Dorgan (D-ND), Herb Kohl (D-WI), Russell Feingold (D-WI), Kent Conrad (D-ND), Michael Bennet (D-CO), Amy Klobuchar (D-MN), Mark Udall (D-CO), Robert Byrd (D-WV), Carl Levin (D-MI), Debbie Stabenow (D-MI) and Sherrod Brown (D-OH).
The provision these Senators are advocating would not ‘contribute to a more balanced and equitable bill’. It would line the pockets of coal companies and offer zero protections whatsoever for consumers.
But don’t take it from me. Consider this chart from the Congressional Budget Office (via David Roberts).
The option on the right, in which 80% of American households experience a decrease in income while the top 20% experience an increase, is what these Senators are fighting for. The option on the left — a 100% auction of allowances with dividends distributed equally to the American people — has not been seriously considered by Congress. This is due entirely to the corrupting influence of corporate polluters on our political process.
David Roberts explains the distinction between these approaches succinctly:
Auction-and-rebate is vastly more progressive, favoring low-income taxpayers, while freely allocating permits overwhelmingly favors the rich.
But suppose you don’t trust the non-partisan Congressional Budget Office. Surely someone else has weighed in on this.
In March of this year, 600 economists wrote a letter to Congress expressing their strong preference for a 100% auction of carbon credits. Specifically, they cited three reasons free allocation of allowances would “undermine the program’s long-term success”:
Free allocations will do little or nothing to protect families and businesses from higher energy costs.Free allocations will represent a significant and undeserved windfall to
utilities and other greenhouse gas producers.Free allocations will deny the government the necessary resources to
reduce the economic cost of combating climate change, and will thus
generate needlessly high costs of achieving any reduction target.
Congressional Budget Office: Check
Hundreds of Respected Economists: Check
Perhaps you need further evidence that these Senators are fighting for the coal industry at the expense of their constituents.
President Obama, during the campaign, advocated strongly for a 100% auction of allowances. During the primary, this was the key aspect of his plan that was superior to what candidates Clinton and Edwards proposed. During the general election, the Obama campaign attacked Senator McCain’s proposal to give allowances away as a huge government giveaway:
Obama’s camp attacks McCain’s program as a huge government giveaway. Says Jason Grumet, Obama’s principal advisor on energy and the environment: “McCain, in contrast to his self-description as a fiscal conservative, would give hundreds of billions of dollars of emissions permits away to the energy industry in the hope that they would pass the savings on to consumers.”
Even more tellingly, OMB Director Peter Orszag told the House Energy and Commerce Committee in March what giving credits away for free would amount to:
If you didn’t auction the permits it would represent the largest corporate welfare program that has ever been enacted in the history of the United States. All of the evidence suggests that what would occur is that corporate profits would increase by approximately the value of the permits.
So, the Congressional Budget Office, the Office of Management and Budget, hundreds of leading economists, and the Obama administration have all argued forcefully against giving away credits. The consensus is that this would be a massive giveaway to corporations and the wealthiest 20% of Americans at the expense of lower-income Americans and the middle class.
This leaves the 14 Senators who signed this letter in a precarious position. Are they actually disputing the arguments I’ve outlined above? I have offered each of them the opportunity to reconcile their claims with this evidence, along with an invitation to publish their response at EnviroKnow.com.
