Wednesday, February 17, 2010

Will change in political landscape make carbon tax inevitable?

Scrap the payroll tax and replace it with a carbon tax.
Keep it revenue neutral.
Get more of what you want, jobs.
From Next Generation Oil & Gas:

The loss of a Democratic Senate seat in Massachusetts may have sent a few moderate ripples through Washington, but it could turn out to play a significant role in America's energy future.

This slight shift in the political landscape is likely to mean that the much-hyped "cap-and-trade" bill will not get passed this year. As a result, decision makers will be left with little choice but to pass an equally unpopular and contentious bill if they want to start seriously cutting carbon emissions - a carbon tax.

Something else that looks set to get the carbon tax wheels in motion is the current level of US budget deficit, expected to reach $1.35 trillion in 2010, according to US Congress estimates. The present and previous administrations have had to balance wars overseas and damaging recession which has meant excessive spending and falling revenue. By 2020, the government's debts will equal 77.2 percent of G.D.P. This level of indebtedness has not been seen since 1950, in the aftermath of the borrowing to finance World War II, and even these are based on relatively optimistic economic projections.

Creative ways to make money

This means the Obama administration has to be rather creative with ways to make money. Raising standard taxes is a highly unpopular move across the board but with taxes on emissions (either through cap-and-trade or the slightly more crude tax on carbon) Obama also appears to be helping the environment - two birds, one stone....MORE

HT: the Houston Chronicle's NewsWatch Energy blog.