September 26, 2007

Is the Sun Setting on Federal Carbon Tax Legislation? Is John Dingell to Blame?

2007 has been a big year for public awareness of global warming-- especially in the halls of Congress, where a variety of legislative remedies have been discussed. But, as the San Francisco Chronicle's Zachary Coile reports, a lot more heat than light has been shed on the subject so far this year:
The new Democratic Congress began this year with a burst of activity on global warming, holding more than 120 hearings on the topic, in which House and Senate leaders pledged that climate legislation was coming soon.
But the feverish push to enact a mandatory system to limit greenhouse gases now has become a slog. Lawmakers are finding the legislation difficult to write. Congress has yet to coalesce around any one plan. Many fear the rising partisan fervor of the presidential race will doom any major climate change bill that isn't passed before next summer.
Aside from the impending presidential election, Coile sees a number of other factors that could spell doom for any new energy policies, including:
A likely presidential veto (President Bush opposes a mandatory cap on emissions); the 60-vote threshold needed to overcome a filibuster in the Senate; and the House, where Rep. John Dingell, D-Mich., who chairs the committee writing the bill, is pushing a carbon tax seen as dead on arrival.
The last item is interesting because at first glance, Dingell's role in the debate appears to have been a constructive one. He's proposed legislation that would encourage construction of smaller, more energy-efficient homes by disallowing the mortgage interest deduction for so-called "McMansions" , and has been signaling throughout the summer that he'll introduce an actual carbon tax proposal this fall. How can such a visionary approach to environmental tax reform hurt the chances of energy reform?

The answer, according to observers such as David Leonhardt and Eleanor Clift, is that Dingell doesn't really believe in these proposals at all. To hear these folks tell it, the Michigan lawmaker formerly known as "Tailpipe John" for his allegiance to the auto industry's interests has definitely not gotten religion on this topic, and in fact is deliberately proposing energy tax ideas that will sink like a stone to convince his fellow lawmakers that energy tax legislation is doomed to failure. Leonhardt notes that the "details of his plan — like using the tax revenue to shore up Social Security, rather than to cut other taxes — do not seem aimed at building political support for it," and Clift isn't buying it either:
If you watch what he does and not what he says, there’s reason to be skeptical about the sincerity of his conversion. Dingell made sure a provision passed by the Senate in June to increase the automobile fuel-efficiency standard to 35 miles per gallon by 2020 (up from 27.5) was not included in the energy bill passed by the House in August.
Until the Senator releases a detailed plan, it will be hard to know how serious he is about it. But if his current outreach strategy is any indication, it doesn't look good: the Detroit Free Press reports that tomorrow, Dingell plans to seek "online input" from the Internet community on his proposal. Hope that works out for him...

September 24, 2007

Broadening the Definition of a "Tax"

It's hardly news that American commuters spend a big chunk of their lives sitting in traffic. But a new report makes news out of this anyway:
Indianapolis-area drivers wasted 43 hours in 2005 due to rush-hour congestion, according to a study released Tuesday by the Texas Transportation Institute, which regularly rates the congestion of metropolitan areas.
There are broadly two ways of fixing this problem: build more roads, or use policy levers to get people to drive less on the most crowded roads. The latter approach means higher gas taxes, higher tolls, or a "congestion charge" of the sort New York City policymakers have been discussing for a while.

Neither of these alternatives is cost-free. Building roads costs money, which has to be raised somehow, and using taxes or tolls to raise the price of driving imposes a burden on working families. But doing nothing imposes big costs, too. As Rep. Peter DeFazio notes, "There is a tremendous cost to doing nothing." An hour sitting on a gridlocked highway is an hour you could have spent earning money--which means that gridlock imposes a real economic cost on workers and on businesses. In response to fears that a gas tax hike would impose costs on workers, one member of Congress sensibly argues that the current "do nothing" state of things amounts to a tax of sorts:
Rep. Jim Oberstar, D-Minn., who heads the House Transportation and Infrastructure Committee, said the $78 billion that travelers lost in wasted time and fuel in 2005 amounts to a "congestion tax."
And of course, he's right. The larger point to be made here is that it's a bit simplistic to argue that a gas tax hike would hurt workers or hurt the economy without taking into account the costs that the current state of things impose on workers. Anything the government does to mitigate the current problems with our transportation grid, whether it's investing more money in better roads or hiking taxes on drivers, is going to bring benefits along with the costs. It's important to measure both sides of this coin before denouncing efforts to hike the gas tax.

September 19, 2007

Ridiculous Quotes from Tax Cut Supporters

I've often wondered what exactly is going on inside the minds of people who respond to almost every situation with a tax cut proposal. Whether the our national debt is in the trillions or not, whether our federal budget is in surplus or in deficit, whether we're at war or at peace, the answer is always a tax cut, according to some influential Americans.

Looking over quotes from some of the most prominent supporters of tax cuts, we generally find that these people, at best, believe something that is reverse of the truth and, at worst, are just flat out crazy.

1997 Milton Friedman before the Republican Congress and President Bush added $3 trillion to the national debt:
"The notion that the surplus should be used to pay back the national debt is, I believe, a very wrong notion. What the surplus should be used for is to cut taxes. What really needs to be done is to cut government spending. The only way, in my opinion, you're going to cut government spending is by first cutting government taxes."

Alan Greenspan discussing the perils America was facing because the national debt might be paid off:
"But continuing to run surpluses beyond the point at which we reach zero or near-zero federal debt brings to center stage the critical longer-term fiscal policy issue of whether the federal government should accumulate large quantities of private (more technically nonfederal) assets. At zero debt, the continuing unified budget surpluses currently projected imply a major accumulation of private assets by the federal government. ...over time, having the federal government hold significant amounts of private assets would risk sub-optimal performance by our capital markets, diminished economic efficiency, and lower overall standards of living than would be achieved otherwise."

Denny Hastert debating the first major tax cut during a war in U.S. history:
"Nothing is more important in the face of war than cutting taxes."

2007 John McCain after President Bush's tax cuts added one and a half trillion dollars to the national debt:
"And the fact is the tax cuts have dramatically increased revenues."

2007 Arthur Laffer discussing the moral dimensions of tax hikes:
"You get a mass murderer that goes out there and kills 50 people. We all hate him, we get him. But you get some guy out there that does some stupid fiscal move on taxes, and he creates an unemployment rate through the ceiling. (As a result, another guy) comes home, he can't find a job, he drinks too much and he beats his kids. It's huge... These aren't numbers when you read unemployment rates ... It's really people's lives."

2007 Grover Norquist discussing why progressive taxes are like Jim Crow laws:
"We are slowly moving away from tolerating discrimination based on economics just as we now reject discrimination based on race or sexual orientation. The drive for a single-rate, flat-rate income tax is the moral equivalent of the 1960s civil rights movement which rejected different laws for whites and blacks."

September 18, 2007

Does the Constitution Allow Congress to Tax D.C. Residents?

Today, the Senate voted against considering legislation to give D.C. residents a voting representative in the U.S. House. Sixty votes were required to consider the bill (S. 1257), which failed by a vote of 57 in favor and 42 against. Eight Republicans voted for the bill, while Democrat Max Baucus of Montana voted against. Democratic Senator Robert Byrd was not present but apparently opposes the bill as well. Opponents of the bill claimed that the U.S. Constitution specifically bars D.C. from having representation in the Senate.

I'm no constitutional law scholar, but the argument the bill's opponents are making sounds like a load of crap.

The opposition to the bill, led by Senate Republican Leader Mitch McConnell, has pointed to Article I, Section 2 of the Constitution, which says members of the House of Representatives are to be chosen "by the People of the several States" which on its face does seem to bar D.C., which is not a state, from having its own representative.

But Congress has blatantly ignored similar language in another part of the constitution. The 16th Amendment says that Congress can collect taxes on incomes "among the several states" which, based on Mitch McConnell's logic, apparently shields D.C. residents from federal taxes.

Again, I'm not a constitutional law scholar, but if an appeal to the plain language of the document is the basis for denying D.C. residents the vote, then I'd say there's a little problem here.

Now, you could say this tax problem is resolved by the "District Clause" of the constitution (Article I, Section 8, Clause 17), which gives Congress the power "
To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the acceptance of Congress, become the Seat of the Government of the United States."

But if that allows Congress to tax D.C. residents, then I would think it also allows Congress to grant D.C. a member in the House. The language arguably allows Congress to decide how the District will be governed and represented and what rights it will have, as well as what federal taxes it would pay.

I invite any readers who are more knowledgable about this issue to comment and perhaps clarify this for me. On the surface, it looks like members of Congress cling to the words "several states" in one context and then completely ignore the same words in another context.