MIT academics propose carbon tax as the solution to America's deficit problems

Compared to the fiscal cliff, a carbon tax would boost growth while cutting emissions.

The Washington Post's Brad Plumer reports on a paper from the MIT Global Change Institute which argues that a carbon tax could, and should, replace the Bush tax cuts in the US.

Plumer:

The authors model what would happen if, this December, Congress enacted a small fee on carbon emissions to fend off a portion of the tax hikes and spending cuts that are scheduled to occur. The carbon tax would be levied directly on fossil fuels—on coal that comes out of the mine, say, or oil that’s shipped in from overseas—and would start at $20 per ton of carbon in 2013, rising 4 percent each year thereafter.

The authors, Sebastian Rausch and John M. Reilly, estimate that this tax would raise $1.5 trillion over the next 10 years.

To advocates of a carbon tax, this paper ought to be a mixed blessing.

On the one hand, the framing of the tax in terms of sensible deficit reduction is one of the better ways to get it in the debate. In both Britain and America, there is – for good or ill – an agreement that high deficits are a major problem which needs to be dealt with, and so hitching any policy to that cause is a far better recipe for success than pointing out its efficacy at fighting climate change.

On the other, the purpose of the tax could get muddled if this is how the debate is to proceed. Look, for example, at debates over the Robin Hood tax. No-one can agree whether it is being implemented to raise revenues, cut down on practices like high-frequency trading, or some undefined mixture of the two.

With a Robin Hood tax, that may be an acceptable confusion, but with a carbon tax, it is undoubtedly introduced to reduce carbon emissions. To think otherwise would be dangerous indeed. And so yoking a deficit reduction program to the tax creates some perverse incentives on the part of lawmakers. For if the tax does succeed in reducing carbon emissions – which the authors of the MIT paper suggest it will, though not by nearly enough to single-handedly solve the problem for the US – then the revenues gathered by it will drop accordingly.

Even so, having a carbon tax is still better than not having one, and the choke point the authors identify – the US fiscal cliff, and all the uncertainty it brings with it – could well be a time for introducing novel legislation of all stripes to the house.

A protest placard from Australia, where the carbon tax is rather unpopular. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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On civil liberties, David Davis has become a complete hypocrite – and I'm not sure he even knows it

The Brexit minster's stance shows a man not overly burdened with self-awareness.

In 2005, David Davis ran for the Tory leadership. He was widely assumed to be the front-runner and, as frontrunners in Tory leadership campaigns have done so enthusiastically throughout modern history, he lost.

The reason I bring up this ancient history is because it gives me an excuse to remind you of this spectacularly ill-judged photoshoot:


“And you're sure this doesn't make me look a bit sexist?”
Image: Getty

Obviously it’s distressing to learn that, as recently as October 2005, an ostensibly serious politician could have thought that drawing attention to someone else’s boobs was a viable electoral strategy. (Going, one assumes, for that all important teenage boy vote.)

But what really strikes me about that photo is quite how pleased with himself Davis looks. Not only is he not thinking to himself, “Is it possible that this whole thing was a bad idea?” You get the distinct impression that he’s never had that thought in his life.

This impression is not dispelled by the interview he gave to the Telegraph‘s Alice Thompson and Rachel Sylvester three months earlier. (Hat tip to Tom Hamilton for bringing it to my attention.) It’s an amazing piece of work – I’ve read it twice, and I’m still not sure if the interviewers are in on the joke – so worth reading in its entirety. But to give you a flavour, here are some highlights:

He has a climbing wall in his barn and an ice-axe leaning against his desk. Next to a drinks tray in his office there is a picture of him jumping out of a helicopter. Although his nose has been broken five times, he still somehow manages to look debonair. (...)

To an aide, he shouts: “Call X - he’ll be at MI5,” then tells us: “You didn’t hear that. I know lots of spooks.” (...)

At 56, he comes – as he puts it – from “an older generation”. He did not change nappies, opting instead to teach his children to ski and scuba-dive to make them brave. (...)

“I make all the important decisions about World War Three, she makes the unimportant ones about where we’re going to live.”

And my personal favourite:

When he was demoted by IDS, he hit back, saying darkly: “If you’re hunting big game, you must make sure you kill with the first shot.”

All this, I think, tells us two things. One is that David Davis is not a man who is overly burdened with self-doubt. The other is that he probably should be once in a while, because bloody hell, he looks ridiculous, and it’s clear no one around him has the heart to tell him.

Which brings us to this week’s mess. On Monday, we learned that those EU citizens who choose to remain in Britain will need to apply for a listing on a new – this is in no way creepy – “settled status” register. The proposals, as reported the Guardian, “could entail an identity card backed up by entry on a Home Office central database or register”. As Brexit secretary, David Davis is the man tasked with negotiating and delivering this exciting new list of the foreign.

This is odd, because Davis has historically been a resolute opponent of this sort of nonsense. Back in June 2008, he resigned from the Tory front bench and forced a by-election in his Haltemprice & Howden constituency, in protest against the Labour government’s creeping authoritarianism.

Three months later, when Labour was pushing ID cards of its own, he warned that the party was creating a database state. Here’s the killer quote:

“It is typical of this government to kickstart their misguided and intrusive ID scheme with students and foreigners – those who have no choice but to accept the cards – and it marks the start of the introduction of compulsory ID cards for all by stealth.”

The David Davis of 2017 better hope that the David Davis of 2008 doesn’t find out what he’s up to, otherwise he’s really for it.

The Brexit secretary has denied, of course, that the government’s plan this week has anything in common with the Labour version he so despised. “It’s not an ID card,” he told the Commons. “What we are talking about here is documentation to prove you have got a right to a job, a right to residence, the rest of it.” To put it another way, this new scheme involves neither an ID card nor the rise of a database state. It’s simply a card, which proves your identity, as registered on a database. Maintained by the state.

Does he realise what he’s doing? Does the man who once quit the front bench to defend the principle of civil liberties not see that he’s now become what he hates the most? That if he continues with this policy – a seemingly inevitable result of the Brexit for which he so enthusiastically campaigned – then he’ll go down in history not as a campaigner for civil liberties, but as a bloody hypocrite?

I doubt he does, somehow. Remember that photoshoot; remember the interview. With any other politician, I’d assume a certain degree of inner turmoil must be underway. But Davis does not strike me as one who is overly prone to that, either.

Jonn Elledge edits the New Statesman's sister site CityMetric, and writes for the NS about subjects including politics, history and Daniel Hannan. You can find him on Twitter or Facebook.

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