hyungwon k ang / reuter s / l andov
green issues ensured the election of Barack Obama and the largest Demo- the 1994 midterm election blamed their vote for the BTU tax. cratic congressional majority in a generation. But the circum- Getting “BTU’d” became Beltway slang for being hung out to stances in which the new president and Congress take power dry on a difficult vote. are radically different than those that greens optimistically envisioned when they planned their dress rehearsal last spring. green leaders are now offering President Obama the same Obama faces the deepest recession the United States has advice they offered President Clinton: Raise energy prices. seen in decades, a failing health system, and a crumbling But Obama is taking power during a very different economic infrastructure. His top priority will be to get the U.S. econ- moment than Clinton did in 1993. Back then, as the U.S. was omy back on its feet. Yet there is little evidence that greens slowly emerging from recession, a reasonable case could be have come to terms with this reality. Like conservatives who made for reducing the budget deficit. High interest rates were see tax cuts as the solution to all problems, greens are now constraining growth, and reducing the deficit would lower offering carbon auctions and energy taxes as the answer to interest rates. By contrast, Obama is inheriting an economy the economic crisis. “Capping global warming that is entering, not exiting a recession. The longstanding conservative arguments pollution and auctioning off the pollution rights against large deficits and government interwill inject $150 billion into the economy each year,” Krupp of EDF told his members in an vention in the economy have given way to Oct. 24 e-mail. a bipartisan pragmatism. Even before the But auctioning carbon permits does not, in recent crisis and subsequent financial-industry bailout, deficit hawks Robert Rubin and fact, inject any new money into the U.S. econLawrence Summers, who served as Clinton’s omy. Requiring industry to purchase pollution permits functions the same as a tax. Anyone treasury secretaries, publicly said that because old enough to remember the beginning of the the deficit is a smaller percentage of gross Clinton presidency will recall that greens and domestic product today than it was in 1992, some deficit is justified. Now Washington is Democrats have tried to raise money through under intense pressure to take a much more environmental taxes before. During the foractive role in the economy. And with a high mulation of Clinton’s first budget, Gore and green groups convinced the president to prodemand for safe U.S. Treasury bonds, the cost pose a British thermal unit (a measurement of of borrowing is low. heat, also known as a BTU) tax on all nonreDeficit spending and direct government newable energy sources. Environmental groups investment in the economy are in. Balanced prospects for had pushed similar proposals for years, seeing budgets and obeisance to markets are out. serious public them as a way to encourage conservation, effiFaced with a global liquidity crisis and a deep investment in and potentially prolonged recession, governciency, and use of renewable energy sources our energy ment has become the investor of last resort. (such as sunlight, wind, and geothermal heat). Congress may close tax loopholes and allow “The BTU tax creates an incentive to switch economy and from coal to natural gas,” the Natural Resources infrastructure the Bush tax credits to expire, but the prospects for any kind of broad-based energy or Defense Council’s Dan Lashof told The New are better than carbon tax, or serious auctioning of pollution York Times in June of 1993. “If you compare they have been the environmental benefits per dollar, a gasorights, are extremely poor. Given the recent line tax is just half as effective as a BTU tax.” in a generation. chaos in the financial markets, Congress is Clinton had decided that balancing the budget unlikely to turn over the nation’s energy and would be his top economic priority rather than transportation economies to the same Wall stimulating the economy through increasing Street firms that brought us credit-default government spending, as he had promised during the cam- swaps and financial derivatives. paign. The BTU tax promised to allow him to follow through Greens have, by and large, missed this shift in assumptions. on campaign promises without further increasing the deficit, While we should not be surprised if environmental leaders all while enacting a policy that promised significant environ- continue to argue for cap-and-trade, it will be surprising if mental benefits. But industries required to pay more for energy Obama, Pelosi, and Reid choose to follow them “off a cliff ” will simply pass along the cost increase to consumers. The once again. BTU tax would have, on average, raised electricity prices for consumers by 30 percent—far more in coal-dependent states so what should greens, progressives, and Democrats do in like Ohio. The fossil fuel, manufacturing, and transporta- this difficult political and economic climate? While carbon tion industries circulated petitions and ran ads against the pricing and pollution trading may be dead, the prospects proposal, and the BTU tax died in the Senate. Unfortunately, for serious public investment in our energy economy and Clinton had already prevailed upon House Democrats to vote infrastructure are better than they have been in a generation. for the legislation, and many of those who lost their seats in Over the last eight years the Bush administration mort-
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