The Grand Bargain is the Grand Bamboozle

According to a recent article in InsideSources–Grand Bargain—some republican stalwarts who subscribe to the climate orthodoxy want to “substitute all the contradictions, preferments, subsidies, tax anomalies and self-defeating rules with a simple, revenue-neutral carbon tax.”  To promote this trade-off, they have created the Alliance for Market Solutions.  It is claimed that the backers of the Alliance are “rock-ribbed Republican business executives, academics and think-tank fellows” who are committed to turning the GOP toward taking a positive stance on climate change.

People like John Graham, former administrator of OIRA and Chris DeMuth, former president of the American Enterprise Institute who are Alliance backers should know better than to take part in what only can be described as a legislative/regulatory bamboozle.  Their Grand Bargain is another house of cards that has a non-existent foundation.

While no one disputes that human activities affect climate, claiming that the science has spoken is to be deaf to what it is actually saying.  Climate advocates consider the IPCC to be the gold standard for the state of climate science. And yet, the IPCC can only make guesstimates about natural variability.  Its estimate of climate sensitivity—the effect of doubling CO2 on global temperatures varies by a factor of 3 and fairly precise temperature measurements since satellite measurements that began in 1979 give every indication that climate sensitivity is no higher and probably lower than low end of the estimate—1 degree C. While evidence is getting stronger that the solar-climate link is not trivial, the IPCC has not given it weight of evidence that it deserves .  Those are just a few of the factors that undermine climate certitude.

Before the Alliance gets too far with its lobbying and PR campaign, it should answer the following question.  Why should anyone support a carbon tax when the US is already doing better in reducing CO2 emissions than the nations that are the biggest promoters of the Paris Accord?

Here is a chart from the 2018 BP Statistical Review of Global Energy–BP.

The real answer is the alleged trade-off is another Trojan Horse that hides an anti-fossil energy agenda and opens another door for Bootleggers and Baptists to pick the pockets of tax payers while pretending to be saving the earth from a climate apocalypse.  The culture of corruption known as The Swamp would get even more entrenched if this or any other of the proposed carbon tax schemes actually would get enacted.  The net effect would be virtually zero since the alleged connection is global emissions and temperature.  And anyone who believes that a carbon tax would be or stay revenue neutral surely believes in unicorns and leprechauns.   Revenue neutral carbon tax proposals are a scam!

Consumers Win; Bureaucrats Lose

The Trump Administration decision to roll back the second phase of Obama’s CAFÉ standards is a small v victory for consumers. A large V Victory would be an amendment to the Clean Air Act that abolishes the CAFÉ provision all together.

CAFÉ proves how difficult it is to get rid of bad policy once it is enacted into law.  Originally CAFÉ was justified as a means to reduce oil imports at the time of the Arab oil embargo as well as a way to reduce air pollution from mobile sources.  At the time, and since, almost all economists have argued that a gasoline tax would be far more cost effective in reducing gasoline consumption and achieving increased efficiency.   But legislators and regulators always believe that they know best what is in consumers best interests.  That is an example of the fatal conceit.

At the time the first CAFÉ standards were imposed they benefitted Japanese automakers because they specialized in manufacturing small high mileage cars.   Domestic automakers were forced to retool and make substantial investments to manufacture small cars and sell them at a loss to induce buyers to purchase them.  The larger effect was to make domestic automakers less competitive.

The other effect that was well documented was to increase highway fatalities and injuries because physics tells us that lighter vehicles hit by heavier ones will sustain more damage.  In spite of this fact, pressure continued to increase CAFÉ mileage standards.   In 2007, Congress passed energy legislation that mandated an increase from 22.2 mpg to 35 mpg in light duty vehicles.  In 2009, the wrong-headed Supreme Court decision on CO2 emissions allowed the Obama Administration to put CAFÉ on steroids by raising the standard to 34.1 mpg and then 54 mpg by 2025 as a weapon to fight climate change.

Since California had the worst air quality in the nation and had more stringent air quality standards at the time the Clean Air Act was passed, the Act contained a provision that allowed California to apply for a waiver to impose stricter auto emissions than federal standards. Over time, its standards for low emission vehicles were adopted by the auto industry.  Over the past 40 years, California like all other parts of the country has made tremendous progress in improving its air quality, especially in the LA Basin which is challenging because of its physical geography and population growth.  A 20- year study by the University of Southern California that was published in the New England Journal of Medicine reported in 2015 that “decreasing air pollution in Los Angeles has led to healthier lungs for millennials when compared to children in the ’90s. … Ozone was below the federal eight-hour standard for most of Los Angeles and the coastal basin and exceeded the standard fewer than 20 days a year. … It’s an environmental success story.”

Since 1973, air quality in the US has improved dramatically as emissions standards from stationery and mobile sources became more binding.  To justify ever more restrictive emission standards from light duty vehicles and trucks. EPA and its environmental supporters found ways to create health benefits out of thin air.  In the case of climate change which California uses as its justification for tighter standards and opposition to the EPA proposed rollback, any benefit, which is doubtful, is well within the margin of measurement error.

In issuing its phase1 CAFÉ standards for model years 2017-2021, EPA and the National Highway Transportation Safety Administration estimated that the annual implementation costs would range from $5.4 to $7.6 billion. The costs for the standards that are being rolled back would likely be as high if not higher since EPA assumed technologies that do not exist or which have not proven commercially practical.  Since the higher costs of CAFE are passed on to consumers through high prices for vehicles they represent an involuntary redistribution of discretionary income.

Advances in automotive technology some of which has been forced by the CAFÉ will continue because of on going R&D and the forces of competition.  Technology forcing by government is a blunt tool that produces unintended consequences exceeding intended ones.


The Disuniting of America: Pogo’s Wisdom

For most of our history, our political system reflected the importance of bipartisanship to find common ground on legislative issues.  This value was based on the understanding that the Constitution’s guarantees of individual rights was intended to protect the minority from tyranny by the majority.

For the Founding Fathers, common ground was essential to building the foundation of our government. The Founders and the colonists were motivated by England’s abuse of their rights as free men which became the catalyst for articulating “self-evident” principles. The prevailing philosophy for governing was best articulated by Henry Clay’s perspective that has been discarded in recent decades.  He said, “Politics is not about ideological purity, or moral self-righteousness, it’s about governing. If you cannot compromise you cannot govern.”

Although the political extremes of the left and right represent a minority of the public, they are disproportionately active and this has led to the polarization, that is an obstacle to progress. Polarization is reinforced by identity politics, which increasingly involves people acting on a preference for associating with people who share their views and for sources of information that reinforce those views.  They live in an echo chamber that produces black and white views and an intolerance for those who do not share them.  The current political system rewards those who pursue conflict and demonization, and punishes those who show a willingness to compromise.  People respond to incentives and the prevailing incentives are misaligned with the Clay’s principle of governing.

Several decades ago (some say in the mid 1990’s), bipartisanship and the search for common ground were replaced by the forces of polarization.  While this is seen in the inability of Congress to do the people’s business, Congressional dysfunction is the result, not the cause, of the polarization that is rampant in society.  As a society, we have become “Balkanized” and intolerant, with too many seeing only black or white with few if any shades of gray.  As a result, many of those who are sent to Congress reflect the ideological purity of the voters who elected them.  Ironically, the loss of bipartisanship and the collegiality needed to find common ground has led to the loss of trust in Congress.

If we want Congress to function better, we need to have representatives who do not view compromise as a character flaw, and who are more interested in solving problems than in scoring political points.  We will only get them when voters look in the mirror and realize that, as the cartoon character Pogo observed, “we have met the enemy and it is us”.

Too many in society have become less tolerant, less accepting, more judgmental, and single-issue voters.  Senator Orrin Hatch of Utah recently wrote that we need a Geneva Convention for the culture war…“we need a detente in partisan hostilities, an easing of tensions that can be realized when both side adopt certain rules of engagement”.  He’s wrong; what we need are not rules to govern incivility—we need a restoration of the principles of civility and good citizenship.  We also need to recognize that the actions of a minority are infectious and are spreading. The antidote starts with us; not in the halls of Congress. The majority needs to be a counterforce to the radical, political activists on the right and left who engage in demonization, intolerance, and scapegoating.

Character matters, and character is the foundation of good citizenship.  The majority needs to recognize the consequences of the downward spiral that is proving so corrosive. More citizens, the media, and thought leaders need to become more active in promoting respect for the rights of others, tolerance,  respect for laws and authority, and contributing to our communities.  Left and right—and everyone in between—would do well to remember words from Abraham Lincoln’s first inaugural address: “We are not enemies, but friends. We must not be enemies. Though passion may have strained, it must not break our bonds of affection. The mystic chords of memory will swell when again touched, as surely they will be, by the better angels of our nature.”