Rent Control

I have been accused of being too cynical about the American legislative process because I forecast in a prior post that lots of side deals would get cut to allow a carbon tax to get enough votes to become a law.

Anyone taken a look at how the current Lieberman-Warner cap-and-trade bill (a.k.a, the “opaque carbon tax”) has been evolving as we approach a vote?

Here are some of the features of the bill: Allocation to farmers and foresters via USDA based on amount of GHG emissions reduced or sequestered; Transition assistance to workers, using auction proceeds directed via the Climate Change Worker’s Assistance Fund; Transition assistance to carbon intensive manufacturers, refiners of petroleum and natural gas providers; Federal assistance to low-income consumers, via auction proceeds directed by the Climate Change Consumer Assistance Fund; Allocation to electricity and natural gas consumers via local distribution companies based on historic sales adjusted upwards for efficiency; Assisting state economies that rely heavily on manufacturing and coal, based on equally-weighted metrics of emissions that resulted from coal production from 1988 through 1992 and number of manufacturing jobs in the same period; Assisting state and local partnerships for mass transit via auction proceeds distributed by the Transportation Sector Emission Reduction Fund; Energy efficiency and conservation block grant program via auction proceeds; Special allocations to states based on historic state investments in GHG reductions and increasing energy efficiency; Special allocations to states and tribes based on several climate change vulnerability indicators; Special auction with proceeds directed to states and tribes via State Wildlife Adaptation Fund; Special allocation to private sector entities through the Early Action program for emissions reductions achieved since 1994; Allocation to owners of high efficiency buildings, retailers and distributors (based on increase in sales), and owners, operators and developers of renewable energy generation facilities (based on several metrics) via the Climate Change Technology Board; Auction proceeds directed to generation facilities and suppliers of technology components via the Low and Zero Carbon Electricity Technology Fund (as administered by the Climate Change Technology Board); Special allocation for entities that purchase medium and heavy duty hybrid vehicles; Special auction with proceeds directed to vehicle manufacturers via the Advanced Technology Vehicles Manufacturing Incentive Program; Allocation to US producers of cellulosic biofuels; Special auction with proceeds directed to federal Firefighting, Wildlife Adaption and similar Funds; Special allocation to foreign countries for the reduction of deforestation; Special auction with proceeds directed to foreign countries and entities via the Clean Development Technology Board (as administered by the International Clean Development Technology Board); Auction proceeds directed to administrative funding via the Climate Security Act Administrative Fund.

Calling some of these carve-outs “transition” assistance is pretty funny, since they extend out to 2030 for the oil, natural gas, power generating and manufacturing companies (six presidential elections and more than three senate terms from now). Do you think that when 2030 rolls around their reaction is going to be “a deal’s a deal”?

Of course, this is the rent-seeking we have now as the regulatory process is about to be kicked off. For this program to work, it has to remain in force for many decades. If this happens, entire lobbying firms will be built up to seek exemptions, allowances and so on. Many nice homes will be built in McLean with the proceeds, and many members of congress will have re-election campaigns financed by the contributions this bill will generate. It will create another income tax code.