The fee and dividend put forward by conservative thought leaders recently would cause a reduction in greenhouse gas emissions and provide us with a more stable climate system. It would also help most low-income families and take the sting out of any increase in energy and transportation prices, if they happen. We know all of that from basic economics and from decades of intensive research on the climate system (and also my posts here and here).
One of the key obstacles the idea will face is that an emission fee without the dividend would provide a new revenue stream. That revenue stream is highly alluring to those who want to create new federal programs, particularly if they can’t win a more direct argument to obtain the federal funding they need to finance those programs. (more…)