Why kill cap-and-trade? Because it’s there

Harvard economist Robert Stavins posted a short and provocative essay on his blog Sunday about cap-and-trade’s spectacular fall from rhetorical grace.

(I say rhetorical because, as he points out, some form of cap-and-trade remains part of all the major Capitol Hill climate change bills. What's dead, at least for now, is the "economy-wide" cap-and-trade idea the House appoved last year.)

Stavins notes that the recession and the Wall Street crisis – which battered the reputation of trading markets – had something to do with cap-and-trade becoming politically toxic.

But then, the heart of his argument (and the italics are his):

But the most important factor — by far — which led to the change from politically correct to politically anathema was the simple fact that cap-and-trade was the approach that was receiving the most serious consideration, indeed the approach that had been passed by one of the houses of Congress.  This brought not only great scrutiny of the approach, but — more important — it meant that all of the hostility to action on climate change, mainly but not exclusively from Republicans and coal-state Democrats, was targeted at the policy du jour — cap-and-trade.

The same fate would have befallen any front-running climate policy.

Does anyone really believe that if a carbon tax had been the major policy being considered in the House and Senate that it would have received a more favorable rating from climate-action skeptics on the right?  If there’s any doubt about that, take note that Republicans in the Congress were unified and successful in demonizing cap-and-trade as “cap-and-tax.”

Likewise, if a multi-faceted regulatory approach (that would have been vastly more costly for what would be achieved) had been the policy under consideration, would it have garnered greater political support?  Of course not.