Orszag’s Weak Defense of Cap-and-Trade

After President Obama outlined an ambitiously reasonable cap-and-trade program for reducing carbon emissions in his budget proposal last week, the White House made the mistake of sending an accountant to defend it on the Sunday chat shows.

After former House Speaker Newt Gingrich attacked the idea as an “energy tax,” Office of Management and Budget Director Peter Orszag mounted the economist’s defense, saying there would be costs and benefits — but never mentioned the words “global warming” or “climate change” — as if the costs imposed by cap and trade had no purpose. Orszag explained that energy costs would rise to offset health reforms, which is right in a big picture sort of way — but not as appealing or precise as the details in the Obama’s plan. The budget summary says $192.5 billion of the estimated $237 billion from auctioning off the right to emit carbon will go toward funding a permanent version of the “Making Pay Work Pay” tax credit (pdf; see p. 115) in the stimulus bill. In other words, higher energy costs would be offset by middle-class tax relief.

Yes, reducing carbon emissions is a complex subject to reduce to a sound byte. But is it so hard to say, “We’re doing something about global warming?”