Orszag Concedes on Cap-and-Trade in Budget

In a call with reporters this morning, Office of Management and Budget Director Peter Orszag conceded that cap-and-trade climate legislation would not be included in the federal budget, after congressional Democrats made cuts to the president’s budget proposal yesterday.

Orszag noted, however, that the Making Work Pay tax credit to low-income households — to be raised from cap-and-trade revenue in President Obama’s proposal — has already been funded for the next two years by the stimulus. He also expressed confidence that cap-and-trade could be passed in a standalone bill.

“We have the tax credit for two years,” he said. “We’ve got two years to figure this out. I mean, I think it’s been little remarked that we actually got that tax proposal into law [in the stimulus] within the first month. With regard to climate change, there’s already legislation that is being considered on the House side. The Senate is also active. The fact that it’s not treated in the budget resolution the same way that we proposed in no way means that the House and Senate can’t take the legislation up. And in fact, I think some may argue that the political economy of getting climate change done this year may actually be better outside of the — outside of the budget resolution than inside of it.”

Indeed, both political analysts and environmental activists have argued that climate change legislation would be more feasible and effective if it’s not rushed in early 2009. Still, the reluctance of some congressional Democrats to sign onto cap-and-trade now could be a preview of things to come.