Spending caps proposed by Republicans would make it "virtually impossible" to enact climate legislation for a decade or longer, according to an analysis released yesterday.
Automatically triggering widespread funding cuts if federal spending exceeds a percentage of the gross domestic product is a popular theme in Congress and in presidential campaigns. But the plan would rule out a carbon tax, cap and trade, and other programs that raise -- and spend -- money by limiting greenhouse gas emissions, says the Center for Budget and Policy Priorities.
"The cap that these proposals would establish very likely would make it impossible to enact any market-based strategy to reduce the carbon pollution that drives global warming," the center says in a new report.
Many Republicans hail the idea as a good way to enforce bipartisan agreement around spending cuts. But technicalities in the way that spending is scored by the Congressional Budget Office would trigger automatic defunding even if a climate program offsets its spending with emission revenue, the center says.
Here's why: Climate plans raise lots of money through auctioning allowances or taxing each ton of carbon. But they also spend that money. It might go to consumers to soften energy prices, or to companies adjusting to the program, or to researching renewable energy.
Those outlays -- in the billions -- would exceed the strict caps proposed in Congress, even though they're not adding to the deficit.
"Lawmakers would have to include very large budget cuts (likely hundreds of billions of dollars of cuts) in the same legislation in order to keep total federal spending within the spending cap," the report says.
"And these hundreds of billions of dollars of new budget cuts would come on top of the trillions of dollars in budget cuts in Medicare, Medicaid, numerous other programs, and possibly Social Security that already would be needed to shrink federal expenditures enough to fit within the global spending cap," it adds.
Dems want deficit caps
A spending cap has become a popular notion among some Republicans and a handful of Democrats as a conditional factor for their support to expand the national debt limit above $14.3 trillion. Several bills have been introduced, with varying levels of strictness on future outlays.
Sens. Bob Corker (R-Tenn.) and Claire McCaskill (D-Mo.) co-sponsored the "CAP Act," requiring mandatory cuts to federal agencies if spending exceeds 20.6 percent of gross domestic product by 2021. Spending is currently about 24.7 percent of GDP.
Rep. Jack Kingston (R-Ga.) wants a tougher cap; he set his at 18 percent of GDP. And Republican presidential candidates former Govs. Mitt Romney of Massachusetts and Tim Pawlenty of Minnesota have offered them, too.
It's unclear how negotiations on the debt limit will land, as a group of bipartisan lawmakers continues to meet with Vice President Joe Biden before the Aug. 2 deadline. Democrats, however, are looking at the other side of the coin: They're pushing for deficit limits that, if exceeded, could trigger higher taxes.
That scenario seems to allow for climate legislation that both collects money from carbon emitters and then spends it to ease energy costs on consumers or research new power sources.
"You don't run into this problem, because climate legislation in the past has been deficit-neutral," said Chad Stone, chief economist with the Center of Budget and Policy Priorities.
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