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Climate skeptics, seeing rising prospects for a carbon tax, vow to make it 'toxic'

Climate skeptics concerned about the rise of conservative groups favoring a carbon tax are preparing a response that seeks to make the policy politically "toxic" for Republicans who might consider it.

The pre-emptive effort, still in its early stages, is designed to discredit the idea that taxing carbon emissions is a good trade-off for lower corporate and individual tax rates, as the nation lurches toward, perhaps, a wide-ranging overhaul to its tax system.

Particularly worrisome is the influence that Mitt Romney's key economic advisers, three of whom support taxing carbon, might exert on the Republican Party as lawmakers weigh difficult choices to avert sunsetting tax cuts and to reduce the $16 trillion deficit. Other prominent economists, like Arthur Laffer, who advised President Reagan, also advocate taxing carbon over income.

"And those people, like Glenn Hubbard and Greg Mankiw and Art Laffer, those people are very influential once you get behind closed doors and they start putting a deal together," said Myron Ebell, who oversees global warming initiatives at the Competitive Enterprise Institute (CEI). "And so we have to make the idea of a carbon tax toxic."

He indicated that the effort would proceed whether Romney wins or loses the election. Hubbard, the dean of Columbia University Graduate School of Business, and Mankiw, a Harvard economist, are advising Romney on economic issues. Both are former chairmen of the Council of Economic Advisers under President George W. Bush.

Mankiw declined to comment by email about CEI's campaign. But he pointed to a 2009 journal article as a source of his "most complete views" on taxing carbon. In the article, Mankiw attempts to convince people who are "skeptical of higher gasoline and energy taxes" that they're economically beneficial -- exactly the kind of message that concerns Ebell.

The fear is that these assertions by prominent GOP economists, and a growing number of conservative groups, will resonate with Republicans in a rare political moment when they might actually have a chance of passing. The acceptance of a carbon tax as a stand-alone initiative is remote. But if it's one piece within a huge collection of provisions meant to reduce the deficit and simplify the tax code, it might fly, some analysts say. Ebell also believes it's possible.

"We see that as definitely a plausible scenario that the promoters of carbon tax could come forward and say, 'Well, we know how to make this deal work; all you need to do is trade this for that and give us a carbon tax,'" Ebell said.

"It's really what the conservative movement decides" that's important, he added. "So we think that that's where the battle will be waged within the movement -- and that we have every expectation that it will be a difficult battle, but it's one that we should win, or it's one that we can win."

Motives that are 'not pure'

One element of CEI's strategy was on display yesterday. Marlo Lewis Jr., a CEI scholar and a member of Ebell's climate team, wrote an op-ed for Forbes that described a carbon tax as "political poison for the GOP."

"The only thing Republicans would gain from destroying their bona fides as the anti-tax, pro-energy party is faint and fleeting praise from cocktail party 'progressives' and the liberal media," he warned. "If Republicans consider that a good bargain, they deserve to be called the stupid party."

The effort is reminiscent of the attacks on cap-and-trade legislation in 2009 and 2010, when opponents reframed the debate to emphasize rising energy prices. Ebell, who says climate change is hyped by scientists and advocates, proudly speaks of his contribution to the collapse of "cap-n-tax."

The pre-emptive effort to discolor carbon taxes might do that and more. Ebell is taking aim at emerging conservative groups that have sometimes waded into discussions about swapping income taxes for one that discourages emissions. He sees a threat in letting conservative groups portray a carbon tax as an economic issue. So he plans to link them to environmental organizations to reduce their credibility as conservative messengers.

"So there will be these efforts to get into the inside of the conservative movement in the debate over the carbon tax," Ebell said of these "front groups," which he named. "And I think those people will be defeated when people on our side point out that these people have motives that are not pure from a conservative or free-market standpoint, that they're being funded by the left, by the environmental left."

Several conservative leaders of those groups reacted sharply to Ebell's characterizations.

Former Rep. Bob Inglis (R-S.C.), who advocates for a carbon tax in exchange for lower income rates and zero energy subsidies at George Mason University's Energy and Enterprise Initiative, said: "If he wants to shut us down, I've got some news for him: I knew what it would cost me when I was in Congress. I didn't back down then, and I'm certainly not going to back down now."

'Character assassinations'?

Eli Lehrer, who is the president of R Street Institute and has worked at both CEI and the Heartland Institute, said his group is largely funded by insurance companies and other non-environmental donors -- often the same contributors that funded him at CEI.

"I know this since I raised the money at both places," Lehrer said. "So if my funding stream makes me a front group, then by that logic, CEI is, too. It's just ridiculous."

Lehrer works with some green groups on insurance issues, like reducing subsidies in the National Flood Insurance Program. And he or his staff attended two private meetings this summer with conservatives and liberals to discuss ways to advance a carbon tax, which he says can be "pro-growth" if it's done correctly.

"I find it quite disappointing that Myron is resorting to character assassinations and attacks on individuals," Lehrer said. "I'm just disappointed that he doesn't seem to have an argument against us on the facts and instead wants to attack us for who we work with."

Michele Combs, founder of Young Conservatives for Energy Reform, said of Ebell's claim that her group is an environmental mouthpiece: "That's just not true. I am as conservative as they come.

"We're not even commenting on the carbon tax," she added. "We haven't even gotten to the point. We're in an organizational mode. We're not even talking policy. We're just talking about a broad energy independence [goal] ... all sorts of renewables, biofuels and stuff like that."

A warning of 'peril' to Republicans

Ebell, who rejects the scientific evidence and political arguments for addressing global warming, said his effort against carbon taxes is still being formulated. Apart from op-eds, he indicated that his group will use routine meetings with conservatives to warn them away from the policy.

"We'll fight it," said Ebell, who believes that a carbon tax would continue to grow for years or decades. "I have every expectation we'll win, but I think it'll be a real fight once tax reform becomes a -- once the leadership in Congress on both sides say, 'We're gonna make tax reform a big deal and we're gonna get it done this Congress.' Then I think the carbon tax will be part of the mix and we'll have to fight it."

He won't be alone. Tim Phillips, president of Americans for Prosperity, a group that casts doubt on climate change and has connections to the Koch brothers, said his group is already meeting with Republicans to warn them away from any deal that lowers income taxes in return for a tax on carbon.

"It's a potent issue when you say, 'Hey, in case you're not paying enough for utility bills and gas prices, these guys want to ... rifle up a new revenue stream and pursue this global warming ideology, or in support of supposed tax reform,'" said Phillips, whose group attacked lawmakers in 2010 for supporting cap and trade.

"Those who support this, I don't think it's a free ride," he said of a carbon tax. "They do it at their peril. I mean Democrats and Republicans."

Some advocates warn that the debate could collapse before it begins if opponents are able to define a carbon tax as an environmental initiative. That would lose resonance among Republicans, a contingent of whom is crucial for a successful outcome.

The focus must be on the economic benefits of lowering income or corporate tax rates, says Paul Bledsoe, an independent consultant who served as communications director of the Senate Finance Committee when Vice President Al Gore proposed a stand-alone British thermal unit tax in 1993. Its failure continues to haunt lawmakers.

"The issue to be effective has to be taken up on, and justified on, economic and tax reform grounds," Bledsoe said. "The environmentalists' views are really beside the point."

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