POLITICS:

Conservatives clash over taxing carbon emissions

Two conservative think tanks that parted ways last year over a disagreement about denying climate change came together temporarily last night for a formal debate over whether or not Congress should impose a tax on carbon dioxide emissions.

The R Street Institute, which formed after its president, Eli Lehrer, departed the Heartland Institute during a controversy in which the institute lumped climate advocates together with the Unabomber, argued that taxing emissions falls within conservative principles. Heartland strongly disagreed, saying that changes to the climate are too small to worry about.

Andrew Moylan, a senior fellow with R Street, said that dismissing the notion of pricing carbon leaves conservatives exposed to liberal whims. He joined former Rep. Bob Inglis (R-S.C.) to argue that Republicans should try to repeal the U.S. EPA's standards on carbon dioxide while achieving lower income taxes in exchange for a carbon tax.

"The reason it's an important debate is because I have this nagging thought in the back of my mind that conservatives may end up on this issue where we ended up on health care, which is yelling from the sidelines, 'No, no, God no, please don't listen to the liberals,' Moylan said. "Eventually, we got steamrolled."

He said a "revenue-neutral" carbon tax is an "authentically conservative solution."

On the other side, David Kreutzer, a research fellow with the Heritage Foundation, joined Heartland's James Taylor, a lawyer, to describe those aspirations as a "fantasy." They said Democrats would never offer so much in return for a carbon tax. Even if they did, the plan would be saddled with special-interest provisions before it was finished, they argued.

"We know we're not going to get a deal like this on a carbon tax," Kreutzer said.

Beginnings of an internal debate among Republicans

Discussions around taxing carbon have increased among conservative groups in the past year, although that hasn't carried over to Republican lawmakers, who oppose tax increases and generally look on climate change with disinterest.

But you wouldn't have known the topic is considered lifeless in Congress by attending the event last night. Organizers planned for 150 people, but received about 270 requests to attend. The crowd didn't reach that size, but the Globe Theater near Dupont Circle was nearly full.

Carbon tax events routinely draw big crowds, but Lehrer smiled as he guessed that the open bar also played a role.

"A year ago, there was no conversation on carbon tax," he said.

The event exposed divisions within conservative thought groups over the effect that the policy might have on the economy, the environment and the political compass of the Republican Party.

Some believe that climate change is an issue akin to immigration and gay marriage at a time of changing demographics that disfavors a GOP brand that has lost two presidential elections while failing to expand its reach beyond a House majority.

John Weaver, who has been a political adviser to Republican presidential candidates such as former Utah Gov. Jon Huntsman and Arizona Sen. John McCain, said the debate is a sign that the GOP is a "party in transition."

"There is a debate internally, broadly, about ... whether you have to admit that [climate change] is real, which I believe it is," Weaver said in an interview. "And secondly, are we as conservatives or center-right activists going to offer solutions about it, as opposed to just putting our head in the sand and pretending it doesn't exist?"

Donald Marron, director of the Tax Policy Center and a former adviser to President George W. Bush, said there have been signs of conservative acceptance of a carbon tax for several years. Scholars with the American Enterprise Institute joined several other think tanks a few years ago to include one in a large economic framework.

"I have been struck by how much interest there is on this set of issues," Marron said in an interview. "Just from the outside, I would say tonight's debate is a reflection of rekindled interest in carbon taxes among the policy analysis community."

'We've benefited in so many ways'

The event was designed to avoid a clash over the existence of climate change. Both sides agreed beforehand that some warming is caused by humans. But that boundary was crossed often as Taylor and Kreutzer sought leverage against a tax that they said would have no effect on environmental outcomes.

Taylor, of Heartland, said there are advantages to climbing temperatures, like smaller deserts, enriched agricultural crops and fewer droughts.

"We've benefited in so many ways as our planet has warmed," Taylor argued. "The mere notion that climate is changing ... does not [mean] A, there's a crisis, or B, we need to do something about it."

At one point, Kreutzer asked the other side if its plan would make energy prices rise, an argument that helped sink the cap-and-trade debate of 2009 and 2010. Heartland, Heritage and other conservative groups, like Americans for Prosperity, have used that assertion with potent force against Democrats for years.

Moylan didn't dispute the claim.

"It raises the price of energy while at the same time taking less money from them in other areas," he said, adding that a revenue-neutral carbon tax is "pro-growth" for the economy.

Inglis insisted that the plan is not driven by hippie motives meant to starve the United States of energy needed for commerce, transportation and industry. It's a fiscal plan, not an environmental one, he said.

"We want more energy," Inglis added. "We're not with the people who want to shiver or sweat in the dark depending on what season it is."

A carbon tax in a bipartisan fiscal agreement?

The event was billed as a debate among friends about a year after Lehrer and his staff at Heartland's Center on Finance, Insurance and Real Estate broke away from the Chicago-based libertarian group amid an uproar about its billboard connecting people who believe in climate change with Unabomber Ted Kaczynski. The split severed Heartland from an important funding source, the insurance industry.

Since then, R Street has adopted a proactive approach on climate policies. But the group and its allies have yet to convince Republican lawmakers that a carbon tax is good fiscal policy, let alone a safe political one.

Rep. Randy Neugebauer (R-Texas), who agrees with R Street's insurance policies, said he will never support a carbon tax.

"We know the climate's changing. Since when Christ created this Earth, it's changed," he said yesterday. "Should we do things that are prudent and make sense to be good stewards of Mother Earth? Absolutely. But I think some people overexaggerate our ability to have much influence over that process."

Others, though, might be leaving the door open. Rep. Peter King (R-N.Y.), who sees natural disasters like Superstorm Sandy as a future threat to his state, did not rule out a carbon tax when asked about it yesterday.

"Right now, I'd be opposed to tax increases. Whatever we do has to be part of an overall package," King said. "I don't want to be getting into what tax increases we should have or not have. ... I hope we can reach a stage in this whole fiscal cliff part two that everything is on the table. But I don't want to be speaking about any specific taxes."

At the debate, the proponents made the case that the Obama administration won't set aside strict EPA regulations on carbon without something in return. "We either get with it and engage with a real solution in free enterprise or we acquiesce when the nation decides they want action for a regulatory solution," Inglis said. "I hope we choose a price signal and fix this thing."

At the end of the hourlong debate, the audience was asked who won. A large majority sided with the proponents of a carbon tax. "Oh no, no, they stacked the audience," Taylor said, laughing.