How Will Obama Cut the Deficit? He's Thinking Carbon.
With the President’s stimulus enacted and more crisis-related spending on the horizon, everyone wants to know how the Obama administration can actually make good on the goal, articulated Monday, to cut the size of the budget deficit in half by the end of the President’s first term. When the 2010 budget is released today, it will make clear that the administration hopes a major source of revenue will be from a proposed carbon cap-and-trade system. But that may not be as easy as it looks.
Many observers focus on the costs of cap-and-trade to the economy. Less appreciated is the revenue that could be generated if the government chooses to auction off pollution permits in such a system. The Washington Times reported the administration expects $300 billion to come in by 2022 from cap-and-trade revenues. Obama wants to put this money to drawing down the deficit.
But Congress will need to go along with his plan and therein lies the wrinkle.
As Andrew Revkin noted last night, lobbying activity around climate change is booming: he cites a report from the Center for Public Integrity that says in 2008 “more than 770 companies and interest groups hired an estimated 2,340 lobbyists to influence federal policy on climate change.” Without question those number are rising this year as well. Many of those lobbyists are no doubt arm-twisting Congress people to get a piece of that money.
Can the Obama team can manage to push through such ambitious legislation without divvying up some of the spoils? We’ll find out.
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