I have previously blogged about how strange our politics has become, when cap-and-trade programs, previously touted by conservatives and viewed skeptically by environmentalists as a "license to pollute," somehow become for conservatives the poster child of big government programs. It is nice when economists as respected as Dick Schmalensee and my friend Rob Stavins make the same point. I'm not sure I can put it much more succinctly than this:
It is truly ironic that conservatives chose to demonise their own market-based creation.
The further irony would be if those opposed to climate change regulation, who have successfully held a cap-and-trade plan at bay by calling it a tax, were ultimately hoist on their own petard by passage of an explicit carbon tax, rather than a cap-and-trade system. I don't see it happening any time soon, but I wouldn't be surprised if there were a carbon tax in place before 2020.
I also agree with Schmalensee and Stavins – though they don't use the term – that it is a final irony that the result of conservative objections to a cap-and-trade system will be implementation of climate change regulations through much more bureaucratic, and less economically efficient, approaches, such as NSPS, authorized under current law. That'll show 'em.
Sadly, when analyzing the Congressional debate over climate change, you just can't make this stuff up.
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