CT Progressive

Ezra Klein did an interview with the on-the-mend Henry Waxman on the subject of his recently-released book, and he promises that it will include a more sweeping description of how the sausage factory runs than is normally featured in this kind of work:

I wrote the book with the help of Joshua Green, a superb writer. It sets out many anecdotes and behind-the-scenes information that people don’t ordinarily hear about in books about how Congress works. They usually hear about a House subcommittee then a committee then the Senate then the Senate committee. They think about it in terms of little boxes. I try to portray the forces at play in dealing with legislation and how some things that were big battles at the time are now taken for granted.

It was a big battle to get food producers to put uniform labels advising people about calories and sodium and carbohydrates and other nutrients on food. But I think most people take it for granted that they can see those labels when they go into the store and use them to make their decisions. But the food producers said they were going to go bankrupt if they had to put these labels on, it would be such a burden, it would be excessive. Finally we got it passed. And I don’t think most people give it a second thought today. It’s just there. [...]

I also talk about the Clean Air Act, which is the most successful environmental law on the books today. There was a huge fight over a one–year period to get that legislation enacted. But now people in the Northeastern parts of the United States that were seeing acid rain don’t have that problem any more. And the cost turned out to be a tenth what they said it would be even though different industries argued that our economy would go to hell. Invariably they met their requirements, met them ahead of time, and met them at a fraction of the predicted costs. So we’ve had very successful laws. But very few people talk about government in those terms.

Funny, Connecticut’s Governor just vetoed a calorie-labeling bill for restaurants, using those very same scare tactics:

“Does it come as a surprise to anyone that a vegetable salad is healthier and more nutritious than a bacon cheeseburger?” the Governor said. “There has been a growing and troubling tendency by some to legislate nearly every aspect of our lives and society, including personal responsibility. Such legislation always comes at a cost to the taxpayer and to individual freedom.”

Governor Rell also noted the cost such a bill would impose on restaurateurs and on the Department of Public Health, adding, “This is hardly the economic climate in which to further burden our businesses and state agencies.”

I included that bit about the Clean Air Act from Waxman’s answer because it occurs to me that there’s a vast amount of what could charitably be described as lying going on in the organized opposition to progressive legislation, and somehow history manages to forget the names of those that tell tales of grossy inflated costs to industry and the supposedly market-destroying impact of pro-consumer and pro-health regulations. If the laws get passed, then advocates are putting their resources into the next fight; if the laws fail, then the lying goes unproven. But from watching the damage that can accrue to politicians that repeat these kinds of falsehoods, it seems like revisiting the claims of industry groups would have a strong public policy benefit, a potential that advocates haven’t yet tapped.

In the days since Waxman-Markey has passed in the House, it’s been the object of a lot of political jockeying — fierce bromides from the climate denialists that have been terrifying the electeds, and agitation from progressives concerned that the milquetoast bill that got passed out of the House might not be enough.

The policy details haven’t been easy to find in any one place, but the Wikipedia article on the subject has a decently brief rundown:

• It sets a slightly higher target for reductions in emissions of carbon dioxide, methane, and other greenhouse gases than that proposed by President Barack Obama. The bill requires a 17-percent emissions reduction from 2005 levels by 2020; Obama has proposed a 14 percent reduction by 2020. Both plans would reduce United States’ emissions by about 80 percent by 2050.
• It includes a renewable electricity standard (almost identical to a renewable portfolio standard, but narrowly tailored to electrical energy) requiring each electricity provider who supplies over 4 million MWh to produce 20 percent of its electricity from renewable sources (such as wind, solar, and geothermal) by 2020. There is a provision whereby 5% of this standard can be met through energy efficiency savings, as well as an additional 3% with certification of the Governor of the state in which the provider operates.

Alternative compliance payments are $25/MWh in violation of the standard, adjusted for inflation beginning in 2010.

• It provides for modernization of the electrical grid
• It provides for expanded production of electric vehicles
• It mandates significant increases in energy efficiency in buildings, home appliances, and electricity generation.

The bill’s cap-and-trade program allocates 85% of allowances to industry for free, auctioning the remainder. 15% will be auctioned, the revenue from which shall be redistributed to low-income households. 30% of the allowances will be allocated directly to local distribution companies (LDCs) who are mandated to use them exclusively for the benefit of customers. 5% will go to merchant coal generators and others with long-term power purchase agreements.

Progressive criticism has come in a couple of forms: first and foremost, that the reduction targets included in this bill will not do enough to save the earth, which is the ultimate in non-petty concerns and seems to be backed up by scientific consensus.

Another concern relates to the auctioning of the emissions permits: the fact that the bill “allocates 85% of allowances to industry for free, auctioning the remainder.” In practice, that means that a lot of money will be made from these permits being bought and sold, only that the money will not go to your Supertrains and electric windmills and solar panels and other national infrastructure goodies. Obama’s budget proposal envisioned a 100% auction, which would have the somewhat counterintuitive impact of raising a lot of federal revenue without actually charging Joe and Jane public any additional money over the alternative scenario.

The current version also offends on the grounds of moral justice: the other 85% of the revenue will go to the same masterminds that set the economy on fire these last few years – Matt Taibbi’s article on Goldman Sachs connects the last several bubbles to the anticipated windfall from carbon offset trading. Believe what you like about Goldman, but this assessment sounds about right:

“If it’s going to be a tax, I would prefer that Washington set the tax and collect it,” says Michael Masters, the hedge fund director who spoke out against oil-futures speculation. “But we’re saying that Wall Street can set the tax, and Wall Street can collect the tax. That’s the last thing in the world I want. It’s just asinine.”

It’s exhausting trying to defend the bill once you glean that the grand bargain sacrificed 85% of the infrastructure improvements so those trillions can sit in the trading accounts of the top .01%, collecting dust and dividends until the next big crisis — at which point there will be no money and no Supertrains. Goddamn it.

“But,” say the activists, “defend it we must!” Just because a few robber barons won’t let us save the planet without tripling their net worth doesn’t let us off the hook for actually saving the planet. Let them have their cash, because now the Senate needs to pass the bill, and the odds are that they’re going to make it even worse.

There are some post-fixes possible: John Larson, lead sponsor of a Carbon Tax bill which would have avoided this giveaway nonsense from the start (the awesomely-numbered H.R. 1337) has also in the past offered legislation regulating derivative speculation, and maybe an approach like that would work for carbon as well. If so, maybe the right time to set the dogs loose on carbon profiteering would be after the ACES energy bill goes through.

Also, Krugman pointed the way to this testimony (PDF link) suggesting that import tariffs to equalize the cost of domestic goods and those goods produced in nations with unchecked carbon emissions would be feasible, legal (under WTO guidelines) and enforceable — which could mean that the energy robber barons would primarily be picking the pockets of the cheap-stuff-for-Wal-Mart robber barons. That would allow the proposal to potentially be improved by after-passage action by legislators fearing this kind of criticism, expressed by GOP Congressional Wannabe Justin Bernier in the 5th CD:

“It will hurt our economy without helping the environment. Because only America is covered by Cap and Trade, this new tax will give corporations another excuse to outsource millions of jobs to China, India, Mexico, and other polluter paradises.”

I can’t say for sure that our delegation will engage in a little friendly carbon-protectionism to ward off this kind of criticism, but if a Republican is complaining about it then at least the incentives, to them, will look to be going in the right way. (Sigh.)

Finally, from that same link above (a once-a-week energy policy blog written out of the New Haven Register) another interesting issue is raised: how will the Federal cap-and-trade system interact with the regional cap-and-trade initiative that Connecticut already participates in?

Connecticut is one of 10 states in the Northeast that are part of a part of a cap-and-trade program. The participating states use the money generated by the Regional Greenhouse Gas Initiative (RGGI) auctions to fund clean and renewable energy programs.

The RGGI auction, which was held earlier this month, produced $4.7 million for Connecticut ’s clean energy and efficiency programs. Connecticut has received about $18.7 million from the four RGGI auctions held since last fall.

It’s unclear to me whether or not energy producers will need both the free Federal permits and the regionally-auctioned RGGI permits to operate: some of what I’ve been able to find makes RGGI permit-traders nervous (a good sign), like this report: (another PDF)

The current proposal allows the conversion of RGGI allowances into federal allowances in a way that RGGI bidders face no risk from paying too high a price for an allowance. This would create strong incentives for speculative bidding that would push the RGGI price much higher than its economic value. Such a price distortion would also negatively impact the federal cap‐and-trade program.

Since it’s already widely believed that the carbon market will be a hotbed of speculative trading, all this seems to mean is that while the Federal government plans to give away the store, the ten states in the RGGI program may reap a windfall of moneys directed towards their (read: our) own infrastructure projects.

Plus, if Waxman-Markey won’t decrease carbon enough to avert a climate catastrophe, I wonder if it’s possible for the RGGI-style cap to be benchmarked to a reduction based not on a historical point (i.e. “10% below 2002 levels” or some such), but rather a reduction above and beyond the Federal cap. If coal-state Congressmen can’t do the right thing, I imagine that us coastal-types might have an incentive to strengthen the policy however we can.

Times are tough all over:

Based on analysts’ earnings forecasts for 2009, Goldman Sachs Group Inc. is on track to pay out as much as $20 billion this year, or about $700,000 per employee. That would be nearly double the firm’s $363,000 average last year, and slightly higher than the $661,000 for the average Goldman employee in fiscal 2007, according to analyst estimates reviewed by The Wall Street Journal.

Some bills get the veto, other sail right through:

“In this down economy, our dairy farmers had no safety net and were essentially in freefall. I commend the leadership of the General Assembly for their strong endorsement of this bill. The legislation had broad bipartisan support, a testament to the importance and urgency for finding a solution, much sooner rather than later,” Governor Rell said. [...]

According to the state Department of Agriculture, which will administer the quarterly payment program, Connecticut dairy farmers lose about $1 for every gallon of milk they produce. The amount of the payment would be based on how much milk each farm produces and the costs to produce it, such as feed, equipment, fertilizer and fuel. The state payment is intended to help the dairy farmer absorb some of the financial losses.

I used to lose a dollar for each dollar I gave away — but after a short while, I realized that I wasn’t in a very lucrative sector of the economy. Apparently I should have held out for a little longer.

Meanwhile, today on the cutting board:

House Bill 5021, An Act Concerning Wellness Programs and Expansion of Health Insurance Coverage: This bill would have expanded mandated health insurance coverage for individual and group policies in several ways. It would have increased the coverage limit for mandatory ostomy supplies and add mandatory coverage for prosthetics, wigs for hair loss associated with alopecia areata, hearing aids for children between ages 12 and 18 and leukocyte testing for bone marrow transplants. It also prohibited copayments for colonoscopies and required group health insurance policies to offer a health wellness program that provides incentives to participate.

The Governor noted that each of the provisions have merit and would provide additional benefits to people with serious medical conditions, but expressed concern over the significant cost to taxpayers, policyholders and employers in the future. The bill’s mandate would not affect the state health plan until Fiscal Year 2012, but the Governor cited a review by the non-partisan Office of Fiscal Analysis that indicated “the FY 12 cost of these mandates could be significant.”

“The simple truth is that we cannot afford this bill,” Governor Rell said. “It would be fiscally irresponsible to burden our recovery with these significant future costs.”

So some bad news for leukemia and myeloma patients, as insurers won’t be required to cover the cost of testing for donor matches. Fortunately, the bill passed by a veto-proof margin in the Senate (with a number of Republican yes votes and Democratic no votes), and would make the 2/3 cutoff in the House if three of the four absent votes (all Democrats) vote “aye” on a veto override. And if that doesn’t work, there might still be time to reclassify kids with leukemia as dairy farmers so they can get a little help from the state…

Also vetoed: HB 6502 (the “healthcare for janitors” bill that would remedy the odd situation where the state government’s janitors are the only state employees without health coverage, passed by wide veto-proof majorities), SB 1078 (establishing a Long Island Sound Commission, passed unanimously — so we can observe which Republicans switch their votes when the Governor wags her finger), and SB 1080 (a bill requiring restaurants post calorie counts on their menus, which is short of 101 votes in the House).

And just as a bonus fun item, one quote from the veto message (and I didn’t erase anything from between the two paragraphs):

While the subcommittee would have included the Commissioners of the departments of Correction, Public Safety and Mental Health and Addiction Services, the Governor said, representation from the Office of the Governor is important as well. “True reform requires all stakeholders to be present at the table. This bill is woefully lacking in that regard.

“I also take note, once again, of the size and bureaucracy of state government,” Governor Rell added. “Every year we enact legislation creating more study groups, task forces, boards and commissions. Sadly, far too often there is little attempt to reach consensus without legislation.”

The size of government is too big — but if you wanted to start a new committee, having only four gubernatorial appointments isn’t enough.

Rell vetoed the Democratic budget proposal (veto message from iBlog West Hartford at MLN):

“Instead of reducing spending as families and businesses across Connecticut have done, Senate Bill 1801 does nothing to reduce the size or cost of a government that has outgrown the taxpayers’ ability to pay for it. Rather, it pushes the pain of sacrifice off the state bureaucracy and onto the state’s taxpayers. I cannot allow that to happen. Senate Bill 1801 calls for $2.5 billion in new taxes on the people and employers of Connecticut in the midst of the greatest global economic downturn since the Great Depression: exactly the wrong move at exactly the wrong time.”

Government, of course, is not a family — it is what families count on in a time of crisis. The right time to scale back our civil services would be during a time of broadening prosperity, not at the moment when we depend on those services the most.

Rell’s cuts would sacrifice 10% of our services — and for what? The proposal she just vetoed would increase taxes by less than a percentage point for families making a million dollars a year. (A household income of $1,000,000 would see a tax increase of $9,500.) Obviously, Rell thinks the middle class can afford to suffer a little more.