At the Risk of Repeating the Obvious, Now Is Also a Good Time for the Green Tax Swap

This article by Michael Flectcher in yesterday’s Washington Post is well worth your time. It follows the push for green jobs in Ocala, Florida as it has met with almost no success over the past couple of years. In brief, there is plenty of money for retraining and there are plenty of workers to be retrained, but there is no market for the products. Nor will there be until the price of fossil fuel emissions is much higher. From the article:

The industry’s growth has been undercut by the simple economic fact that fossil fuels remain cheaper than renewables. Both Obama administration officials and green energy executives say that the business needs not just government incentives, but also rules and regulations that force people and business to turn to renewable energy.

Without government mandates dictating how much renewable energy utilities must use to generate electricity, or placing a price on the polluting carbon emitted by fossil fuels, they say, green energy cannot begin to reach its job creation potential.

In the name of protecting low-income workers from the high price of gasoline (and other dubious reasons), we did not put a carbon tax in place. But when they lost their jobs, we trained them for jobs that would exist only in a high-carbon-tax environment. Brilliant!

Fortunately, the clock never runs out on good ideas. Washington is currently coming down to the wire with discussions of how much of the Bush-era tax rate reductions will be continued. As I have blogged earlier, I do not support making any of these reductions permanent. But in this case, we have the luxury that no one in Washington seems to agree with me. Fine. At least they should recognize that these discussions are happening alongside other discussions — like the one in this article — about how another major policy initiative is floundering. So the Obama administration should pair the two together by linking whatever support it is going to give for extending the income tax rate reductions to an increase in the price of carbon emissions through a comprehensive tax on fossil fuel emissions.

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About Andrew Samwick 89 Articles

Affiliation: Dartmouth College

Andrew Samwick is a professor of economics and Director of the Nelson A. Rockefeller Center at Dartmouth College in Hanover, New Hampshire.

He is most widely known for his work on the economics of retirement, and his scholarly work has covered a range of topics, including pensions, saving, taxation, portfolio choice, and executive compensation.

In July 2003, Samwick joined the staff of the President's Council of Economic Advisers, serving for a year as its chief economist and helping to direct the work of about 20 economists in support of the three Presidential appointees on the Council.

Visit: Andrew Samwick's Page

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