Saturday, September 5, 2015

Why Republican Party May Be Better Sponsor For Climate Change

Greg Mankiw, like many economists, has supported a carbon tax.  He assumes that global warming is real, and that the social cost of consuming carbon should be included in the price.  This is pretty standard economic thinking.  He argues that the question that arises from a carbon tax is whether the carbon tax is revenue neutral.  He claims that Republicans would support a carbon tax if it led to the reduction of other taxes.  He further claims that Democrats who favor the carbon tax are not interested in cutting other taxes in order to get a carbon tax.  They are more interested in using the additional tax revenue to provide more government services.  In other words, the battle over the carbon tax is simply a war over the size of government.

Mankiw understands that the Republican Party has promoted global warming denial in its populist base.  He may also realize that the fossil fuel industry has rewarded the Republican Party for its efforts to do so.  Its hard to imagine, however, that his favorite party would agree to a tax on carbon if it were revenue neutral.  Its also a major leap to argue that major difference between Republicans and Democrats is really about the size of government.  There are deep divisions between the two parties about who pays for the taxes that are collected by government and how the revenues are spent.  The Republican Party has not reduced government spending when it has been in power.  It has made tax policies less progressive and it has used tax revenues for different purposes than the Democratic Party.  Mankiw is disingenuous to pretend that the real issue is over the size of government. 

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