Friday, March 07, 2008

More Responses to the CBO Carbon Tax v. Cap and Trade Report

Nat Keohane has written two very nice responses to the CBO paper on taxes and cap and trade that I linked to earlier here and here. What I particularly like about his posts is how he clearly identifies key assumptions in the CBO report and then proceeds to explain why these assumptions may be incorrect and how if they are incorrect you would reach a different conclusion. That is, he employs a structure that is similar to what I have you do on the in-class quizzes.

Here are his two main points:

Read the whole thing for the details.

Director of CBO, Peter Orzag provides a response to these concerns here.

Besides the two criticisms that the report depends on a straw man and is based on a faulty premise, I would like to ass a third. I think that on of the things the report didn't consider is the immense benefits from CO2 reduction. It seems to me that the costs of using petroleum (which is the main cause of the over-saturation of atmospheric carbon concentrations) seem to be sky rocketing, while the benefits keep decreasing. On the other hand, transitioning to clean energy sources seems to be getting cheaper and cheaper, while the benefits have never been clearer. Politically, people are extremely concerned with jobs and the economy, as well as national security. It seems to me like these two issues tie squarely into clean energy and kicking the fossil fuel habit. Lets see a report about this, instead of how much it would cost to regulate carbon, which addresses little more than the symptom.
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