Breslow and Kurman-Faber are, in short, trying to pull the wool over our eyes. You cannot achieve the environmental benefits that the Benson bill promises without a substantial shrinkage in the economy.
by David G. Tuerck and William Burke
In their comments on our study, Marc Breslow and Jonah Kurman-Faber use one of the favorite tricks employed by climate alarmists, which is to change the subject from climate change to infrastructure spending and health benefits – in other words anything but the minuscule change in greenhouse gas emissions that, for example, a state carbon tax could bring about. Thus, for example, they cite “the billions in dollars in economic benefits” that the state will capture from the creation of a “Green Infrastructure Fund.”
Of course, there are benefits to be had from infrastructure spending. The question is why resort to a carbon tax if the goal is to improve, say, transportation? Why not talk about tolls or the gas tax or other means of funding the improvement? The answer is that the real goal of alarmists like these (including their compatriots in Washington) is to bring about the very shrinkage in the economy that we predict.
And make no mistake about it. The economy will shrink under the Benson bill. The tax would impose an immediate burden of $1,253 billion on the state economy. That would be equivalent to a 7.4% increase in the state income tax.
But in the world of climate alarmism, there is no such thing as raising taxes too high. That’s because alarmists depend on economic models like the REMI model, according to which government can raise taxes all it wants as long as it spends more. It is the reliance on such models that brands one a “cherry picker” – in this case picking the model that gives you the result you want.
As for our STAMP model, the reader must understand that our methodology is exactly the same as the methodology used by eminent economists like William Nordhaus, who argue for a national carbon tax. Breslow and Kurman-Faber criticize us for assuming full employment even though, by any measure, the economy is, in fact, at full employment.
We don’t assume full employment, however, just because it happens to exist at the moment but because any serious modeling of climate change legislation, such as the modeling done by Nordhaus, requires that assumption. Otherwise, we would be treating the Benson bill as an economic stimulus measure, not as a bill that aims to bring about long-run changes in the climate.
Breslow and Kurman-Faber are, in short, trying to pull the wool over our eyes. You cannot achieve the environmental benefits that the Benson bill promises without a substantial shrinkage in the economy. The idea that we can get those benefits in any other way is utter hokum.
Further, Breslow and Kurman-Faber disregard the fact that this particular bill would do little in terms of abating greenhouse gas emissions. The sources targeted by the bill are highly inelastic, and therefore are insensitive to changes in price. Additionally, the sources targeted in the bill having already been trending downwards in recent years. What the bill fails to cover are greenhouse gas emissions from industrial processes, where we project emissions to increase substantially over the coming years. They mention that we have the opportunity to be leaders towards achieving a clean future, yet they don’t factor in that Massachusetts already is as a member of the Regional Greenhouse Gas Initiative.
Moreover, Breslow and Kurman-Faber cite a study conducted by Breslow on the impacts of Representative Benson’s bill on Massachusetts households at different income levels. This study, however, includes no analysis on the revenue that would be raised by the tax, nor does the methodology explain the environmental benefits that would result from the tax. The study, as mentioned in the methodology, is based only on a random sample of 625 Massachusetts households, rendering any conclusion from study as largely trivial.
Breslow and Kurman-Faber complain that we didn’t provide more detail on our methodology and claim that “the institute reveals that major elements of H.2810 have been completely stripped away from the analysis, including the 30 percent of revenue dedicated to the Green Infrastructure Fund”. However, this statement is completely unfounded, as we incorporate the distribution of all carbon tax rebate funds as inputs to our STAMP model, including said Green Infrastructure Fund. We refer the reader to www.beaconhill.org for that additional detail.
Read BHI’s op-ed here.
