At least someone gets it:
All three of the leading Democratic candidates have proposed cap-and-trade plans that auction 100% of their CO2 permits. This is, economically speaking, the same thing as a carbon tax.
The context: NY Times columnist Tom Friedman is complaining that no major presidential candidate has proposed a carbon tax—which he takes as evidence that nobody has had the guts to take a stand in favor of policies that would “trigger a truly transformational shift in America away from fossil fuels.”
But as uber-blogger Kevin Drum points out, this is simply rubbish. There are plenty of presidential candidates who are proposing a “truly transformational” shift away from fossil fuels, by putting a price on carbon emissions. Yes, they’ve labeled their proposals “cap and auction” rather than “taxes”—but economically they’re peas in a pod. The only real economic difference, besides some administrative details, is in where they concentrate the economic uncertainty: in the price of carbon (for cap and trade), or the effectiveness of the program (for a carbon tax).
I’m not sure if Friedman doesn’t understand this, or if he’s just miffed that the candidates haven’t adopted his preferred carbon pricing system. To his credit, Friedman’s been a long-time carbon tax supporter. But claiming that taxes are the only “transformational” pricing policy for fossil fuels is silly.
Update: Here’s even more speculation on what Friedman was thinking.
