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This actually doesn't seem too bad to me. There are a few things I'd tweak, naturally:

*Don't put the money towards the earned-income tax credit. That just encourages more population growth, which we certainly don't need. Put it towards something else, or just use it to pay down our debts.
*Why are we giving more money to road construction? Don't we have enough roads already? Mass transit should get 100% of this portion, not 40%.
*Until we figure out a liquid fuel alternative for air transport, we need to devote maybe 10% of the jet fuel tax to R&D and 90% to yet more mass transit. Let's build a rail system that's actually competitive with the airline industry in terms of speed, cost, and level of service, as they have in much of Europe.
*The final list of things is fine, except I wouldn't give low-income people money SPECIFICALLY to ease their energy bills. I'd just give it to them in a lump sum, keep the incentives for less energy dependency, and enable them to purchase other stuff, such as home infrastructure or bicycles that will have long-lasting structural economic benefits to them.

As for cronyism, that's going to happen no matter where the money goes, whether it goes into state-run programs or private companies like Halliburton or Enron or whatever. That's just how our current political/economic system functions.

From what I see it looks like it could be a European tax strategy. You raise taxes on fuel, and spend the proceeds on programs like health care and infrastructure. Say what you will about Europe but our energy usage is way below that of the US, and our tax policies have something to do with it, even if we don't drive the same distances as in the US, nor have the American weather extremes. I don't quite understand why EP is so negative about it. I'd say it would probably work and achieve its goal of reducing fossil fuel use. But whether the American public would accept a larger role of the state in their daily lives (which it indeed implies) is another matter.

I've got to agree with EP about this proposal, it looks to me to be designed to please no one, that its designed so he canclaim to have supported a free market solution but those pesky environmentalists opposed it for not being perfect. It gives new depth and meaning to the term "dingleberry".

*note to our foreign readers. A dingleberry is a ball of fecal material clinging to the hair around the anus. Bob Ebersole

A flat carbon tax is utterly immoral. And if you're considering it, you should be ashamed whoever you are. Who suffers from more expensive energy? The poor people. Who can afford to pay an extra $1 for their gasoline? The rich people. There are only two morally acceptable ways to cap carbon emissions that I see: 1. Tax luxury activities (flying for example), or 2. institute a carbon ration as George Monbiot and others have suggested. Sorry, but that needed to be said.

Despite the possibility that this will be a short-lived bill, I think it's a relatively good bill. Disclaimer: I haven't yet read the details, just the summary, and often implementation details can turn a good bill into a bad one.

That said, here are some counter-points to Engineer-Poet's analysis:

1. It's true we don't need to expand the road system, but the bridges do need to be repaired and quickly. The DOT says that one in ten bridges are structurally deficient (http://tinyurl.com/2lfddy) while the American Society of Civil Engineers says it's one in four (http://tinyurl.com/6v6gg; click on "Report card" on the lower left). So, we can either have more bridges collapse or we can repair them. To me that seems independent of whether we expand the public transit system. Let's do both.
2. It's true that expanding the earned-income tax credit may have the unintended side effect of encouraging more children but, in my view, that is small counter-balance to the generally beneficial effect of easing the situation for low income earners — they are also the group that doesn't have the room in their budget to purchase newer, energy efficient vehicles.
3. Generally, compared to cap and trade, I think a carbon tax is: a) faster to implement b) much less open to being rigged by industry (see Europe's failed carbon market for an example of that) and c) easier and administratively less costly to implement because the tax collection infrastructure is already in place (unlike a cap and trade system which would spawn an entirely new, largely unproductive industry just to regulate carbon).
4. I think it's courageous for Rep. Dingell to introduce this legislation and I acknowledge that. He is taking on the auto industry and the rich (see the mortgage tax exemption reduction) at the same time. This seems to me rather progressive for him and might be political suicide. He must certainly know the risk and he's doing it anyway.
5. I have to think about the diesel exemption. That may be smart especially since industry uses more diesel than consumers and it might be easier for consumers to reduce their gasoline consumption (by carpooling, reducing extraneous trips, etc.). To my knowledge, there aren't yet good alternatives to diesel for running a D9 (http://en.wikipedia.org/wiki/Caterpillar_D9).
6. I'm not sure the 50 cent tax on kerosene (aka jet fuel) will be able to stay in the bill. Apparently there are 4,000 bilateral trade agreements that have the side effect of preventing any one country from taxing jet fuel on international flights. (This comes from Monbiot.com but I could not find a good reference, sorry.)

Considering all the above, and especially considering that a revenue-raising bill has a better chance of passing when the revenues go back to the people paying (i.e. gasoline tax revenue going back to transportation and repairing bridges and not some other worthy cause), at first blush I think it's a good bill. I would support it pending a thorough reading of the whole bill and not just the summary.

Andre' Angelantoni
Six-Month Carbon Diet for Business
www.InspiringGreenLeadership.com

I think that the proposed carbon and transport fuel taxes are not large enough by themselves to actually accomplish the stated result, "reduce greenhouse gas emissions by 60-80 percent by 2050". I think we need a tax the equivalent of $2/gallon NOW, not 5 years hence.

Furthermore, this plan ignores the impact of inflation over the 5 years, which would be expected to diminish the impact of the tax, as everybody who can will "pass the buck" and push market prices and their income to higher levels in dollar terms. This process was clearly evident as a result of the 1973 OPEC Oil Embargo and the 1979-80 Iranian Crisis. That was what we experienced as "Stagflation", i.e., recession and inflation at the same time, which mystified the economists of the day. The tax would be inflation adjusted only after the 5 year phase in period, which would continue to push prices ever upwards with no end in sight.

Of course, this scheme also ignores Peak Oil, which will also lead to ever higher prices as demand exceeds supply. Those increased prices will act as a "tax" on the consumer, but the proceeds will go to the oil companies, especially the national companies which now dominate world oil supply. The resulting transfer of wealth from the poorer peoples and nations to the rich will only serve to increase the disparity between the haves and the rest of us.

Again, I wish to point out that a direct rationing system may be the only hope, once Peak Oil hits home. Rationing won't be any less difficult to pass into law than a stiff fuel tax, but, once in place, the economic disruption would be minimal.

Again today, we are seeing a jump in futures price for oil, said to be driven by Asian demand. Our politicians in Washington are living in a fantasy world of their own creation, the necessary result of the political process where the truth is well hidden. It's long past time to raise fuel taxes, as that should have been done when oil was selling for $10 per barrel. Senator Dingell knows that his proposed tax is not likely to be passed into law under present market conditions, thus I think his proposal is very cynical.

E. Swanson

There is a fundamental assumption in all proposals that using taxation will influence public behavior. In some specific cases this is true. Make tobacco more expensive and smoking tends to go down.

Where this assumption fails is when the use of taxation is supposed to create incentives. Whatever the mechanism proposed to cut GHG emission (caps or taxes) the basic assumption is that making the activity more expensive will lead to innovation.

However, this only provides an incentive it does not guarantee innovation. It is a way for pols and business people to shift responsibility to the "marketplace". Most of the proposals floating around depend upon technology which doesn't exist, or is uneconomical. Much of it also depends upon people changing their lifestyles without any discussion of how this is to be accomplished.

Take the simple example of commuting from the exurbs. If fuel is more expensive what are the commuters supposed to do? There is no mass transit for them to shift to, there aren't even any plans for mass transit. Single family sprawl housing can never be made as efficient as compact housing. Asking people to better insulate their houses is inadequate.

If anything is to be done, then government and other people need to address the hard issues directly and stop pretending that the "marketplace" will come up with solutions though the magic of the invisible hand. The invisible hand is not only invisible, it doesn't exist at all. See today's NY Times story about how fast the water table is dropping in much of China. People can't alter their behavior to fix society. There needs to be a national framework and it involves more than tweaking the tax code.

I can understand why this dingelberry would like such a tax proposal. Like most politicians, he wants more taxes but also wants to be reelected, so any way he can make it sound good to people to plunder more of their wealth, and get away with it sounds good to him.

So then the average person is less able to spends his own wealth on ways to reduce his own energy consumption. Forget solar panels, insulation and windmills that empty pockets cannot buy. Shift money out of the more efficient private economy into the $500 toilet seat government mentality; subsidize boondoggles like ethanol; throw away huge amounts of energy on a war to capture Iraq's oil reserves; research a path to fusion that even the researchers privately say is not going to work.

Government solutions will never work because all government is is force guided by minds that are focused first and foremost on their own financial and sick power needs.

But then maybe helping to wipe out those at the bottom of the social ladder with regressive taxation is a start to population reduction, so there is at least one benefit to this proposal.

Excuse me if I am amused at the surprise of posters here that a politician would deliberately use a serious issue as a platform for personal gain. Of course, if you understood what we are, then you would not have been surprised. Am I being too cynical for some of you? Or am I just being a realist?

"The greatest shortcoming of the human race is our inability to understand the exponential function." -- Dr. Albert Bartlett
Into the Grey Zone

Although I can understand how this bill might be part of Machiavellian machinations designed to kill the whole thing. However that doesn't detract from it being basically in the directions need, however cynically felt.

Instead of just badmouthing it for its mother, instead support it and get someone else to present a more 'acceptable' alternative at the same time. Politics is the art of compromise, so if it looks like this bill were getting popular support, there would be a move to pass the lesser bill as a more acceptable alternative.

End result is a backfire on John Dingell (Mr Unfortunate Name)

Diesel exemption means all vehicles sold become diesel, business continues as usual.

Engineer-Poet:

I didn't see any discussion of what makes you think Dingle proposal is cynical. It's as if you feel a mere statement of its provisions make it glaringly apparent. But its not apparent to me. I have my own problems with it: We have no idea as to the elasticity of demand for FF and therefore have no idea whether the proposed taxes are sufficient to achieve a sufficient reduction in demand. Furthermore, we really don't know what amount or demand reduction would be sufficient. (and sufficient to achieve what?) So what are your reasons for seeing cynicism in the proposal?

Phasing out the mortgage tax exemption on more expensive houses is code for raising taxes on city and suburban people in the coastal states.

What upsets me is the boatload of ill-conceived exemptions writting into his proposal.

"3. Phases out the mortgage tax forgiveness on houses over 3,000 square feet
• Exemptions for pre-1900 homes and farm houses
• Exemption if owner purchases carbon offsets
• Exemption if LEED certified"

3,000 is palatial. Making such a high limit excludes the majority of new housing construction, no less existing housing. For those building over 3,000 square feet, you can still get the exemption by shelling out a few bucks for some [probably bogus] carbon offsets [aka indulgences].

"Exemption for diesel
• Biofuels that do not contain petroleum are exempt. Biofuels blended with petroleum are only taxed on the petroleum portion of the fuel."

Diesel is only slightly (~10%) more efficient than gasoline once you take into account the higher energy content of diesel (which means it takes more crude to make a gallon of diesel and there are more CO2 emissions/gallon). There is no good reason to exempt it.

Today's biofuels are far worse for the environment than crude oil, and some biofuels such as palm oil, soy oil, and corn ethanol are worse than crude oil just in terms of global warming (no less other environmental concerns, where crude is actually quite clean). If anything, they should be taxed double (once for the CO2 they emit, and once for all the harm related to their farming).

"Gas tax goes 40% to mass transit and 60% to roads
• Jet fuel tax goes to airport and airway trust fund"
If the aim of the tax is to reduce car and plane usage, it would be stupid to build more road and airport capacity. A small amount of money will be needed to maintain a shrinking amount of existing capacity (let some fall to ruin, repair the stuff that is still actually used), but far less than in a scenario of expansion.

"1. A $50 / ton tax on carbon
• Phased in over 5 years and then adjusted for inflation
• Applies to coal, including lignite and peat
• Applies to petroleum and any petroleum product
• Applies to natural gas"

Why exempt logging, agriculture, and concrete? Any substantial human-induced source of CO2 should be covered or else perverse incentives can result. Agriculture is a very large source of CO2 (probably larger than cars on a worldwide basis if on includes CO2 from deforestation - most emissions coming from former rainforest land and former tropical peat bogs). The world's third largest CO2 emitter (Indonesia) emits almost all of its CO2 from agriculture and logging related deforestation and swamp draining.

In short, this bill panders to so many interests that it will be ineffective at causing anything but paperwork. Even if a 50 cent/gallon and $50/ton of carbon tax was levied with no exemptions, the cost is just too low to cause much substitution. Look at what is happening in the EU where they face far higher taxes on petrol. Usage is lower, but not by enough to get by in a post-peak oil world or one without massive global warming.

I heard an interview with Dingell where he talked about this proposal. He was upfront - this is designed to fail. Or basically to prove that most congresscritters are unwilling to treat climate change sufficiently serious manner as to make a difference.

And for that matter it is unclear what level of sacrifice the general public is currently willing to make to deal with climate change. I guess the alternative is either doing nothing and living with it, or hoping for some technological miracle.

While I think the only reason Dingell is putting this forward is some attempt to poison the well...

It's not such a bad start. I wouldn't call it good legislation, but it's got the right idea. It's something that might be appropriate if we had foreknowledge that a peak would occur in 2030, or if we had vague fears that one day OPEC wouldn't be there for us. What we actually have are predictions that the peak will happen in the next 5 to 10 years, and an administration that is attempting to figure out how it could bomb Iran without losing control of the Strait of Hormuz, being impeached, or suffering an outright military revolt.

What amuses me is how complicated revenue neutrality has to be to fit the anti-socialist, anti-communist idealogies that even the most liberal of US politicans have suffered under for sixty years. It's a simple concept. You takes de money in, you gives de money out. Every adult citizen gets a check from the government annually for an equal fraction of the total revenue brought in last year. In a society with publicly financed elections, this should be a no-brainer for the politicans who pass the legislation and give hundreds of millions of poor and middle class people a leg up on the economy over the backs of the Hummer drivers, while lessening the economic case for illegal immigrants to come here.

Introduce the tax as soon as possible but combine it with a smart ration card that gives a lower tax on say the first 5 gallons/20L per week. That gives people a chance to downsize their ride. The fuel has to go into the car tank not a jerry can, making it less likely that people will sell their allocation.

Get an elected committee to oversee the disbursement of the tax revenue. No matter if crazies get elected, the Mayor of London was so-labelled but brought in some good ideas.

EP thanks for this post.
We have butted heads on the tax issue before, I suspect this time no different.

.....I am not in Michigan

I AM in Michigan and have been all my life.
What folks from elsewhere may not know is that Monday, Oct 1st, the Michigan State government may shut down due to the inability of our elected leaders to agree on a new budget. Our constitution forbids them to conduct business without one.
The sticking point? An increase in TAXES.
Our second term Democrat governor refuses to negotiate on a plan she introduced in February, thinking it a work of art that must pass as is.
In it is a 4.9% income tax increase.
The Republicans and members of her own party, some fearing voter backlash, have urged her to show fiscal restraint and cut, among other things, the number of entitlements enjoyed by state employees. (e.g. The powerful teachers union does not have co-pay on health benefits, one teacher stated on TV "Why should WE have to co-pay?".
This is not lost on the constituency who, if lucky to have medical benis at all, most certainly burden some of the cost.)
In the past year alone, Pfizer, Volkswagen and Comerica have joined other major companies that either suspended operations or announced such due to Michigans "poor Business climate" (read high taxes).
A poll taken this week show that when given a choice, 70% of Michiganders prefer cuts in state spending over increases in taxes.
Our pig-headed govenor wants to inflict all this on the state with the nations highest unemployment and that seen some of the worst of the housing bubble collapse.
If Dingell wrote and introduced this bill just to see it fail, it only highlights the utter contempt our leaders have for us.
I am totally 100% against the feeding, by means of more taxes, the gluttinous monster our government has become.
Especially since NOT ONE argument here has conclusively shown raising fuel taxes will cut consumption.
Raising taxes is for raising revenue, naught else.
The only discussion worth having in regards to reducing consumption has to center on conservation.
Only when our leaders acknowledge this will you know them to be serious and worthy of your vote.

No need to tax anything, unless we plan to use 100% of the money to fund a massive Manhattan type project to get us off of fossil fuels (highly recommended but getting kinda late at this point - need to get on that).

The problem should take care of itself. As prices start to skyrocket (gas is still cheap right now), alternative energy becomes more attractive, providing market growth and innovation - solar, wind, nuclear, biofuels, energy storage. Who knows what else? See the latest issue of Wired.

My only concern is that these folks seem hell bent on finding ways to keep all the cars running. Maybe someone will, which keeps our way of live going, but kinda sucks because this country is becoming one giant ugly parking lot. Well, sucks for me anyway since I like to ride my bike places.

And I just read in the WSJ that the number of people riding bikes has been declining for years.

The proposal looks very consensual to me, there’s a bit of everything to please everyone. As some kind of socialist, or worse (!) I should like it, as it is quite sharply re-distributive to the poor. (I only read the summary posted here.)

But I don’t. There’s not much point in taxing gas and then giving ‘energy’ subsidies to the poor. - That’s the job of income tax in general, and ‘energy’ subsidies should not be given. Or taxing carbon and then spending the money on roads. - That’s the role of a general energy policy. Or returning jet-fuel tax to airports. - That just leads to fiddles and creative accounting practices, “they” get the money back. Housing and mortgages is another matter altogether.

I’m with engineer poet, tax *all* fuels. The money goes into the Gvmt. pot and is used according to its general rules / principles, eg. so much for Medicare, free lunches for school children, whatever.

Petroleo argues that the proposal is 'European’ in flavor. But it isn’t really - now this is a generalization from slimmish knowledge, and countries do vary - but on the whole the EU taxes on gas (etc.) are used to keep the transport/energy infrastructure going. Ie. the motorist pays for roads, street lighting, and pipelines as well. (User-payer philosophy.) Or it goes into the general pot, is not traceable. Affecting this income to social works (the health of the elderly poor for ex.) ..well I can’t think of an example. Maybe someone will contradict me. I haven’t examined this in any detail, that might be interesting to do.

dtbks makes the point that a flat carbon tax is utterly immoral, and that it is the poor who suffer the most from high energy prices. I agree, and within the proposal one should be very wary of that aspect. But it all depends on the rest of the tax structure. Steeply progressive income tax for the rich (which is not a US bent, to say the least, therefore these odd piece meal proposals), quality health care for the poor, etc. would mean it is not an issue.

Other considerations above question ‘flat tax’ on the grounds, interpreting a little here, that it is best to tax *excessive* use - the rich will stay rich and consume and that is one thing that to be curbed. That is an important point, but very hard to discuss without specific numbers, and once again, outside of general tax structures.

I’m all for flat taxes because of their clarity and the implied equality, the idea that general principles might be seen as ‘good’. They are also cheaper and easier to apply, leave less wiggle room for cheaters, and that does count. The ethics and fairness issues kick in - elsewhere.

Lastly, it is simpler, and psychologically more pertinent, and thus more effective, to tax consumption or use (eg. gas/petrol, propane, electricity, parking space, SUVs, swimming pools) rather than the effects of consumption (eg. carbon emissions, pollution, garbage?, litter? waste of water?) But that is a whole other can of worms, as raises the question of individuals vs. businesses.

If I could trade my old gas guzzler for a hybrid getting double the mileage then the net fuel cost to me is zero or even less. The trouble is no one will give me $30,000+ for a 1990 Plymouth Voyager. Poor folks like me are stuck with these old guzzlers because we can't afford the new high mileage cars. $180 billion would buy 6 million high mileage new cars that could be built profitably by the Big 3 if they are assured that many sales of identical vehicles.