The Center's work on 'Climate Change' Issues

The Center analyzes the potential effects of climate change policies on low- and moderate-income households and the federal budget. It also designs measures to ensure that the increased energy prices resulting from climate change legislation do not drive more households into poverty or make poor households poorer.

In Case You Missed It…

June 15, 2012 at 4:43 pm

This week on Off the Charts, we focused on the federal budget, state budgets, income inequality, health care, and food assistance.

  • On the federal budget, Richard Kogan explained that recent Bipartisan Policy Center estimates of the automatic cuts (“sequestration”) in defense funding scheduled for next January are based on questionable assumptions and do not present a realistic look at sequestration.  Hannah Shaw noted that a group of Northeastern states have raised more than $1 billion through auctions of carbon dioxide permits — a system the federal government should also consider to generate additional revenue and limit carbon dioxide pollution.
  • On state budgets, Michael Leachman commended North Dakota voters for voting down a constitutional ban on property taxes, which would have eliminated a key, stable revenue source, and Michael Mazerov emphasized the need for Congress to set rules that would lessen the damage to state and local treasuries and economies being wreaked by the Supreme Court’s Quill Corporation v. North Dakota decision (in light of the decision’s 20th anniversary).
  • On income inequality, Chad Stone highlighted recent Federal Reserve data showing that wealth is even more concentrated than income, with 75 percent of wealth held by the top 10 percent of families.
  • On health care, Edwin Park warned that a claim about lower-than-expected spending by the Medicare Part D drug benefit in a recent Heritage Foundation blog post relies on faulty calculations, and Shannon Spillane outlined three important opportunities that will be lost if the Supreme Court fails to uphold health reform. Shelby Gonzales also discussed the Center’s new toolkit, which provides states with guidance for approaching and implementing the eligibility changes in health reform and resulting changes in how families access SNAP and other programs.
  • On food assistance, Stacy Dean highlighted a Center video on the role of SNAP as the nation’s first line of defense against hunger — an important reminder as the Senate debates the farm bill, which authorizes the program. Zoë Neuberger pointed to new data from the Center and the Food Research and Action Center showing that the “community eligibility” provision in the 2010 child nutrition reauthorization law is helping to expand the reach of the school meals program. Zoë also stressed that Congress should resist pressure from the potato industry to force the Agriculture Department to add white potatoes to the limited list of foods it has approved for the Special Supplemental Nutrition Program for Women, Infants, and Children, commonly known as WIC.

Pricing Carbon Pollution Pays Off in Northeast

June 13, 2012 at 1:44 pm

Global warming may be off Congress’ radar screen for now, but a group of northeastern states have operated coordinated cap and trade programs to “put a price” on carbon pollution since 2008 through the Regional Greenhouse Gas Initiative (RGGI).  RGGI raised over $40 million last week in its sixteenth auction of permits to emit carbon dioxide; these auctions have raised more than $1 billion (see table).

RGGI is a useful reminder that we can raise revenue while achieving other important policy goals.

Each of the nine states participating in RGGI has set a cap on the pollution that electric power plants may release.  Electricity producers must hold a permit for each ton of carbon dioxide pollution they emit.  States distribute most of the permits through quarterly auctions.

States have used this revenue for a variety of purposes, including investing in energy efficiency and renewable energy, helping poor families pay their energy bills, and shrinking state budget shortfalls.

Furthermore, RGGI estimates that the coordinated programs will cut carbon dioxide pollution in the region by 10 percent by 2018.

At the federal level, too, raising revenues by limiting carbon dioxide pollution could help address two of our most pressing long-term concerns.  As we have discussed, federal policymakers should take a balanced approach to reducing long-term deficits that includes both spending cuts and revenue increases.  They should consider a carbon pollution tax or some other mechanism that puts a price on carbon pollution as a potential revenue source in this package.

Putting a Price on Carbon Can Be a Budget Policy/Energy Policy “Two-Fer”

March 29, 2012 at 3:02 pm

As my CBPP colleagues have been busy documenting, House Budget Committee Chairman Paul Ryan’s budget does more to sharpen partisan differences than to move us toward a credible, sustainable, and bipartisan deficit-reduction plan.   My latest post for US News & World Report discusses something that would be a step in the right direction:

Policymakers who are serious about addressing the nation’s long-term fiscal problems should look closely at the merits of “putting a price on carbon.” A carbon tax or similar policy is a “two-fer” that would give businesses and households a better price signal to guide their decisions about energy use, and that would raise revenue to reduce the budget deficit.

As our backgrounder on policies to reduce greenhouse gas emissions points out, market-based approaches to controlling pollution from fossil-based energy create incentives for businesses and households to conserve energy, improve energy efficiency, and adopt clean-energy technologies — without prescribing the precise actions they should take. It’s the solution that most economists prefer, including advisers to prominent members of both parties.

A carbon tax or other market-based approach to putting a price on carbon can generate revenue to reduce long-term budget deficits.  By itself, however, it is a regressive policy, since low-income households spend a larger share of their income on energy and energy-related products than better-off households.  To protect the truly disadvantaged — a key principle that the Bowles-Simpson deficit commission set forth — any comprehensive deficit-reduction package that puts a price on carbon should include appropriate protections for low-income consumers.

Happy Holidays from the Center

December 21, 2011 at 5:48 pm

Wishing you and your loved ones a happy holiday season. Off the Charts is going on vacation, but we’ll resume posting regularly and approving comments as soon as we return in the new year.





States Cutting Jobs, Hurting Economic Recovery

February 7, 2011 at 3:28 pm

Cuts in services at the state and local level continue to act as a drag on economic growth, and will continue to do so in the coming year – unless there is a significant course correction by policymakers.

Friday’s jobs report from the Bureau of Labor Statistic provides the latest evidence.  BLS estimates that states, cities, counties, school districts, and other units of government cut another 12,000 jobs in December, bringing to 426,000 the number of jobs lost since August 2008.    Here’s the breakdown:

  • Local school districts have cut 154,000 education jobs since August 2008.
  • Cities, counties, and other local governments have cut 202,000 jobs.
  • State governments have cut 69,000 jobs.

The previous week, the Commerce Department reported that cuts in the services that states and localities provide were responsible for slicing one-tenth of a percentage point off GDP growth in the October-December period.  That may not sound like a lot.  But as the recovery struggles to pick up steam, the last thing it needs is a push in the wrong direction.

This bad situation may get even worse.  Economist Mark Zandi told a Congressional committee last Thursday that he expects a new round of spending cuts at the state and local level to shave another 0.4 percentage points off GDP growth over the course of 2011.  Goldman-Sachs similarly predicts a similar impact of 0.5 percentage points.

Those predictions may actually be optimistic.  Our latest survey found that states must find $125 billion worth of spending cuts or other budget-balancing measures for the 2012 fiscal year, which begins July 1 in most states.   If states pursue a cuts-only approach to closing these gaps, as opposed to tapping reserves and raising additional revenues, the loss of GDP could approach a full percentage point and slow job creation by as much as 850,000 public- and private-sector jobs.

Unfortunately, it looks like many of the nation’s governors are taking just that kind of cuts-only approach to resolving their budget gaps.   State legislators should reject this course and take a more balanced approach.