Gary Smith, PowerSouth CEO


A Bad Conservative Approach

I get a number of comments about my articles. Some are good. Some are not so good and even personally demeaning.

One response said, “You need to stop printing Gary Smith’s opinion because it’s idiotic and above all untrue! He is a coal promoter and denies global warming exists. Therefore he is stupid and a liar! Stop spreading YOUR lies Mr. Smith as Alabamians deserve better than you!” Another response said. “You are obviously not a nutritionist because you don’t know that cow milk provides no nutritional value for babies. And, your labeling people as liberals creates a political divide and is moronic.”

I criticize plans imposed or proposed by Democrats and liberals. However, this month, I will criticize a conservative proposal brought by two Republicans – George Shultz, Treasury Secretary under President Richard Nixon and Secretary of State under President Ronald Reagan, and James Baker, Treasury Secretary under Ronald Reagan and Secretary of State under President George H. W. Bush.

Secretaries Schultz and Baker recently proposed a carbon tax and rebate scheme that they say, “…does not rely on heavy-handed, growth inhibiting government regulation, but instead is based on a sound economic analysis that embodies the conservative principles of free markets and limited government.”

The plan contains four pillars: (1) a gradually increasing carbon tax; (2) a rebate of the carbon tax proceeds to the American people through a dividend; (3) a border carbon adjustment to protect American competitiveness; and (4) rollback of environmental regulation when the system is in place.

They say their carbon tax “… is a cost-effective way to reduce carbon emissions and unlike the current regulatory approach would free companies to find the most efficient way to reduce their carbon footprint. A gradually rising tax would send a powerful market signal to businesses that want certainty when planning for the future.”

They also state, “The carbon dividend rebate would return the tax proceeds to the American people on a quarterly basis. The revenue neutral tax would benefit working families rather than bloat government spending. A $40-per-ton carbon tax would provide a family of four with roughly $2,000 per year in carbon dividends in the first year and gradually increase as the carbon tax increased.”

Finally, they say, “…our plan would strengthen the economy, help working class Americans, and promote national security, all the while reducing regulations and shrinking the size of government.”

The plan is great for politicians. It probably won’t be so great for you.

PowerSouth, a small electric utility, emits approximately 8 million tons of carbon dioxide annually. A $40-per-ton tax on carbon dioxide would increase our expenses by $320 million – or about double the cost of wholesale power to our members. That increase, in turn, would mean an increase in your retail electric bill by about one-third. If you are currently paying $180 per month, you would pay about $240 per month with the carbon tax. Of course, under the plan you will supposedly get your money back at the end of the quarter, and you must adjust  your spending patterns for three months.

Secretaries Schultz and Baker say that the plan reduces government bloat, reduces regulations and reduces the size of government. Who will decide what tax gets collected, who will collect the taxes, who will account of the taxes, who will hold the taxes, who will decide the size of the rebates, who will distribute the rebates and who will make sure everything about the plan is fair?

Practically, many new government employees would have to be added and at least one agency and probably more (after all, it is the government) would have to be created to administer the plan. Those people and processes are not free, and your money collected by the tax would go to pay them instead of being returned to you.

Also, taxes, once imposed, never go away. However, government proceeds, or in this case tax rebates, do go away. How long will it be before politicians declare the carbon tax proceeds are needed for another critically important government purpose and the rebates are diminished or terminated?

Secretaries Schultz and Baker haven’t proposed a conservative plan to reduce carbon dioxide emissions, solve global warming and reduce government bloat. However, their plan is another typical political solution to increasing taxes for the political class that will likely result in inflation of consumer goods, increase the size of government and hurt working class Americans.

Conservatives can have bad ideas, too. I hope you have a good month.

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