White House Signals Pessimism on Cap and Trade

Numbers abound in the fiscal-year 2011 budget released by the White House this morning. The full package runs just over $3.8 trillion for next year, which includes a 6 percent increase in education spending, an additional $160 billion for the wars in Iraq and Afghanistan, and the $300 in tax cuts over the next decade that President Obama foreshadowed in his State of the Union address last week. But also revealing is what’s not included in the budget. Curiously absent, as noticed by enviros, is the lack of revenue expected from a cap-and-trade program to cut greenhouse-gas emissions. Under the basic framework of the program, companies would either be charged a tax for emitting beyond certain levels, or would participate in a trading program that penalizes polluters by rewarding those who comply with federal emissions levels.

Under some estimates last year, such a program would bring in nearly $650 billion while encouraging the nation’s biggest polluters to slowly ramp down their emissions. But no such number is included in Obama’s budget—a signal of wariness in the White House that legislation is unlikely to pass this year through the Senate and land on the president’s desk. Instead, only a vague call that Congress set up a “comprehensive market-based climate change policy.” The House already passed it’s own cap-and-trade bill last summer, although it leans further to the left than what could reasonably pass the Senate, and thus, what Obama would sign.

Speaking to Reuters this morning, an administration official denied that Obama has given up hope on a climate bill and said that senior staff are still working vigorously to advance the measure in the Senate. But the official did allude to the growing difficulty of meeting Obama’s requirement that any bill not add to the deficit. "We assume neither a specific spending and revenue level─but stand by the same principle that the policy as a whole must be deficit-neutral," the official told Reuters. Maintaining such a balance has been the omnipresent challenge for the administration as it tries to limit profligate spending while addressing enormous structural issues like health care and climate change.

But one other reason for withholding cap-and-trade revenue is an obvious one: it’s the work of the Congress, not the president. Including any numbers, even estimates, risks getting too far ahead of what lawmakers may end up deciding and may come across as far too liberal or conservative, to the point of gross inaccuracy, once the negotiating is complete. Still, adamant environmentalists have little patience for such a rationale, alleging that Obama’s light touch puts little pressure on Congress to move in the first place. And plus, they argue, if Obama was really serious, he could bypass Congress in the short term and set sweeping emissions cuts using his executive authority under the Clean Air Act. Such action has been threatened in order to urge companies to support congressional legislation that would likely be more accommodating.

Word of low expectations for cap and trade has the environmental community strategizing how to show disappointment but not anger that efforts to address climate change have stalled. In a statement sent this afternoon to reporters, League of Conservation Voters’ president Gene Karpinski complimented Obama for investments in clean energy technology and ending tax cuts for Big Oil. But when it came to cap and trade, the frustration was focused and strategic, so as not to alienate a president still on their side. “We urge the Senate to turn the president’s vision for a clean energy future into a reality by swiftly passing comprehensive clean energy and climate legislation that he called for in his State of the Union address.” In other words, get the ball rolling.