Wednesday, July 09, 2008

Orszag on Cap and Trade

In today's Washington Post, CBO director Peter Orszag says that if a cap-and-trade system for carbon is to be maximimally effective, the allowances should be sold rather than handed out, and fluctuations in the price of an allowance over time should be limited. In other words, the cap-and-trade system should be designed to resemble a carbon tax.

Makes sense, but it seems like lawmakers are going through a lot of needless work just to avoid the word "tax."