Reid Between the Lines

Reid backs away from funding health care via cap-and-trade 1

Remember how Senate Majority Leader Harry Reid (D-Nev.) last week opened the door to the possibility of using cap-and-trade revenues to fund a new health-care system? He’s now sounding less enthused about the idea, saying he has “no big plot” to pay for health care with cap-and-trade.

Meanwhile, it’s become clear that Congress will have to pass climate legislation separately from the budget—and that means 60 votes will be needed in the Senate.

Both the House and Senate approved budget resolutions on Thursday, versions of President Obama’s budget plan. But while Obama included a cap-and-trade plan in his budget, the House and Senate resolutions don’t (and the Senate’s in fact specifically bars it). 

Still, enviros are cheering the fact that Congress’ budget resolutions contain at least the basic framework to allow for climate and energy legislation later this year, including a reserve fund for energy projects.

“With investments that will help generate millions of jobs and protect our land, air, and water, this is one of the most environmentally responsible and economically stimulating budgets in American history,” said Gene Karpinski, president of the League of Conservation Voters. “It builds an irresistible momentum towards a new era of clean energy with more jobs, greater security, and a cleaner planet.”

Kate Sheppard is Grist’s political reporter.

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  1. Aldyen Posted 4:11 pm
    05 Apr 2009

    Good for Reid for backing off, if he has. No government can build a sustainable health care system off the back of CO2 allowance revenues, unless that same government elects to price CO2 allowances sub-optimally to secure the revenue stream required to maintain health services and oversight. I live in a Canadian province that operated a pollution discharge fee system for over 2 decades. After the first few years, the provincial government earmarked pollution discharge fee revenues to finance environmental protection enforcement. Enforcement costs, quite reasonably, go up a little every year. That meant that if pollutant discharges fell, government had to reset discharge rates to make their revenue requirement. It did not take long for industry to figure out that there was no long term operating cost saving in cutting pollution discharges when the key determinant of pollution discharge fees was government's revenue requirement. After a few years of real experience with the system, no corporation--acting prudently--ever again built a discharge fee-related operating cost saving into the cost benefit analysis they did to decide which plant investments to proceed with and which ones to postpone. It is bad enough when the pollution/emission fee system revenues are required to finance government's environmental protection/enforcement capacity. But health care? Bad idea.

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