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In Bill's Big Idea: Save the Climate, Share the Wealth
Barnes said President Obama's "general framework is exactly right: set a cap, auction allowances and give most of the money back to the people." But he believes giving refunds would be better than Obama's proposal, which would extend the $400 tax credit for working people with incomes below a certain amount. Because the price of emission allowances will fluctuate, outlays under Obama's approach could be higher or lower than the amount taken in. Moreover, Barnes said, a means test for carbon dividends would undercut popular support.
"If you give all the money back, you have a credible chance of getting Republican support," he said. "It's not only important for getting 60 votes in 2009, but to the long-term stability of the program."
He doesn't want it to go the way of President Jimmy Carter's solar tax credits. "In a very personal way, I learned the importance of having a broad constituency for directing people away from fossil fuels. The fossil fuels lobby is very powerful."
Barnes said that "when you put a price on something that wasn't priced before, you're creating a whole new money flow. Over the years, it could come to trillions of dollars. So every interest group in America is interested in that. So the idea of giving the money back to the people is unpopular here in Washington, but outside Washington I think it's very popular."
Not everyone agrees. Fred Krupp, head of the Environmental Defense Fund and one of the architects of a detailed cap-and-trade program, said pricing carbon will extract more money from coal-intensive regions than others. "I think you have to have at least a transition period of many years, a decade or so, to give regions of the country the opportunity to move to non-polluting sources," Krupp said.
Philip R. Sharp, president of Resources for the Future and a former member of the House of Representatives, dismissed Barnes's plan as an effort to buy off voters. He said the money should be used to help low-income earners and ease regional disparities.
Van Hollen said he would be happy with Obama's proposal, but that he embraced the Barnes concept as an alternative. "Over time, the caps are going to come down and get tighter," he said. "Therefore, we're going to see an increase in costs. The more we can return those costs directly to the consumer, the better off the consumer will be and the better chance we will have for retaining the support of the American people over the long haul."