‘I have listened to you, I have learned from you, and you’ve made me a better president.” So said President Barack Obama after winning re-election. But on the subject of energy it isn’t clear what he has learned. If news reports are accurate, the president’s second-term agenda may include pushing for a carbon tax ostensibly to reduce the deficit and address climate change.
Before getting too carried away with the wonders of a carbon tax, Mr. Obama might want to talk to former President Bill Clinton, who attempted a similar gambit almost 20 years ago.
The centerpiece of Mr. Clinton’s first budget was a tax on energy use, as measured in British thermal units, or BTUs. At that time, McGraw-Hill‘s MHP -0.33% Data Resources Incorporated estimated that the so-called BTU tax would raise more than $30 billion in federal revenue annually ($50 billion in today’s dollars). That translated into $500 in additional taxes per family, or $800 today. No segment of the economy would have been exempt from the tax, which the Competitive Enterprise Institute estimated would cost 700,000 American jobs over three years.
The proposal provoked a brutal backlash, to the surprise of no one but the Clinton White House, environmental advocates, and liberal members of Congress such as Henry Waxman (D., Calif.). The vocal anti-BTU coalition included small businesses, the agriculture sector, the building trades, the transportation industry, manufacturers and even social-service organizations that relied on gasoline and heating oil to care for the poor and homeless.
A few months after Mr. Clinton proposed the tax, the administration and Democrats in Congress abandoned the idea. As the great English writer Samuel Johnson observed, there is nothing like a hanging to concentrate the mind. “BTU” became a verb, and from then on no politician wanted to be “BTU-ed.” A year later, in November 1994, voters gave control of the House to Republicans for the first time in decades.
Read more at The Wall Street Journal. By William O’Keefe.
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