National Lampoon's Global Warming Debate

During the chaotic climax of "National Lampoon's Animal House," a subtitle informs viewers that Bluto Blutarsky, the manic ne'er do well played by the late John Belushi, will be elected a U.S. senator later in life.

That's what came to mind in reviewing last week's chaotic Senate debate on America's Climate Security Act. It wasn't pretty. Neither side's leaders acquitted themselves well as exemplars of the greatest deliberative body in the world.

Still, for all its awkwardness and unpleasant moments, the debate was a necessary opening skirmish for the great debate next year, when the 111th Congress and the next president try to come to terms on legislation establishing a national climate policy. However the legislation turns out, it will shape the U.S. economy and way of life for decades to come. Getting it right will require thoughtful give and take that cannot be rushed or unduly politicized under the pressures of narrow agendas.

From that standpoint, last week's sloppy debate was useful. Amidst the partisan sniping, the faint outlines of an eventual deal began emerging. The central element of the deal will be money, which as the duct tape of politics can fasten together a coalition delivering 60 votes in the Senate and a majority in the House. The more bipartisan the coalition, the better for ensuring that the bill has broad support, regardless of whether the 44th president is named McCain or Obama.

Money that will be raised from sale of greenhouse gas emissions allowances will total up to be a tidy sum. In Barbara Boxer's version of America's Climate Security Act, the total was $5 trillion between now and 2050. How that cash pile will be divided up is likely to be a leading point of contention next year, as it was last week.

In very general terms, Democrats will push for giving government most of the say in how the money is spent. Likely spending choices include energy research and development; biofuel, renewable energy, and carbon sequestration subsidies; energy efficiency retrofits; and transitional assistance, including worker retraining and payouts to energy-intensive industries.

In very general terms, Republicans will push for returning allowance revenues to taxpayers to spend as they see fit, as compensation for higher energy prices.

Both sides offer arguments that have merit. A cap-and-trade policy will be indispensable, but not sufficient by itself, for pushing low- and zero-carbon technologies forward. A number of market barriers make it difficult for the private sector to shoulder the entire burden of developing new technologies. There is a proper role for the government in taking on the risks of researching, demonstrating, and deploying over-the-horizon technologies, such as large-scale carbon sequestration. A substantial portion of allowance revenues should be dedicated to technology R&D that the private sector is not in a position to pursue.

But there is also a strong case for returning a substantial portion of allowance revenues to taxpayers, perhaps in the form of payroll tax reductions or other tax cuts. Until carbon-free technologies can supplant fossil fuels, coal and oil will be with us for the time being. Putting a price on carbon, the essential first step of reducing carbon emissions, means that coal-fired electricity and petroleum-based fuels will cost more. How much more depends on whose economic models are closer to the mark. All economic forecasts are wrong, but some are less wrong than others.

If the next Congress and president can keep partisan posturing to a minimum, the two branches of government could settle on a grand bargain that serves up slices of the allowances pie to the taxpayers and to R&D, plus transitional assistance. The electeds will need to work fast. No sooner will the oaths of office be taken and the opening ceremonies concluded, then the 2010 and 2012 campaigns will start simmering, bringing with them Blutarsky politics at its worst.