Tax Policy Symposium Planned

• Reducing CO2 emissions to 1990 levels by 2010 will significantly worsen the distribution of income in the United States and slow economic growth.
  
  
• Near-term emission reductions by Annex I countries alone will have little or no impact on global emissions due to sharply higher emissions from developing nations.
  
  
• Flexibility in terms of where and when emission reductions take place can reduce costs by as much as 85 percent.
  
  
• Technological developments in energy production over the next 30-40 years may make it possible to reduce global emissions at relatively low cost.

The forum, "Climate Change Policy, Risk Prioritization, and U.S. Economic Growth," featured new work by noted researchers Gary W. Yohe of Wesleyan University, Jae Edmonds, James Dooley, and Marshall Wise of Pacific Northwest National Laboratory, and Thomas D. Hopkins of Rochester Institute of Technology.

Keynote Addresses

The Honorable John D. Dingell (D-MI), ranking Democratic member of the House Commerce Committee, and the Honorable Craig Thomas (R-WY), a leading member of the Senate Foreign Relations Committee, were keynote speakers for the Center's forum.

Opening the forum at the breakfast session, Congressman Dingell expressed his concerns with the Administration's current approach to climate change policy, and specifically its statements on this issue at the recent United Nations conference in Geneva. The Michigan congressman stressed that there are doubts about the science of climate change. "But," he added, "leaving aside the science for a moment, if you accept the premise that global warming is a problem, there is only one way to solve it: everybody has to make a commitment." Mr. Dingell also said that it will do no good for the United States to agree to limit or reduce greenhouse gas emissions if the developing nations&shyp;&shyp;especially China, Brazil, India, and Indonesia-are let off the hook. He noted, "That kind of agreement could in fact award the developing countries a tremendous competitive advantage and thus do the U.S. economy great harm."

Congressman Dingell added that a number of serious questions remain unresolved and time is running out. "We are only a bit more than a year away from the deadline for concluding an agreement. I detect a great many opportunities for mischief in these next few months," he said, suggesting that the business community should remain watchful and involved in the process.

In his remarks at the luncheon session, Senator Thomas observed that in his view, "It is too early to enter into new agreements on climate change because we do not have good science to back up the agreements and because we do not know what impact the agreements might have." He added that it is not fair to penalize the United States relative to other countries and stressed that the Administration should let the public know what its policy goals are in regard to climate change. He also noted that there will be a substantial amount of debate on the issue in the next Congress.

Climate Change Policies, the Distribution of Income, and U.S. Living Standards

Dr. Gary W. Yohe, Professor of Economics, Wesleyan University, reviewed estimates of the economic consequences of policies designed to significantly restrict near-term carbon emissions. Dr. Yohe stated that reducing CO2 emissions to 1990 levels by 2010 would slow the growth of GDP by 1 percent annually, reduce real wages by 5 to 10 percent per year, and worsen the distribution of income in the United States. A significant near-term reduction in carbon emissions could "feel like" living through the oil price shocks of the 1970s and early 1980s, according to the study.

Respondents on the panel were Dr. W. David Montgomery, Vice President, Charles River Associates; Dr. Raymond Prince, Senior Economist, Council of Economic Advisers; and Dr. Richard Schmalensee, Professor of Economics and Management, Massachusetts Institute of Technology.

Atmospheric Stabilization and the Role of Energy Technology

Dr. Jae Edmonds, Technical Leader of Economic Programs, Pacific Northwest National Laboratory (PNNL), presented the results of a study he and his colleagues at PNNL had undertaken of the costs of carbon emission mitigation. Dr. Edmonds observed that the costs of stabilizing the atmosphere depend on the timing with which emissions mitigation occurs, the flexibility available to participating nations in mitigating emissions, and the available technologies. Stabilizing the atmosphere with the present suite of technologies (1990 vintage) would cost between one and three percent of present discounted GDP, even with the most efficient implementation over space and time, according to Dr. Edmonds' estimates.

He also noted that the development of advanced non-carbon energy technologies holds the promise of reducing the costs of atmospheric stabilization. While advanced technology does offer promise, its development is uncertain and the costs of reaching the technology levels assumed in Dr. Edmonds' study could be quite large.

Commenting on Dr. Edmonds' study were Dr. Howard K. Gruenspecht, Director of Economic, Electricity and Natural Gas Analysis, U.S. Department of Energy; Mr. Kenneth R. Richards, Professor of Economics, University of Indiana; and Professor Thomas C. Schelling, Distinguished University Professor, University of Maryland.

Risk Prioritization: Moving the Debate Forward

Dr. Thomas D. Hopkins, Professor of Economics, Rochester Institute of Technology, presented a paper suggesting that the regulatory structure could be substantially improved if it incorporated better-balanced scrutiny. He stressed that the simple logic of benefit-cost analysis, if judiciously applied, offers potent guidance that need not be tainted by partisanship or hidden agendas. Through its use, it should be possible to identify improvements in the operation of our economy, as well as gains in risk reduction that changes in our regulatory structure could yield.

Dr. Hopkins noted that numerous studies indicate that regulatory policy has slowed U.S. economic growth and that reductions in regulatory costs stemming from better prioritization have the potential to improve both GDP and living standards. He cited one study that indicates $100 billion could be saved just by deleting those regulations whose costs exceed their benefits. He concluded that regulation certainly deserves as much attention as tax and government spending issues on economic grounds alone.

Dr. Robert W. Hahn, Resident Scholar, American Enterprise Institute, and Dr. Peter W. Preuss, Director, National Center for Environmental Research and Quality Assurance, U.S. Environmental Protection Agency, were the respondents on the panel.

The edited papers, comments, and keynote speeches presented at the forum will be published in book form in January, 1997. To reserve a copy, please contact the ACCF Center for Policy Research, 1750 K Street, N.W., Suite 400, Washington, D.C. 20006-2300.

Congressman Rangel Links Taxes and Jobs

Congressman Charles Rangel (D-NY), who was tapped by retiring Congressman Sam Gibbons (D-FL) to succeed him as the ranking Democratic member of the House Ways and Means Committee, addressed the ACCF's Capital Formation Forum on September 26.

"When we talk about tax measures to promote saving and investment, you and I know that no one provision-like capital gains tax reductions-can pass alone. We ought to be talking about a multifaceted tax package that will benefit the country," Congressman Rangel told ACCF supporters. "No one likes to pay taxes. We need to have a tax system that repairs the confidence people should have in their country."

Stressing that the main problem in his congressional district is the lack of jobs and opportunity, the New York congressman observed that, in the past, immigrants came to the United States for jobs. While those jobs may have been lowly, they gave people the dignity of working and the hope that their children would do better. Today, the United States is losing low-tech jobs though we are gaining high-tech jobs. This means that people with limited skills have no hope for themselves or their children, he explained.

"I tell business leaders that it is not fair for them to be paying high taxes while the school system turns out people who lack even the basic skills they need to do low-tech jobs. Business must get involved in seeing to it that we have better schools and better teachers," Congressman Rangel cautioned.

"I am your best friend," he said, "because I am working with business to put together a bill that would let business be a partner in modernizing our schools to prepare the workers of tomorrow. If we do not take steps to improve our education system, we are going to continue down the path we are on now where one out of every three inner-city kids ends up in jail, rather than working and productive."

Because increased trade means more jobs for American workers, Congressman Rangel noted that he believes international tax issues are more important today than ever. "I don't mind seeing U.S. companies have a tax advantage over their competitors," he said, stressing that the United States must expand its trade with countries all over the world.

Elected to Congress in 1970 when he defeated Adam Clayton Powell, the only other congressman to represent Harlem, Charles Rangel is the senior member of the New York congressional delegation.

Tax Policy Symposium Planned

The ACCF Center for Policy Research will sponsor a blue-ribbon public policy symposium, Tax Policy for the 21st Century, on Thursday, December 5, 1996. The conference will be held at the National Press Club, Washington, D.C., from 8 a.m. until 4 p.m. Topics will include the following:

• Fundamental Tax Reform: Getting Back to Basics;
  
  
• What Causes Economic Growth?;
  
  
• Social Security Privatization, Saving Incentives, and U.S. Economic Growth; and
  
  
• The Private Pension System: Is It Ready for the Baby Boomers?

Keynote speakers for the symposium are the Honorable Charles W. Stenholm (D-TX), founder of the Conservative Democratic Forum, who will address the breakfast session, and the Honorable Judd Gregg (R-NH), a prominent advocate of Social Security and private pension reform, who will speak at the luncheon.

Mark your calendar for December 5 and plan to attend this conference on key issues on the tax policy agendas of the next Administration and Congress. For more information, contact the ACCF Center for Policy Research. Telephone: 202/293-5811; fax: 202/785-8165; e-mail: info@accf.org.