1. We need a climate change bill. Waxman-Markey as passed by the House is pretty lame; as passed by the Senate it will be much worse. Maybe it could be rescued in Conference, but maybe not, and the Conference Report needs 60 votes to beat a Senate filibuster.
2. We need a health care bill, and — for no good substantive reason — it needs to be “paid for.” (No one bothered to “pay for” the Bush tax cuts or the War in Iraq, and for that matter no one has to “pay for” the uncontrolled escalation in the budgetary costs of Medicare, Medicaid, and Federal employee [and contractor] health coverage that will result if health care reform doesn’t happen.)
3. Finding a combination of new revenues and cost-savings that will make the bill “budget-neutral” in the eyes of CBO and that will also pass the Senate may well result in an inadequate set of health care reforms.
4. But health care can be done under Budget Reconciliation, which precludes a filibuster. The Senate Dems have already agreed not to do Waxman-Markey in that way.
5. A greenhouse gas tax is just as good as a well-designed cap and trade, and much better than the mess likely to emerge out of Waxman-Markey.
6. A greenhouse gas tax can raise quite a bit of revenue.
7. That revenue could be used to help “pay” for health care reform. And a revenue measure is clearly relevant to Budget Reconciliation.
8. So, having scared all the rich folks by threatening an income tax surcharge to pay for health care reform, the Conference that handles Budget Reconciliation can pull a rabbit out of a hat by substituting a greenhouse gas tax for part of that surcharge and using the surplus to craft a better health care plan.
I have no estimate of how likely this is to actually happen, but I don’t think it’s a remote outcome. I very much doubt that Harry Reid is as much of a softie as his critics make him out to be. When you have a solid majority and a way to get around a filibuster, there’s no need to bluster.
Footnote Doubling Federal alcohol taxes would pull in about $90 billion over 10 years, which is 9% of the total budget offset required. It would also directly reduce health care costs, and reduce the homicide rate by something like 6%.