The House Republicans sitting on the Democrats’ jurisdiction-free Select Committee for Energy Independence and Global Warming have written to the House Judiciary Committee, seeking an assessment as to whether a carbon dioxide cap-and-trade scheme should follow constitutional requirements applicable to revenue measures. That is: can we all just admit that cap-and-trade is a tax?

The committee’s ranking Republican, Rep. James Sensenbrenner (R-WI,) recently said “I call this idea ‘cap-and-tax’ because it will take money out of the private sector and transfer it to the government,” echoing many things said by the Congressional Budget Office. First, as to the tax-like nature of cap-and-trade, there is this fairly plain assertion in the CBO’s report “An Evaluation of Cap and Trade Programs for Reducing US GHG Emissions” on that issue: “the economic impacts of cap-and-trade programs would be similar to those of a carbon tax: both would raise the cost of using carbon-based fossil fuels, lead to higher energy prices and impose costs on users and some suppliers of energy.”

That is it quacks, swims and -- everything else -- just like a duck, a rather economically harmful duck. Call it a canard a la recession.

The only way that the revenues go to the state is if the emission permits, or ration coupons, are sold, as opposed to given away. In fact, the CBO has serially noted that a cap-and-trade scheme that sells the ration coupons – that action which our models, the Europeans, have not had the oignions to do, and which Congress is equally unlikely to accomplish in any meaningful way, bluster notwithstanding – is a revenue measure.

Selling any of them, meaningful or not, does indeed turn the thing into a de jure tax, in addition to being a de facto one however you slice it.

For example, this connection was repeatedly made by the CBO’s director, Peter Orzag, during his November 2007 testimony before the House Budget Committee.

Of course, the last thing that those who seek a carbon dioxide cap-and-trade scheme want to do is offer the less-harmful direct tax on emissions, given that the entire point of cap-and-trade is to avoid the transparency of such a measure. Cap-and-trade isn’t the preferred option for reasons of it being “the most efficient way to reduce emissions” as is commonly misstated; that is inarguably done through a tax. Cap-and-trade isn’t their Plan A even because it’s the way for such profiles in courage to ensure the ration coupons are allocated most efficiently: they plan to allocate them, to particular emitters in particular industries, which completely defeats the express purpose of allowing the market to find the cheapest places to reduce emissions!

If it weren’t for Senate Environment Committee Chair Barbara Boxer and House Speaker Nancy Pelosi both promiscuously spending – rhetorically, in advance – revenues putatively raised from selling the ration coupons, we should think that cap-n-trade enthusiasts would be happy for this one additional reason to just give the things away to certain corporate constituencies.

Orszag hints at this in his report, see footnote 5:

“Some analysts also suggest that a cap-and-trade program could be more politically acceptable than a tax because distributing the allowances for free could provide a method of directly compensating producers in the most affected industries. See Robert N. Stavins, A U.S. Cap-and-Trade System to Address Global Climate Change (Washington, D.C.: Brookings Institution, October 2007).”

Orszag went on to discuss ways the government could use the revenue raised by either cap-and-trade or a tax, helpfully answering the question for the Judiciary Committee. The impact on the consumer is the same whether the ration coupons are handed out, sold, or simply turned into a tax. It’s just that in the first instance the revenue goes not to the state but to favored industry participants. Orszag is merely describing here those “rents” which are precisely the reason that some in industry insist that man-made global warming is an enormous threat so long as they get free ration coupons to sell or build into the ratepayers’ tab, a la Europe (recalling for us that “windfall profit” doesn’t really mean “a profit made by an oil company”).

Obviously these trifles do complicate matters for members of Congress eager to waive around a piece of paper representing Greenpeace in Our Time, declaring “I did something.” Recall how one of their chief supporters, Duke Energy, breathlessly insists that man-made global warming is a terrible and imminent threat to us all. Then, when the prospect of either selling the ration coupons or taxing emissions is instead floated, they find sobriety, cautioning how this really is an issue on which we don’t want to act hastily or do anything rash.

See how easy it is to reduce the “threat” of global warming? Just take away the goodies for industry.

Making duck sausage can be messy but, thanks in part to the House Republicans for formally raising this, you really don’t want to look away. Instead, even for those among the increasingly timid regulated community who are able to set aside their anxieties, it should be fun to watch.

Christopher C. Horner is a senior fellow at the Competitive Enterprise Institute. His latest book is Red Hot Lies: How Global Warming Alarmists Use Threats, Fraud, and Deception to Keep You Misinformed.