An Earth Day, birthday “he said; she said”

Bob Inglis

I was briefly a conservative hero in a sea of liberals last week.  The occasion was an assembly convened by the Rochester People’s Climate Coalition and sponsored by both the Sierra Club and the Rochester Chamber of Commerce.  The guest speaker was Bob Inglis, a former South Carolina Republican Congressman whose awakening to the dangers of climate change got him primaried out of his seat after serving 12 years.

Inglis is evangelizing for a bipartisan bill called the Energy Innovation Carbon Dividends Act (EICDA). It’s a carbon tax that’s positioned as nota tax increase because all the proceeds will be rebated to taxpayers in a monthly check. Acting kind of like a universal basic dividend, it would also be redistributive.  If you’re a rich person who owns a limo, a Ferrari and a Gulfstream, you’ll pay a lot in carbon taxes but get the same amount as a minimum wage worker who takes the bus to work. 

Inglis started by polling the audience and I found myself as only one of three people holding up my hand. We three were right-leaning and believe we should do something about climate change.  And, so I was briefly a hero to the radical lefties in the room. I was thanked and congratulated and should have felt good about it.  But, instead, I found myself, in my pin-striped suit and tie, feeling like a prize pig at the county fair – emphasis on pig.

I was invited to the event by Abigail McHugh-Grifa, the interim director of the coalition.  She and I co-authored a piece in Sunday’s Democrat & Chronicle (D&C), using “he said; she said” style to portray a casual conversation between friends about climate change, the EICDA and the Inglis event. It was intended to be cute and I think it was.  Here’s an excerpt:

He: I’m sorry, Abby. But I’ve never had a good answer to this question: How are you going to pay for that? 

She: Although people won’t like the idea of rising costs, that’s the point of a carbon price, so we shouldn’t tiptoe around that. However, we should also consider that the cost of burning fossil fuels does not reflect their true cost to society in terms of public health and climate impacts. Polluters continue to pollute while taxpayers pick up the bill for disaster relief and increased healthcare costs.

It was not an in-depth debate. The D&C’s 475-word limit leaves scant space to explore one point of view much less two.  But it’s worth noting that there’s some Milton Freidman philosophy embedded in Abby’s response.  In the web series Freidman Fundamentals, he explains libertarian philosophy (1-minute video) and defines the point at which government must intervene as when “a company is imposing a cost on me for which I am not being compensated.”  And, indeed, to the extent that burning fossil fuels emits pollutants that affect my health or to the extent my taxes contribute to the healthcare system, I am not only not being compensated but also paying the socialized cost of damage created by others. 

Still, there are reasons to be skeptical.  A website called ‘New Scientist’ claims there is no link between CO2 increases and global warming.  Another ‘The Conversation’ questions the logic of the standards set by the Paris climate agreement.  But every scientist you talk with will qualify their comments by saying climatology is not their expertise.  Meanwhile, the climatologists on the International Panel on Climate Change say we have reached the “gold standard” of certainty that climate change is man-made, and we must do something about it. 

My background is not science; it’s economics.  So, my concern is focused on what we do, how we do it and what it will do to our economy. Disruption is expensive and the cost must be borne by someone.  In Germany, the push toward alternative energy coupled with a ban on nuclear has led to a 50% increase in energy costs to consumers.  That would be politically infeasible in the U.S. and would undermine the effort before its goals were achieved.

Many people support conversion to nuclear energy as France has done.  The most concise economic argument I’ve seen was made by the Wall Street Journal in a piece titled ‘The Nuclear Option is the Real Green Deal.’  But I worry what happens at scale.  How would we handle the amount of waste water created at 100% nuclear?

Many are concerned about solar at full scale too.  So, I asked a local solar installer how much land would be required to be 100% solar. “One eighteenth of North Dakota,” came the reply without hesitation.  That’s about one half of 1% of the U.S. land mass or slightly more than half what the federal government leases to the oil and gas industry.  He sent me a study to back it up.  

In the end, I come down in favor of the EICDA not because it offers a perfect solution but rather because it doesn’t create a government mandated plan.  It simply disincentivizes burning fossil fuels by raising the cost of doing so, leaving free enterprise to innovate solutions.  

As for Inglis’ presentation… Well, he exhorted our left leaning audience to approach those on the right with language more likely to lead to constructive dialog.  “Innovation not regulation” was his catch-phrase.  That’s a good place to start, in my view.  As for the event itself, it failed to move the needle primarily because Inglis was preaching to the choir.  The better audience would have been made up of politically moderate business leaders, perhaps convened by the Chamber of Commerce rather than the climate coalition.

WHO WILL LEAD?

PS my twins were born on Earth Day in 1973, hence the title of this post.  Happy Birthday, Peter and Dan!

Connecting the Dots on 'Connections'

I was invited to be a guest on Connections, a weekday talk show on WXXI, Rochester's NPR affiliate.  The show is available as a podcast, a link to which is included in this post. This essay was published in the Rochester Beacon.  Click HERE to read the original piece. 

The TV character MacGyver once said, “Desperation tends to make one sort of flexible.” I think of it whenever WXXI radio host Evan Dawson reaches out to me to come on his show, “Connections.” I am reliably conservative, and he likes to present a balanced perspective. But I am a minor figure in Rochester with little expertise in anything. Why else would he reach out to me unless he’s desperate?

John Calia

“Connections” is like an oasis in the desert if you crave intelligent discussion rather than screaming insults. Dawson doesn’t facilitate debate so much as moderate a discussion. He leans to the left politically but is fair-minded. He relies on data to inform opinion; so, I knew I had to be well-armed when he asked me to discuss New York taxes. The state budget had just been approved with some new taxes on the wealthy but without others that were the favorites of so-called progressives. 

I was a guest along with Jeremy Cooney, former chief of staff to Mayor Lovely Warren and recent Democratic candidate for state Senate, and Michael Kink, executive director of the Strong Economy for All Coalition. I predict Cooney will be a successful politician simply because he is so engaging in a face-to-face encounter and pragmatic in his approach to policy matters. Kink, on the other hand, is a liberal firebrand.

The rapid-fire Q&A that characterizes discussion shows doesn’t play to my strengths. Following the show, my thoughts about the experience fell into one of three categories: 1) what I said that felt right, 2) what I could have said better and 3) what I didn’t get a chance to say. 

I arose early on the day of the scheduled broadcast and skipped my trip to the gym so I could do some research. I wanted to broaden the context of the conversation. My supposition is the issue isn’t taxing the wealthy but rather a bloated state budget that undermines the economic success of our state.

Data point number one: Florida has 1.75 million more people than New York but its state budget is only $88 billion (as opposed to New York’s $175.5 billion). I then quoted Paul Wetenhall from his recent article in the Rochester Beacon. A former Xerox executive who moved to Rochester in 1975, Wetenhall is now an economic development professional in Charlotte, N.C. Generally, he described how North Carolina government works with business toward productive ends. More specifically, he laid out the structural challenges that New York must address. For example, the cost to educate a pupil in the Rochester area is about $17,000 while Charlotte manages to do the same with only $11,000. Charlotte must be doing something right. Over the last 40 years, its population has more than doubled while Rochester’s has only increased 10 percent.

The mention of Charlotte got the discussion off-script for a while. Kink waxed poetic about North Carolina’s embrace of philosophies and policies that emulated those of New York when it was indeed the Empire State. If I didn’t know better, I would have thought he is a Rockefeller Republican. Alas, he is not. At least four times, he characterized wealth as “immoral” and “obscene.” Neither our host nor my fellow panel member challenged this assertion. It was left to me to point out that doing so characterizes “the engine of our prosperity” as evil. Earning money and having wealth is not, in and of itself, evil. It is power that corrupts. Our state government aggregates power by taking money out of the economy and creating criteria by which we might get it back. That’s “immoral” and “obscene.”

I wish I had I asserted that not only is the process immoral but the practitioners to whom we trust this task are often convicted of corruption. There should be a dedicated wing in state prison for former New York legislators. 

I didn’t get a chance to say that the new state budget includes a plethora of new taxes aside from those levied on the rich. For example, a new tax on online sales will cost consumers $390 million this fiscal year. Meanwhile, the governor doles out unproductive economic development funds by the millions. An example is the Pinnacle North development in Canandaigua. The taxpayers contributed millions to an environmental cleanup of the site, a liability that would normally have been borne by the investors. The governor (who was campaigning for reelection at the time) told us this is the kind of project he would “invest in all day long” because it would provide about 100 low-paying service jobs. But, where did the funds million go? Answer: into the pockets of the investors. A more recent example is the state’s $4 million “investment” in Hickey Freeman.

In my closing remarks (too late to explore), I was able to point out that the U.S. already has the most progressive tax code among the nations of the seven largest developed countries. I didn’t get a chance to provide the data substantiating that claim, detailed in a 2018 Wall Street Journal op-ed. The article noted income data reported by the U.S. Census Bureau doesn’t include the impact of non-cash transfers. Consider: 

• Medicare and Medicaid pay $760 billion to the bottom 40 percent.
• 93 other programs transfer $520 billion to low-income households (CHIP, TANF, SNAP).
• States transfer another $310 billion

The bottom 20 percent of U.S. earners receive 84 percent of their income from taxpayer-funded transfers. The next 20 percent receives 57 percent of their income the same way. Overall, 28 percent of household income in the U.S. is received from the government, a percentage larger than any other country in the OECD except France. The top 10 percent of U.S. taxpayers earn 33 percent of total household income and pay 45 percent of taxes, a ratio of 1.35 times their income. In Germany, the ratio is 1.07. In France, it’s 1.1. The U.S. collects only 35 percent of taxes from non-income sources, the smallest share of OECD countries. All those countries have a value added tax (VAT), which acts like a national sales tax. To close the $1 trillion annual federal deficit, Americans would have to pay an 8 percent VAT. 

Off air, Dawson and I casually discussed the attraction of moving to a low-tax state like Florida. 

“The difference in my tax burden would send us on a European vacation each year,” I told him. 

“Yeah,” he joked. “But if you move to Florida, you’d have to buy a boat.”

So, what would you want to spend your retirement income on? Paying taxes or owning a boat?