.Obama Budget Will Assume Revenue From Climate Law

.Obama Budget Will Assume Revenue From Climate Law

Fri Jan 29, 1:50 pm ET
President Obama's fiscal 2011 budget will project hundreds of billions of dollars in new federal revenue from a proposed comprehensive cap-and-trade climate law, according to Democratic aides -- despite dimming prospects for enacting such legislation this year.

Including cap-and-trade revenue in the new budget underscores Obama's commitment to press ahead with climate legislation, which passed in the House last year but stalled in the Senate. The president reiterated his insistence that Congress address global warming in his State of the Union address.

In the fiscal 2010 budget, the White House projected raising $646 billion in federal revenue over a decade through the sale of emissions allowances to polluters. Under the plan, emissions would be capped and polluters would need to hold government-issued allowances to release carbon dioxide and other gases that contribute to global warming. The allowances could then be bought and sold in the marketplace.

That budget would have used about two-thirds of the revenue to fund payroll tax breaks through the administration's "Making Work Pay" program. About $15 billion annually, for a total of $150 billion over a decade, would have been reserved for alternative energy research and development.

Senate aides say they expect the fiscal 2011 budget to make different recommendations for spending any revenue from a climate law.

But North Dakota Democrat Byron L. Dorgan, chairman of the Senate Energy-Water Appropriations Subcommittee, said any proposal to spend cap-and-trade revenue is probably dead on arrival.

"If there's an anticipation of cap-and-trade revenues, I think that anticipation probably is not going to result in success because my best estimate is that we're not likely to do a cap-and-trade bill this year," Dorgan said.

Senate Foreign Relations Chairman John Kerry, D-Mass., who is leading efforts to write a bipartisan climate bill, said he objects to using cap-and-trade revenue for the "Making Work Pay" program and would rather see it go more directly toward easing the burden of any utility price increases on consumers and industry.