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GOP Elders Propose Carbon Tax to Fight Climate Change


February 2017 - Sometimes it takes our Republican friends a little longer to recognize a problem than we would like, but eventually the ones who are willing to put reason above partisanship will at least grudgingly admit it exists. So we're happy to report that three prominent Republican elder statesmen, all former businessmen and Cabinet members, surprised a lot of their party colleagues by declaring that the issue of climate change is something that needs to be addressed.


Not so surprising is the fact that they proposed a market-based solution to the problem. More surprising to many, though, is the fact that their solution is a carbon tax, a solution that many Democrats, including Al Gore support. Or maybe the surprise is just to many of today's partisan conservatives who hate to concede that Democrats support market-based solutions, too: when they work.


(Image from NewYorker.com)

Heading this GOP endeavor to address climate change (under the umbrella name of the Climate Leadership Council, or CLC) are former Secretaries of State George Schultz and James Baker III, plus former Treasury Secretary Henry Paulson. Joining them on the CLC are three other notable conservatives, former WalMart Chairman Rob Walton and two former heads of the President's Council of Economic Advisors, Martin Feldstein and N. Gregory Mankiw. Their proposal is as follows:
  • Tax carbon dioxide emissions (the primary identifiable cause of climate change) starting at $40/ton and gradually increase it over time
  • Refund all of the money collected as a rebate to individual Citizens, who will see their energy bills increase as a result of the tax
  • Address international competitiveness concerns through a tax on imports from countries that do not have a similar carbon tax in place and by a refund of carbon taxes paid when US firms export to those same countries
The expected results of this plan would be to make more expensive the primary producers of carbon dioxide, fossil fuels such as coal, oil, and natural gas, thereby making cleaner renewable energy sources more competitive relative to fossil fuels, thereby speeding the conversion to renewable energies, which would reduce carbon emissions.


This isn't the first time Republicans have supported a market-based solution to an environmental issue. Heard much about acid rain recently? Our Economics article, "How Bush Sr. Solved Acid Rain Using Basic Economics", explains how a bi-partisan cap-and-trade proposal was implemented during the early 1990's and solved that issue, exactly as it was designed to do.


A number of countries around the world have passed similar cap-and-trade legislation to address climate change and you may recall that the Obama administration put forward their own cap-and-trade proposal. That proposal made no headway in a House dominated by today's partisan conservatives and forced the Obama administration to issue regulatory measures to reduce carbon emissions, measures the current Trump administration has indicated they plan to reverse.


Unfortunately, unless there are some forward-thinking minds in the Trump White House willing to push the concept, the CLC's carbon tax may end up realizing the same fate as befell the earlier cap-and-trade proposals. We'll keep you updated.


(For another possible solution to climate change that would not adversely affect the fossil fuel industry, see our Science & Technology article "Can This Company Reverse Climate Change?"")







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