We should all welcome the carbon dividend proposal announced by the Climate Leadership Council today. This distinguished group of former Republican economic officials and corporate leaders, led by three Treasury Secretaries serving President Reagan and both Bushes, offers a simple plan to address the threat of global warming while making the size of government smaller. Americans will easily grasp their approach and I believe most will support it.
The plan has four pillars: tax the carbon in fossil fuels at $40 per ton of carbon dioxide for the emissions they will produce; rebate all of the revenue to American households in quarterly dividend payments; repeal federal regulations that will no longer be needed because carbon prices produce greater and more efficient investments in emissions reductions; and assure that the program does not damage U.S. trade by adjusting its impact on exports and imports that are energy intensive.
It is often said these days that in their hearts many Republicans in Congress know that we need to act on the global warming threat, but they are imprisoned in their anti-climate position by fierce partisan politics and the threat of interest group money supporting their primary opponents. Well, this is the day for the prison break. And as our Republican friends come out, I hope that Democrats and environmentalists will happily welcome them to a new, bipartisan conversation on this carbon dividend proposal.
One way we can put out the welcome mat is by reexamining our insistence on implementation of the Clean Power Plan as the Climate Leadership Council suggests. A gradually increasing price on carbon dioxide emissions starting at $40 a ton will do more to reduce emissions from the electric power sector, and do it sooner, than the Clean Power Plan. And it is a tax that reaches across the entire economy, so we won’t have to wait for new rules on oil refineries, paper mills and steel plants.
The second thing we can do is agree to send all of the revenue back to the American people as dividends rather than keeping it here in Washington and spending it on special interest nostrums, many of which we have supported in the past. Climate change legislation was defeated in 2010 mostly because the American people saw Congress using it as a way to make government much bigger by doling out subsidies and favors to those who had the best lobbyists. Let’s not make that mistake, again. Let’s just send all of this revenue back to the American people without any haircut for Washington-designed programs.
I don’t mean to suggest that there shouldn’t be any discussion about the details. For instance, low-income households spend much more of their budgets on energy than the more well-to-do. To make sure that the combined carbon tax and dividend does in fact have an equal impact on all Americans, perhaps the dividends should tilt a bit toward lower income families. We might also want to think about keeping the automobile fuel efficiency standards that President Obama created because they will for the next few years do more to reduce emissions in the transportation sector than a carbon tax. And by the way, the fuel efficiency standards also save Americans money in lower fuel costs.
In other ways, members of the Climate Leadership Council have done much to identify the impact of global warming on our economy and the most vulnerable economic sectors in each region of the nation through reports such as Risky Business. With this proposal today they have given us a simple, efficient and effective way to address those risks. It is an invitation drawn from principles that Republicans have long endorsed and should not be ignored by current officeholders who know they need to step up. I hope that it is an invitation that will also be welcomed by my colleagues in the environmental community as it draws on a principle we have long supported. A price on carbon is the most efficient policy to stop the threat of global warming.