Henry Waxman’s plan to cut the deficit and stop global warming — at the same time
“Taxmageddon” is coming. That’s what Hill staff are calling the pile-up at the end of 2012, when the Bush tax cuts are set to expire, the payroll tax cut is set to expire, the $1.2 trillion spending trigger is set to go off, and the debt-ceiling is expected to be breached. But some members of Congress see opportunity tucked behind this coming crisis.
On Friday, Reps. Henry Waxman (D-Calif.) and Edward Markey (D-Mass.) joined former Reps. Sherwood Boehlert (R-N.Y.) and Wayne Gilchrest (R-Md.) to publish an op-ed arguing that we could address our most pressing fiscal and environmental problems in one fell swoop by placing a price on carbon. “The United States could raise $200 billion or more over 10 years and trillions of dollars by 2050 while cutting carbon emissions by 17 percent by 2020 and 80 percent by 2050,” they wrote. I spoke with Waxman about the idea on Friday. A lightly edited transcript of our conversation follows.
Ezra Klein: Republicans have shown no interest in raising taxes. They’re actively hostile to efforts to address global warming. So what chance does a proposal like this have?
Henry Waxman: I think it’s going to be a challenge to get Republicans and others to support putting a price on carbon. But we have to consider the alternatives. Will it be easier to slash Medicare benefits? Make deep cuts to defense? Raise income taxes? A climate policy is the easiest way to face these challenges.
There’s an interesting similarity in the problems of the two issues. Cumulative debt and cumulative carbon emissions are both rising. If you look at the debt problems they’re going up and up and up and the cumulative emissions of carbon are going up as well. One can have terrible consequences for the economy and the other for our planet. I don’t think people have realized the similarities of these two issues.
EK: What always worries me about climate change is that I think it is, in an important way, dissimilar from budget issues. If the deficit goes up and up and up, and interest rates begin to rise, we can make different choices an the debt can still be brought down. It’s harder, maybe, but not fundamentally different. With carbon, it goes up and up and up and then we hit a point of no return, where we can’t get that carbon back out of the atmosphere.
HW: I think we have to look at the fact that neither of these problems can be solved overnight. But if we could put in place a price on carbon and then use the sales of carbon allowances to raise revenues we could raise money and cut emissions at the same time, and we can have a transition that will be as orderly as possible. If we leave both to become much more severe then the answers will be more radical and painful.
EK: But is combining them the easiest way politically? Because from where I sit, the key change in the global warming conversation is that it’s become a cultural issue rather than a scientific one. So doesn’t this layer a culture war on top of an already difficult set of economic choices?
HW: I am amazed that the question of science and the clear consensus of opinion that we are experiencing global warming and it is caused to a great extent by people is thought of as controversial. We do have people who are science deniers and, in the House of Representatives, we’ve had party-line votes where the Republicans have voted to deny science. But I know a lot of those same Republicans know this is a problem that has to be dealt with. This last year was the highest on record. We’re seeing more bizarre climate episodes than we’ve seen before. It’s now February and the daffodils are growing. All these are signs that something is happening. We can’t deny the evidence.
EK: Given Republican opposition to raising taxes, what about doing this in a revenue neutral way, perhaps by swapping taxes on work for taxes on carbon emissions?
HW: I know there are people who are thinking along those lines. I think all of this ought to be on the table. I think a market-based policy would protect American families from climate disasters and level the playing field for clean energies like wind and solar. And maybe even more importantly given our economic downturn it would provide urgently needed certainty for businesses to invest in energy, where we’re now allowing China to race ahead of us on the energy industries of the future.
EK: You mention the economic downturn. The more thoughtful case against policies to mitigate climate change is that yes, climate change is real, and yes, we have a lot to do with that, but in an economy this weak, now just isn’t the time to raise taxes on energy. That’s the argument made by, among others, Jon Huntsman.
HW: Well, study after study shows you can cut pollution and grow the economy. Policies can be adopted to protect our energy intensive, trade exposed policies. Policies can be adopted to avoid spikes in electricity prices. But I think this is exactly the time to act because we can have a number of benefits from these policies, none more important than the jobs that could be produced by giving clean-energy entrepreneurs certainty that they can begin to invest.
EK: Have you begun to try and talk through these ideas with Washington’s community of budget groups? Should we expect to see coalitions including groups like the Peterson Foundation and the Committee for a Responsible Federal Budget?
HW: I plan to have more conversations with them. We put out the editorial to get people to think about it and we have a job to do in the next nine months to get other groups to recognize the opportunity here.
EK: Have you discussed any of this with the White House?
HW: I know that the president wanted an energy policy that would keep us more independent from importing foreign oil from the Middle East and Venezuela. I know the president was trying to develop an energy policy that would help transition to a lower-polluting environment. And I know he has seen the benefit of the jobs that can be created when we send the market signal that it’s time to invest in clean energy.
I thought having the industry groups supporting doing something like we proposed in 2009 would help us bring the Republicans to the table but it didn’t. Perhaps if we add the budget problems we can get the conversation going.