These fiscal and environmental problems may appear unrelated. But as a bipartisan group of current and former members of Congress, we want to propose a new idea: These seemingly intractable challenges are easier to address together than separately.
The debate over how to reduce our nation’s debt has been presented as a dilemma between cutting spending on programs Americans cherish or raising taxes on American job creators. But there is a better way: We could slash our debt by making power plants and oil refineries pay for the carbon emissions that endanger our health and environment. This policy would strengthen our economy, lessen our dependence on foreign oil, keep our skies clean — and raise a lot of revenue.
The best approach would be to use a market mechanism such as the sale of carbon allowances or a fee on carbon pollution to lower emissions and increase revenue. Using these policies, 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, providing transition assistance to affected industries, and supporting investments in clean-energy technologies.
Such a policy would have enormous benefits beyond its fiscal contributions. As the National Research Council of the National Academy of Sciences concluded last year, “The risks associated with doing business as usual are a much greater concern than the risks associated with engaging in strong response efforts.” Inaction on climate means more intense and frequent heat waves, more droughts, more flooding and more loss of coastline. Delaying action just until the end of the decade will quadruple costs to the global economy, according to the International Energy Agency.
A market-based policy would be a catalyst for international action, help protect U.S. families from ecological disasters and level the playing field for clean-energy sources such as wind and solar. It would spur research into and development of electric batteries, carbon capture, storage technologies and the like.
And it would provide urgently needed certainty for business and industry. During the past Congress, the chief executives of leading energy, chemical and manufacturing companies endorsed comprehensive climate legislation. They told us that they have deferred hundreds of billions of dollars of investments until they know what they will be required to do to protect the planet. And they said that delay in addressing climate change puts our country’s competitiveness in jeopardy, allowing China to race ahead of the United States in building the clean-energy industries of the future.
We recognize there are several ways to raise revenue through climate policies. Our goal is not to propose a particular policy solution but to start a discussion. It is a testament to the enormous power of the oil and coal lobby that climate-change policies have been dismissed as a viable option for deficit reduction. We believe that must change.
The “grand bargain” talks collapsed over the summer and the “supercommittee” failed in the fall for largely the same reason: The debt-reduction alternatives then on the table — raising taxes, cutting Social Security and Medicare, or carving deeply into defense and discretionary spending — were too politically painful. These alternatives will not magically become more attractive a year from now.
That is why we believe the time is right to begin considering new options. If budgeting is ultimately about choices, enacting a policy that reduces dangerous air pollution while providing hundreds of billions of dollars in debt relief should be a no-brainer. No other policy would do as much for our economy, our security and our future as putting a price on carbon.