Barely twenty days after signing his $1.9 trillion American Rescue Plan to provide pandemic relief and wrestle Covid-19 to a halt, President Biden this week unveiled a follow-on eight-year $2 trillion plan that he called a “once-in-a-generation investment in America” to repair failing roads and bridges, revitalize rail travel and freight, get rid of water-supplying lead pipes, and generally overhaul the country’s infrastructure.
While a New York Times headline framed Biden’s American Jobs Plan as “stressing jobs, roads and growth,” the paper’s own explainer was sketching a different — and lower-carbon — story. Of $621 billion in transportation spending, less than 20 percent, $115 billion, goes to “roads and bridges,” and much and perhaps most of that appears destined for “fix-it-first” repairs rather than traffic-inducing highway expansions. (See graphic.) Public transit and railways get a combined $165 billion, and word is that some of the $20 billion penciled in for “underserved communities” is to pay to tear down segregation-enforcing urban expressways.
The devil is in the details, of course, as Streetsblog USA noted today, with links to detailed treatments in Vox, Politico and Transportation for America. Notably missing from the new Biden package, though, is a carbon tax, or a carbon price in any form. The Biden infra plan is all carrots and no sticks, meaning it may not make much headway in reducing carbon emissions, at least in the short term.
We’re at peace with that, at the Carbon Tax Center. Razor-thin House and Senate margins simply don’t allow for hot-button measures like carbon pricing that might jeopardize other elements of the package in addition to failing on their own. Biden’s task, as he knows full well, is to pass bold, progressive, popular legislation to help Democrats expand their Congressional majorities in 2022 and 2024 and give him a thumping second-term mandate to boot. Then, and only then, can he risk a carbon tax.
Syracuse University public administration professor David Popp spoke to this dynamic in another Times story earlier this week, Biden’s Lesson From Past Green Stimulus Failures: Go Even Bigger. “Spending money is politically easier than passing policies to cut emissions,” he noted. “Unless [spending is paired] with a policy that forces people to reduce emissions, a big spending bill doesn’t have a big impact. [But if that] sets up the energy economy in a way that it’s eventually cheaper to reduce emissions, it could create more political support for doing that down the road.”
When the time is ripe, what kind of carbon price?
The number of $1,400 stimulus payments issued by the Treasury Department has surpassed 125 million, according to a CNBC update on the American Rescue Plan. That’s in addition to 100 million or more stimulus relief checks last April that provided up to $1,200 for Americans earning less than $100,000 a year.
The vast majority of these payments have been made as direct deposits, a procedure so immediate and trusted that one elected official recently called such payments “political magic.” That accolade fits our own preference for the carbon fee-and-dividend method of taxing carbon, which returns all (or nearly all) of the carbon revenues to American households as direct payments made quarterly or even monthly.
As we’ve written previously (explainer here, policy/strategy here), carbon-fee-and-dividend has these powerful virtues: simplicity (explainable in a sentence), concreteness (money in your bank account), proportionality (the amounts deposited rise whenever the carbon tax level is raised), and progressivity (most low- and even middle-income households come out ahead).
Depositing carbon revenues in people’s bank accounts makes fee-and-dividend quintessentially revenue-neutral. Where, then, will the money come from to pay for American Jobs Plan? President Biden’s answer is to boost corporate tax rates while also raising corporate tax “capture rates” by finally plugging special provisions and accounting tricks that last year enabled over 50 major U.S. corporations to go completely tax-free despite reaping billions in profits, according to a new report from the Institute on Taxation and Economic Policy.
A two-step strategy of (1) building green — or, at least, greener — infrastructure and paying for it by taxing corporate wealth, and (2) instilling carbon-cutting incentives in every cranny and capillary of the economy via a revenue-neutral carbon price, would follow the contours of the “New Synthesis: Carbon Taxing, Wealth Taxing & A Green New Deal” we sketched in Dec. 2019, shortly before the pandemic struck. The Biden plan does #1, and, if successful, could lay the foundation for tackling #2 after the midterms or the president’s re-election.
That approach is not what the Washington Post urged in an editorial last week, Pay for Biden’s $3 trillion infrastructure plan with a carbon tax. In our view, adding a carbon tax would sink the infrastructure plan. Better to get the plan through Congress (infra is perennially popular), pay for it with corporate taxes (similarly popular), and use the political windfall to marshal support for a carbon tax later.
Time to reform the Climate Solutions Caucus
Clearly, we think carbon fee-and-dividend has legs, and we salute Citizen Climate Lobby for patiently and faithfully building grassroots support for it over the past dozen years. Nevertheless, even before this week’s unmasking of Florida Congressmember and Trumpista Matt Gaetz as a possible serial sex-offender (first salvo from Tuesday here, today’s latest, here) we were getting restive about the inclusion of Gaetz and other avowed-denialist House Republicans in the ranks of the Climate Solutions Caucus.
CCL has touted the caucus since its inception as part of its philosophy to advance fee-and-dividend carbon pricing as bipartisan. Alas, that project has become increasingly dubious as Republicanism has come to require unflinching fealty to fossil fuels. For years now, few of the two dozen House Republicans who signed up for the caucus have so much as lifted a finger to warrant being considered climate solutions anything. (Several who did, such as Francis Rooney and Carlos Curbelo, both from Florida, either retired or were defeated for re-election.)
I have in mind two members from New York State: Lee Zeldin, from my native Long Island, and Elise Stefanik, who represents sparsely populated northern NY where my family has a cabin. Both are unreservedly Trumpian (voting to overturn the 2020 election, for example). Gaetz, even before this week’s unseemly revelations, was arguably the most Trumpian member of Congress, ideologically and culturally. Since entering Congress, none of the three have evinced interest in or support for carbon pricing.
The Carbon Tax Center calls on Citizens Climate Lobby to develop meaningful, transparent criteria for maintaining membership in the Climate Solutions Caucus. My concern here is not to keep undeserving caucus members from greenwashing themselves. They likely couldn’t care less; indeed, for them, anti-climate is probably a badge of honor to wear in their next primary campaign.
Rather, we at CTC believe that removing climate deniers from the Climate Solutions Caucus could help rehabilitate carbon taxing in the public conversation. As it now stands, letting anti-climate ideologues remain in a “climate solutions” body makes it easier to cast carbon-tax proponents as easy marks — gullible Charlie Browns waiting in vain for the G.O.P. to share the carbon-tax football.
In our opinion, any leverage that Citizens Climate Lobby might gain from continuing to seek bipartisanship is more than offset by the perception — which has only risen since the Capitol insurrection — that pursuit of climate partnership with Republicans is a fool’s errand.
Robert Archer says
Thanks for your thoughts on further delay on carbon tax advocacy until after 2024 but I don’t think a four year three-cushion billiard shot to get to a carbon tax is a good risk given the stakes.
However, I hope you will continue to address the misstatements, cherry picking and conflation that permeate too much of the climate dialogue. There are some points that merit discussion.
First, you have stated that: “Environmental justice advocates–a key constituency–increasingly disdain carbon pricing.” Some of this opposition is based on the conflation of California’s cap and trade/offsets with the carbon dividend policy as you have written. There is merit in the opposition to cap and trade on grounds of meager performance and, in particular, carbon offsets which CARB and Big Green continue to push hard. The conflation of cap and trade with the very different policy of a carbon dividend (and fee) is unfortunate. Some see the difference. The Environmental Justice Advisory Committee to the California Air Resources Board concluded the following as part of the 2017 cap and trade review process:
“CARB should abandon the Cap and Trade system for a non-trading system option like Carbon Tax (also referred to by staff as Cap and Tax), Cap-and-Dividend, Fee-and-Dividend, or command and control regulations. These options would eliminate free allowances and offsets…”
It isn’t well known that the fee and dividend policy results in the bottom 2/3 households coming out ahead and a family of four receiving up to $4000/year. I hope you will continue to make that substantive difference clear in your writings. No other climate policy on the table is as progressive. And many are regressive with the benefits falling primarily to higher income households.
Second, please correct the impression given that the Climate Solutions Caucus is run by the Citizens’ Climate Lobby. It is an official Caucus of the House of Representatives. CCL should be proud of encouraging its establishment as the first forum for bi-partisan discussion on climate.
Third, the cherry picking of the behavior of a single member of the Caucus–Gaetz–unfortunately discredits the Climate Solutions Caucus which is unfortunate particularly when the charge is wrong. He is a not climate denier (see below). If one discards climate voters based on their various political views or behavior, there may well be a lot fewer votes on both sides of the aisle for climate action.
I hope you will continue to try to shed light on the unfortunate conflation of cap and trade’s sins being thrown onto the fee and dividend…and highlight the deep flaws of cap and trade’s first cousin–carbon offsets. Note that the Clean Electricity Standard contained in the House CLEAN Future Act has all the markings of cap and trade.
Doug Nichols says
Right on. Agree completely
Charles Komanoff says
Hi Robert —
This post is generating great comments. Yours is particularly nuanced and generous. I really appreciate it.
First, thank you for pointing out my (gross) error mischaracterizing the Climate Solutions Caucus as a creation of CCL. I’ve fixed that.
EJ rejection of carbon pricing is no longer limited to cap-and-trade, as I noted. And while I wish California’s carbon pricing were via a tax rather than emission permits (cap/trade), it functions very much like a tax, and it would be disingenuous for CTC to pretend otherwise. More importantly, unlike a decade ago, EJ advocates don’t seem inclined to distinguish between the two mechanisms (tax vs. cap). For those reasons, I feel it’s incumbent on us to defend carbon pricing when it’s rendered as a well-designed cap program (as in Calif), and not limit ourselves to defending carbon taxing alone.
Your point about economically progressive outcomes with carbon fee-and-dividend is one that CTC has made since Day One … and continues to make. Alas, it doesn’t resonate with the EJ community, which in my experience is far more interested in investing carbon revenues (esp’ly in frontline communities) than in straight-up dividends. Beating that drum doesn’t seem likely to win over EJ advocates to any form of carbon pricing.
Thank you for the link to the April 2019 Matt Gaetz interview. Yes, he sounds a bit more open-minded than I credited him. But his plan has no climate substance, nor was his interview followed up by substantive legislative advocacy. He certainly never stood up for a carbon fee. Same goes for the two NY Members of Congress I mentioned in my post.
Please stay active, and keep in touch, Robert, thanks very much.
David Atkins says
I am a CCL’er and I strongly agree with Robert’s points. Your point that the R’s will not come around and that the progressives are not supportive indicates we have to do more than try and rely on the uncertain possibility of larger majorities in ’22 and ’24. Which are far from givens. Instead we need to work on skeptics on both the left and right to see the merits of fee and dividend as the fastest, most effective and economically beneficial solution out there. The rest is working on the margins. Waiting 4 more years only makes a steep hill only steeper. We don’t have to convince all the R’s or all the D’s we need a majority of the combination, which will give the policy the staying power needed to address the issue through the vagaries of shifting political winds.
The movement of the C of C, large financial banks, the insurance industry that has happened in the past few months is very significant and we need to leverage that to get more senators to join Romney and Murkowski who have expressed a willingness to consider fee and dividend. This is very possible. It only gets harder when your organization says delay. Delay is not an option.
Charles Komanoff says
Thank you for those cogent thoughts.
I have two points and one question.
Point 1: I see a reasonably clear path to getting progressives on board w/ carbon taxing. It’s actually the path that Biden is pursuing: infra with decarbonization components, paid for by wealth taxes. (Interestingly, it’s the path I laid out in my Dec 2019 blog posts, take a look!) That will IMO placate progressives while also revealing the need for carbo pricing as it (the Biden path) proves insufficient to bring down emissions substantially.
Point 2: We have all been waiting since 2010 for more than token numbers of sitting (elected) R’s to support carbon pricing. Even as climate exigency keeps rising, the political incentives for R’s to abjure climate policy in any form appear to be rising faster. I encourage you to read the Roberts and Bacon pieces we link to on our “Conservatives” page (https://www.carbontax.org/conservatives/).
Q 1: What specifically are you seeing/hearing about Romney & Murkowski other than their shopworn “signals” that they might “consider” carbon fee and dividend?
Thanks for writing.
PS: CTC isn’t saying “delay,” we’re saying “Don’t undermine Biden and the Democrats by pushing a carbon tax at this time, wait and build for the proper moment.” Perhaps to you that’s a distinction without a difference? I hope not. Thanks again.
Robert Archer says
Having delved deeply into California climate policies, particularly through the writings of the UC Berkeley Energy Institute and others, your statement that the California cap and trade” behaves very much like a carbon tax” and is well designed is one you may want to seriously reconsider (and withdraw). The justified disenchantment of cap and trade advocates here is best reflected in Danny Cullenward’s (and David Victor) new book “Making Climate Policy Work.” Their political assessment misses some key economic issues and mostly addresses the political flaws. Their error is projecting the flaws of cap and trade onto a carbon tax policy which is quite different (while at the same time they, at one point, highlight the strong characteristics of a carbon tax). I’ll forward my working draft paper that spells out the seven significant differences between the two policies based on the last 12 years of experience (and not Goulder and Schein theory) and welcome your posting the executive summary. Bottom line: conflating the two into a “carbon pricing” policy discussion is a serious error.
Note that the recent criticisms from political scientists (Stokes, Green, Cullenward, Victor) primarily hammer away at cap and trade and then dismiss “carbon pricing.” Conflation and false equivalence are not a good way to go through life as Dean Wormer would say. The climate policy dialogue fails to accurately consider these differences so far.
With respect to the household dividend, some EJ and community groups seem to view the carbon tax revenues as a zero sum game as in Washington State. The revenue policy of I-732 was to reduce the highly regressive sales tax benefiting all low income households most. (“Progressive” Washington has no income tax and has the most regressive state tax system in the country. ) Instead, such groups wanted the revenues to be spent on community programs. It was a small pie.
With the Biden Infrastructure plan you can have both the expenditures and a fee and household dividend which will protect the bottom 2/3 of households (from the regressive subsidy and standards programs as well as the carbon tax). It’s a huge pie. The fact remains: cycling the carbon tax revenues through to households is the most equitable climate policy on the table regardless of who supports it.
The 12 million low income households in California get the short end of the climate stick–inequitable subsidies, standards and regulatory programs. Those who think that spending 40% of cap and trade revenues over about 80% of California (the areas for eligible expenditures) will address the inequities in disadvantaged communities (DACs) can’t back it up. Neither can the Biden Plan of 40% expenditures which will focus on a relatively few (high pay fossil industry workers?) and leave the great majority of low income households vulnerable.
Marilyn McNabb says
We still need a bipartisan approach to secure fee and dividend through the years, so that when the
party political pendulum swings again, there are supporters in both parties. That’s an even longer view.
Charles Komanoff says
Hi Marilyn. I ask you, how can we have a bipartisan approach when no R’s will back a carbon fee? The only way forward (as I see it) on climate and everything else is for Democrats in Congress (and in the White House) to govern so effectively that their majorities grow and grow, enabling more good legislation to pass, creating a virtuous cycle that shrinks the Republican Party (as we have known it since 2010) and realigns American politics to the point that allows meaningful bipartisanship.
Marilyn McNabb says
True, right now no Rs will back CF&D. But I’m old enough to have seen a lot of once -thought-impossible things actually happen. Just pretty recently, the Farm
Bureau moved. So did the U.S. Chamber of Commerce. And some of these Republicans have kids who will keep pushing them.. If you live in a place like, oh, say, Nebraska with no Democrats in the House or Senate, do you advise climate activists to quit? That doesn’t sound like you, Charles. I still think we need to approach the climate crisis as a bipartisan responsibility.
Charles Komanoff says
Alas, I don’t have blanket advice for climate activists in deep-red districts w/ Republican reps, Marilyn. Maybe they should run in the next Congressional primary, and use the campaign trail to shame their rep and educate the public. And/or, help nurture and support Dem candidates who don’t have to be dragged kicking and screaming (even then it doesn’t work) to take climate seriously. Yes, structured polarization of the electorate (the “big sort,” gerrymandering, Senate inequities) is a deep, vexing problem. But you can’t have a bipartisan approach with a party whose leaders (McConnell, McCarthy, Trump) say over and over that they will not support Democratic legislation.
Marilyn McNabb says
What about the problem of a bill passed by the Dems alone being repealed in a couple of years when the pendulum swings?
Charles Komanoff says
There is nothing more critical, IMO, than ensuring that the pendulum never swings back to climate denialists who area also misogynists, xenophobes, white supremacists, extractionists. If it does, we’re cooked anyway. So let’s not trim our sails in anticipation of that.
Btw, I wanted to add to my prior reply: climate activists in red states should run for local offices. There’s probably no better way to build the political infrastructure that can lead to winning House and Senate seats in those states.
John Gage says
Waiting would be risky. Mid-term elections often swing. Hopefully Congress will focus on policies that complement carbon pricing in the short term and in several months they’ll give CF&D a real try. There are some Republicans showing interest in it now.
Charles Komanoff says
You’re right that mid-term elections usually work against the party that took the presidency two years earlier. As I intimated in the post, Biden & Co. are designing their legislative strategy to deliver enough good things to Americans that they can overcome that historic pattern and expand their majorities in 2022 and again in 2024. Meanwhile, I ask you to face the reality (as I see it) that R’s aren’t going to come on board for any sort of carbon price — notwithstanding the beauty (it *is* beautiful) of fee-and-dividend. Your optimism (“There are some R’s showing interest in it now.”) has been disproven year in and year out. Not a single sitting Republican member of Congress has expressed clear, unequivocal support for fee/div or any other type of carbon price.
John Gage says
It a good article, I just don’t think we can afford to risk solving climate change so much – two more years delay and hinging on another election. A bipartisan solution that people will like (most families will get more money in their dividend each month than they’ll pay in trickle-down higher prices from the fee paid by fossil fuel producers).
Actually, some Republicans are talking about Carbon Fee and Dividend in public now. For example, see the Senator Romney video here: https://sites.google.com/view/carbon-cashback-coalition/carbon-cash-back/support-in-congress?authuser=0
And as a CCL volunteer, I know there are many Republicans who are very interested in this specific solution behind closed doors. They have been waiting for the right time and cover, and if the press would start explaining CF&D better the public would realize how good a solution it is for them, and the cover would be there.
Watch “Safe Passage” episode of NatGeo’s “Years of Living Dangerously” where Senator Whitehouse talks about that: https://youtu.be/bW-TDUZOTRo
Joseph (Joe) Sauer says
Charles, Very thoughtful & insightful post. I am a CCL’er and would love to see real action going that way, but the reality of the voting public is not even close and thus much too easily swayed by misinformation from both sides. So, everything you are saying makes perfect sense. PS: It would be interesting if you and Danny Richter could do a podcast together or, at a minimum, to have an in-depth conversation together. Thanks for sharing your insightful thoughts. Joe Sauer.
Rachel Mark says
I was thinking the very same thing. I am also a volunteer with CCL and feel very conflicted about this issue.
Russell Lowes says
Thanks for the astute political assessment. I’ve been pro-carbon tax since I first comprehensively looked into it, about 2008. However, for the last several years, it has been looking like a hazard to the only party that will significantly get behind it, the Dems of course. With HR763, the supporters have become willing to sell out on environmental protections of the Clean Air Act, AND willing to establish a precedent for trading away our legal protections. Once we get on that slippery slope, if we ever do, the best laws will much more readily be on the chopping block.
John Gage says
HR763 only paused regs on covered emissions for ten years. Those would all be redundant during that time because the bill will drive those emissions down much faster (and cheaper) anyway. Then after ten years the bill would have required aggressive targets be met, through regulation if the price alone did not do it. This was an addition in the bill from the pure CF&D policy proposal, added by Congress to attract Republican support (it worked).
As for trading away legal protections, you are confusing the Energy Innovation and Carbon Dividend Act (HR 763) and underlying Carbon Fee and Dividend policy proposal from Citizens Climate Lobby (https://citizensclimatelobby.org/carbon-fee-and-dividend/) with a similar policy from a completely unrelated group and their policy (clcouncil.org). That group has since removed the get-out-of-jail-free card from their proposal. It’s a real discredit to CCL to associate that other policy with the gold-standard Carbon Fee and Dividend policy.
We can’t afford not to use carbon pricing to reduce climate pollution. The problem is too large not to use the most cost-effective solution. With a 100% rebate of the money (net) to families, we can achieve the necessary price. With complimentary policies, we can achieved net-zero by 2050.
BTW, the Energy Innovation and Carbon Dividend Act has been reintroduced in 2021 with just Democrat cosponsors, and the regulatory pause was removed: https://energyinnovationact.org/
Mike Aucott says
I don’t fully agree with you regarding your point – which I take to be that CCL’s single-minded focus on climate action and its strong commitment to bipartisanship are increasingly at odds with each other in today’s polarized environment – is worth thinking about, and I’ve urged some of my colleagues in CCL to take a look at this post if they haven’t already seen it.