Deal or No Deal

Earlier this month, in response to those (such as Bill McKibben and James Hansen) who claim that the Paris climate agreement is insufficent to reduce dangerous carbon pollution, Michael Sean Winters of the National Catholic Reporter observed:

Some on the left will complain that the Paris accords did not go far enough, but they have no real alternative to the realism that governed the deliberations. The accords are an achievement of the first order, especially because they are realistic and require the countries to devise their own programs. I have grown suspicious on what international diplomacy can achieve but this weekend, I regained a bit of confidence: When good will, good science, and an attentiveness to the common good all come together, progress is possible.

Climate activists who are disappointed by the perceived watering-down of the Paris climate agreement might have to brace themselves for more disappointment if Congress gets another chance to pass carbon-pricing legislation in 2017.

One cannot view the GOP’s fear that having Donald Trump as their nominee in 2016 will result a Democratic sweep of the House and Senate (in addition to a third consecutive Presidential election loss) without factoring in the implications for the country’s energy policy. (Keep in mind that, as former Republican State Leadership Committee head Chris Jankowski noted back in March on MSNBC’s The Rachel Maddow Show, Democrats won the House in 2006 despite the fact that the House had been gerrymandered in such a way as to favor Republican retention of power: “I mean, some of the [Congressional] districts in the legislative chambers we won in 2010 were won by the Democrats in 2006 under lines drawn by Republicans in 2000. So, political environment trends can overcome [gerrymandering].”) If Nancy Pelosi returns as House Speaker and Chuck Schumer becomes Senate Majority Leader, there will be a strong push by climate activists to make sure that carbon-pricing legislation–something Karl Rove declared permanently dead after the 2010 midterm elections–is a top priority.

Such legislation is likely to take the form of a gradually rising carbon tax or carbon fee to discourage the use of fossil fuels and expedite the national shift towards clean energy. However, in order to get such legislation passed, certain deals will have to be cut–and one prominent organization, the Partnership for Responsible Growth (co-founded by former Clinton Administration official George Frampton and former Idaho Democratic Rep. Walt Minnick), has argued forcefully in favor of one specific deal:

If Congress enlists the power of the free market, our nation can reduce emissions more quickly. To attract support from lawmakers who are not so concerned about climate, a revenue-neutral carbon fee could be part of a pro-growth package that would use half the fee’s proceeds to reduce the corporate tax rate…

The Partnership for Responsible Growth offers a pro-growth solution and was formed to advocate a robust debate about the merits of revenue-neutral carbon fee. About half of the revenue could be used to reduce the corporate tax rate from 35 percent (the highest in the industrialized world) to 25 percent. Most of the balance could be returned to low and middle income families through a lump sum tax credit, rebate, or other tax reductions. We call this bipartisan approach “carbon-funded tax cuts.” In our test case, the fee would start at about $30 per metric ton and increase annually. The fee must have an ongoing escalator to maintain revenues as it delivers a drop in emissions.

The Partnership for Responsible Growth has aggressively promoted this argument in letters to the editor published across the country, implying that carbon pricing will never make it through Congress unless it’s paired with a reduction in the corporate tax rate.

There is an argument to be made that progressive Democrats should not go for such a deal, since reducing the corporate tax rate is illogical at a time when the federal government needs more revenue. However, if Republicans and conservative Democrats absolutely won’t vote for carbon pricing unless it is paired with a reduction in the corporate tax rate, wouldn’t progressive Democrats have no choice but to take such a deal in order to expedite the expansion of clean energy, something that (according to Hansen) can only be done through carbon pricing?

The subtext of the Partnership for Responsible Growth’s argument is that federal carbon-pricing legislation cannot possibly make it through Congress without, for want of a better word, the permission of the one percent. If you’re a progressive Democrat, and a bill that would implement a carbon tax or fee while reducing the corporate tax rate comes up for a vote, do you provide that permission to protect the planet?

UPDATE: More from Jon Margolis, the Wall Street Journal and InsideClimate News.

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D.R. Tucker

D. R. Tucker is a Massachusetts-based journalist who has served as the weekend contributor for the Washington Monthly since May 2014. He has also written for the Huffington Post, the Washington Spectator, the Metrowest Daily News, investigative journalist Brad Friedman's Brad Blog and environmental journalist Peter Sinclair's Climate Crocks.