Jan 17, 2019

Former Fed chairmen and Nobel economists voice support for carbon tax

Former Federal Reserve chairs Ben Bernanke and Janet Yellen. Photo: Alex Wong via Getty Images

America’s leading economic establishment has penned a Wall Street Journal op-ed in support of taxing carbon dioxide emissions, eliminating other regulations and returning the resulting money to consumers in the form of a recurring dividend check.

Why it matters: The increasing consensus among economists that the best thing to do with any money raised with a carbon tax is to return it to Americans is a significant policy marker as Washington debates to what degree, if at all, it will address Earth’s rising temperatures.

Details: All four of the still-living former Federal Reserve chairs, nearly 30 Nobel economists and all but one former chair of the White House’s Council of Economic Advisers have signed onto a statement laying out their support for a carbon-tax policy — one that has been gaining support from big oil companies, environmental groups and others across the political spectrum.

  • The plan includes a tax on carbon emissions that rises over time, with the proceeds sent back to Americans via quarterly dividend checks.
  • Other carbon-tax policies have put the money toward other priorities, including clean-energy investments and eliminating other taxes.
  • The op-ed published Wednesday says a sufficiently rising carbon tax would “replace the need for various carbon regulations that are less efficient.” That point is particularly controversial among some environmentalists who want regulations as a backstop.
“This is a turning point in Republican climate policy, where the GOP economic brain trust unites behind the [carbon price policy]. This includes the top economic advisers to Presidents Ford, Reagan, H. W. Bush and W. Bush.”
— Former Sen. Trent Lott (R.-Miss.), a lobbyist pushing the policy

But, but, but: Despite economic agreement behind a carbon tax, the politics around it have long been toxic in Washington, and elsewhere too. Voters in Washington state, one of the most progressive in the nation, rejected a ballot measure pricing CO2 emissions after a $30 million campaign by oil companies.

  • President Trump and most elected Republicans continue to ignore or dismiss climate change. Meanwhile, Democrats are rallying around another idea: the vague-but-popular Green New Deal pushed by Rep. Alexandria Ocasio-Cortez (D.-N.Y.), whose only specific component as of now is a goal to achieve 100% renewable electricity.
  • By the way, the one White House economic adviser who didn't sign on is Joseph Stiglitz, who held the position under then-President Bill Clinton. An emailed request for comment to Stiglitz wasn't immediately returned. He has written a paper for the United Nations on the effectiveness of carbon pricing, so he is in favor of the general concept.

What’s next: Ted Halstead, one of the lead organizers on the policy, said he’s confident the 2020 presidential election will focus around this plan and not the Green New Deal, even though the former is getting more media attention with possible candidates. Getting economists’ support is critical, he says.

“We’ve just cornered the market on the best economic minds of our country behind every single pillar of our plan.”
— Halstead

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