https://www.bloomberg.com/news/articles/2019-01-17/from-greenspan-to-yellen-economic-brain-trust-backs-carbon-tax
climate changed
From Greenspan to Yellen, Economic Brain Trust Backs Carbon Tax
By Jennifer A Dlouhy
January 16, 2019, 7:47 PM EST
An all-star lineup of economists, from Alan Greenspan to Paul Volcker,
is endorsing a plan to combat climate change by slapping a tax on
greenhouse gas emissions and then distributing the revenue to American
households.
All living former Federal Reserve chairs, several Nobel Prize winners
and previous leaders of the president’s Council of Economic Advisers
have signed on to a statement asserting that a robust, gradually rising
carbon tax is “the most cost-effective lever to reduce carbon emissions
at the scale and speed that is necessary.”
“A carbon tax will send a powerful price signal that harnesses the
invisible hand of the marketplace to steer economic actors towards a
low-carbon future,” the 45 economists say in the opinion piece,
published by the Wall Street Journal late Wednesday.
The missive is a rare case of the economic establishment speaking with a
single voice on a pressing social issue, albeit one that faces political
challenges from conservatives, Republicans and the current White House.
The signers include economists who have served every president going
back to Jimmy Carter.
“This is one of the few ideas of economic policy that commands broad,
bipartisan support,” former Harvard University President and U.S.
Treasury Secretary Larry Summers said in an interview. “Nowadays on
economic policy, we don’t see much of that.”
Other signers include former Fed Chairmen Janet Yellen and Ben Bernanke
as well as former White House economic advisers Austan Goolsbee and
Christina Romer.
The economists’ endorsement could deliver momentum to a carbon
tax-and-dividend plan devised by two former secretaries of state --
James Baker and George P. Shultz -- that has already drawn financial
support from Exxon Mobil Corp., ConocoPhillips and Exelon Corp.
Pressure is already mounting in Congress to take aim at climate change,
following dire warnings about the growing consequences from a United
Nations panel and the U.S. government. House Speaker Nancy Pelosi, a
Democrat from California, has promised the chamber will take up climate
legislation. And some Democrats, led by freshman Representative
Alexandria Ocasio-Cortez of New York, are advancing a so-called Green
New Deal that calls for phasing out fossil fuels by 2030.
That effort may not get far in the current political dynamic, with
Republicans controlling the Senate and the White House. President Donald
Trump said he opposed taxing greenhouse gas emissions while campaigning
for the White House. And House Republicans voted in July to condemn the
very idea of a carbon tax as “detrimental” to the U.S. economy, with
only six Republicans breaking ranks to vote against the measure.
Advocates of the proposal say they are trying to build momentum for
action two years from now.
The economists’ statement includes proclamations that could have broad
appeal to Republicans. For instance, the group highlights the importance
of keeping the tax “revenue neutral” by giving rebates to all Americans,
a tactic the economists say will “avoid debates over the size of
government.” They also tout the promise that by replacing inefficient
“cumbersome regulations” with a carbon tax, the government can “promote
economic growth and provide the regulatory certainty companies need for
long-term investment in clean-energy alternatives.”
“This is a turning point in Republican climate policy, where the GOP
economic brain trust unites behind the Baker-Shultz carbon dividends
plan,” said Republican Trent Lott, the former Senate majority leader
helping push the proposal.
Many economists have favored a carbon tax as the most effective strategy
for discouraging greenhouse gas emissions and combating climate change.
But the economists now are going further by stressing that the revenue
should be rebated to citizens, instead of being used to reduce the
deficit, fund government or pare income taxes.
“For the first time, there’s consensus among economists on what to do
with the money, and the answer is to give it back to the American
people,” said Ted Halstead, head of the Climate Leadership Council
backing the plan.
That approach is key to ensuring it is a progressive tax that ends up
helping the poor, instead of just hiking their energy bills. The premise
is that periodic dividend checks could more than make up for the hike in
costs for poor- and middle-income Americans.