Summary: Some prominent conservatives have proposed a bipartisan compromise to break the gridlock on public policies to fight climate change. While unlikely to gain Republicans’ support in its present form, a small change would make it attractive: use the new funds to cut taxes for the rich. It would be a win-win for Republicans, and offer Democrats a harsh choice — gain their most-sought policy goal by betrayal of their party’s core beliefs.
- Proposing the Great Swap.
- Origin and reactions.
- A Great Betrayal?
- For More Information.
(1) Proposing the Great Swap
A new phase in the climate wars began with “A Conservative Answer to Climate Change“, an op-ed in the Wall Street Journal on 7 February 2017, George P. Schultz and JAMES A. BAKER III (both former Secretaries of State) proposed a Federal carbon tax of $40 per ton, with the proceeds distributed back to Americans — combined with loosening of pollution regulations and “adjustments” for the carbon content of imports and exports.
On February 8 the Climate Leadership Council released “The Conservative Case for Carbon Dividends”. Members of the CLC met with Gary Cohen (Director of the National Economic Council) to discuss their proposal. George P. Schultz and Ted Halstead elaborated on it in an article at the National Review on 28 February 2017 — “Enacting a carbon tax would free up private firms to find the most efficient ways to cut emissions.” From that article…
“According to the Treasury Department and several independent studies, the bottom 70% of Americans would come out ahead if our plan were enacted, meaning that they would receive more in dividends than they would pay in increased energy costs. …our program might be so popular with working-class Americans that it would lead them to support continued increases in the carbon tax to increase their dividends, in addition to promoting the clean-energy alternatives that the vast majority of voters, including Republicans, clearly favor.”
(2) Origin of the Great Swap, and reactions to it.
Many Conservatives went berserk. No surprise — last June Republicans in the House unanimously voted to condemn a carbon tax. Five prominent conservatives immediately responded with a letter to Cohn explaining why that would be bad policy. My favorite is this crazy exaggeration about the funds produced by a carbon tax — a highly regressive tax — from a National Review article by Rupert Darwall.
“The package is topped off by giving away the entire proceeds of the carbon tax to anyone with a Social Security number. The political bet is that the lure of free money for all…”
This bipartisan policy shift has been proposed before, most notably by the Progressive Policy Institute in their November 2016 report by Joseph E. Aldy: “Long-Term Carbon Policy: The Great Swap“. He described the CLC proposal in “The Great Swap” at Democracy — “Does a deal now gaining momentum across the aisle actually have the potential to break the stalemate on climate change?” Aldy describes the result in delusional terms.
“Republicans would tap into new revenues to support a sweeping tax overhaul. …An economy-wide carbon tax would produce substantial revenues — as much as several hundred billion dollars annually — that could finance significant reductions in existing tax rates. For example, a credible carbon tax could allow for significant cuts to payroll taxes to benefit workers and to reduce corporate income tax rates to promote business investment. It could also finance the infrastructure investment the President-elect has highlighted as part of his incoming Administration’s agenda.”
This will not happen. Republicans top policy priority is cutting taxes for the rich. That’s the big reason they hate Obamacare: it is funded by taxes on the rich (as seen in the redistributive effect of its repeal). It is delusional to expect that the GOP would use funds from a carbon tax to lower payroll taxes for American workers. As for raising taxes to boost spending, that is the opposite of core GOP doctrine; they want to cut spending and cut taxes.
(3) A Great Betrayal?
In 1964 the Republican Party began its great betrayal, abandoning its century-deep roots as defenders of African-American’s rights — exchanging their honor for political power in the South. They saw the opportunity created by Johnson’s great civil rights legislation. It always comes down to choice.
Now comes the temptation of the Democrats. For a decade they have made the core of their platform public policy measures to fight climate change. A large fraction of them, ignoring the IPCC, consider climate change from global warming an existential threat to humanity. The “great swap” could accomplish that. But the Republicans will demand a price. After all, as Schultz and Halstead said, the GOP does not need the Democrats’ support to lighten regulations on polluters.
“The final argument put forth by our critics is that Republicans would be foolish to trade a carbon dividends plan for regulatory relief, as the party is now in a position to roll back all Obama-era climate measures without giving anything up in exchange.”
The Democrats will have to give up something to get a carbon tax. My guess is the GOP will offer the Democrats a harsh choice: tax carbon if they agree that the bulk of the proceeds go to tax cuts for the rich and corporations. That would complete the Democrats’ great betrayal, begun in the 1970’s, abandoning their long support for America’s workers to embrace polices sought by upper class professionals, managers and academics. That would be a logical decision, since the middle and lower classes are weak and apathetic — while the upper classes are politically mobilized and affluent.
If the GOP makes the offer, how will the Democrats choose? The Republicans faced such a choice in the 1960s. Their decision has made them powerful.
“Choice. The problem is choice.”
— Neo, in The Matrix Reloaded.
For More Information
If you liked this post, like us on Facebook and follow us on Twitter. For more information about this vital issue see The keys to understanding climate change, see posts about Reforming America: steps to new politics, see my posts about income taxes, about the Republican Party, and especially these posts…
- American politics isn’t broken. It’s working just fine for the 1%.
- On Martin Luther King Jr. Day, let the GOP remember its great betrayal.
- Climate activists’ final act, as they move into the last stage of grief.
- A look at the future of global warming. Our political response depends on its trend.
Books explaining how we’re trapped by America’s Left and Right.
Read Thomas Frank to learn more about our horrific political situation, trapped as the Left and Right move against us: Listen, Liberal: Or, What Ever Happened to the Party of the People? and The Wrecking Crew: How Conservatives Ruined Government, Enriched Themselves, and Beggared the Nation.