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Why Obama And Baucus Should Push For A Carbon Tax

Memo Pad Politics

Why Obama And Baucus Should Push For A Carbon Tax


A carbon tax would bring long-term rewards, but it will take leaders willing to make short-term sacrifices.

We are at an unacknowledged turning point for the economy and the environment. We could, right now, substantially reduce our debt and deficit projections, take a major step toward a better environment, create a simpler and fairer tax system, make job creation easier, and raise economic growth a bit. For all of these reasons, we could and should adopt a carbon tax.

Taking this step depends on two men: President Obama and Senator Max Baucus, chair of the Senate Finance Committee. Both men want to leave an important legacy, and both are in a unique political position: They still possess real political power, but neither will ever face another election. (Obama, of course, is limited to two terms, and Baucus has just announced that he will retire.) Acting together, the two of them could completely change the odds of enacting a carbon tax this year.

Right now, if you ask around, as I have, there are many across the ideological spectrum who agree that a carbon tax would help us solve a lot of problems, but they won’t take a public step because they see no leadership support. My own gut feeling is that there would even be energy industry support for a carbon tax. President Obama and Senator Baucus could change this picture by making a carbon tax a priority and building bipartisan support for the project.

Why should we care? Let’s look at four issues: federal revenues, the tax system, jobs, and – oh, yeah – the environment.

First, a carbon tax of $20 a ton would raise about $120 billion a year, or $1.2 trillion over a decade. Right now, everyone anywhere near the budget debates is in a convenient and delusional state of mind about revenues. The conventional wisdom is that we either do not need more revenues or they are easy to find. So here are some counter-assertions: (1) despite the right’s imagination, we are not going to cope with the retirement of the boomers, the doubling of folks on Medicare, and our need for fundamental infrastructure investment without new revenues; (2) despite the speeches the left makes to itself, the problem won’t be solved by taxing whomever the left decides is rich; (3) we aren’t going to end the home mortgage and charitable deductions. There will come a point when $1 trillion in new revenue over the next decade that actually makes the economy and the world a little better will look pretty interesting, so why not try for it now?


  1. Dominick Vila May 2, 2013

    I support this, but doint it after tackling emotional issues such as gun control and gay marriage would be the kiss of death for democrats running in 2014 and beyond. This proposal will be portrayed by the GOP as another example of taxing the middle class, with devastating long term consequences to Democrats running for elected office at all levels. Considering the political risks, I believe the best approach would be a media campaign to emphasize the benefits of walking to the grocery store when possible, vacationing near our homes, using public transportation, and being more conscious of the consequences of carbon emissions and other pollutants.

  2. docb May 2, 2013

    Baucus has been worthless to the Dems…his legacy was blown with Health care reform. Schweittzer will be a breath of fresh air…The President does not need to to anything with the traitor!

  3. option31 May 2, 2013

    The deniers are those that refuse to see the fact that global warming is a hoax. It is May 2nd and the midwest has just been hit with a snow storm with another coming this weekend. This is the coldest start to spring in US History. It is so cool that farm fields that are normally planted by now have yet to be tilled prior to planting. Snow has fallen in the last 24 hours form Michigan to Texas. In Ireland in excess of 30,000 animals have did front he extreme cold and snow. In Scotland the prolonged cold has decimated lobsters, supply is 10% of normal. This carbon tax is like the window tax of the middle ages where it kept the masses down through taxes. This is just another scheme to hurt the poor and working class in favor of the ruling class.

    1. m8lsem May 3, 2013

      Dear option31, individual area local weather is not a thermometer for global warming. We have a world weather system heavily influenced by ocean temperatures and currents. One consequence of a runaway heating would be on-land glaciation, for example, as an open Arctic Ocean will vastly increase snowfall in northern Alaska, Canada, and Russia. Indeed, that’s what some scientists believe began glaciation in North America.
      Be that all as it may, snow in the Midwest in early May can be a symptom of warming happening in the oceans. Heck, we had frost here in Idaho at 1200 feet above sea level day before yesterday.
      Ask the folks in Florida and Greenland what’s going on, and you’ll hear much higher temperatures and glacial retreat. Ask the folks in Antarctica what’s going on, and you’ll hear glacial retreat.

    2. ralphkr May 4, 2013

      And yet, option31, I never had to shovel snow once this past winter at it is currently in the 70s where I live which is just a few miles from the Canadian border. By the way, it is my understanding that global warming shall result in our local climate (all time record low of 7 above and high in the 80s) becoming about the same as Minot, ND, and UK & Ireland shall have the same climate as enjoyed now by Siberia because the ocean current bringing warm water up from the south shall be interrupted.

  4. m8lsem May 3, 2013

    The problem I see with this approach is that the inevitable consequence of all of this respecting senior citizens, is that the revenue from which Social Security and Medicare are provided will no longer be special revenue identified to those programs, but general revenue, freeing up the right-wing to ‘honestly’ scream about the expense and propose major reductions.

    And I am myself persuaded that graduated income taxes are far more fair than any other generally applicable tax. I remember my Dad hiring someone when his marginal rate was over 90% and saying that Uncle Sam was going to pay 90% of the added payroll. When hiring someone adds a marginal expenditure of only 10% of what the salary is going to be, hiring is easy. Now I am not suggesting any generally applicable 90%, only pointing out the effect that higher taxes have of making deductible expenses cheaper, a redirections of inevitable expense from the ‘revenuers’ to the vendor. In that ‘perverse’ way, high taxes can stimulate investment and hiring.

    That being said, the carbon tax is as described a very nice idea.

  5. montanabill May 3, 2013

    Mr. Cutter’s opening statement is pablum without substance. He claims we could substantially reduce our debt and deficit. How? With a carbon tax? So far, all Democrats do with more revenue is spend more. A major step toward a better environment? How? Will a carbon tax magically reduce the amount of energy we need? Create a fairer and simpler tax system, how? I didn’t see him outline getting rid of our current tax code monstrosity and replacing it with a flat tax or equivalent? Make job creation easier? How? Raise economic growth? By taxing???

    1. Jim Myers May 4, 2013

      As long as I can remember, the Democrats have been known as the “Tax and Spend” crowd. A title that is well earned.

      HOWEVER, the Republicans have turned the “Borrow and Spend” label into their own, (HIDDEN IN PLAIN SIGHT), agenda.


      However, I do think the “Carbon Tax” is long overdue.

      It just makes sense to heavily tax this pollutant in order to force the industrial complex to make the changes necessary to make our environment more sustainable.

      1. montanabill May 4, 2013

        Maybe, but this might cause you to question that:

        www dot slate dot com/articles/health_and_science/project_syndicate/2012/09/thanks_to_fracking_u_s_carbon_emissions_are_at_the_lowest_levels_in_20_years_.html

  6. Allan Richardson May 4, 2013

    The problem with a carbon tax ALONE is that millions of lower income workers are “stuck” living in rural areas where jobs are far away, driving older cars (and in rural areas, mostly pickup trucks) on long commutes. Ideally, all these people would get jobs closer to home, or be able to move into a city or suburban home, and get brand new vehicles with lower or zero fossil fuel consumption, but if that were possible for them, they would have done it already. Adding an additional tax to the large amounts of fuel they are FORCED to buy to get to work to support their families would make their poverty worse while waiting for the transition.

    I propose a special tax at the pump on non-renewable fuels to be offset by a special REFUNDABLE tax credit, to REPLACE current mileage allowance deductions, and ADD commuting mileage as tax-deductible. This tax credit would be computed by EMPLOYERS on each paycheck and advanced to the workers immediately (those who are eligible for more would be able to show this at tax return time). Computing this accurately would not be difficult, since most employers use computers, and have on record the employee’s home address, work address, and the number of trips to work in a pay period. They also have on record any “exceptional” trips to alternate or additional work sites, and for business trips by air, the commute to and from the departure airport would be used.

    The idea is that the rates for the tax and the credit would be designed to compensate people for the difference between what they would pay if they were totally on renewable energy and what they must pay with an AVERAGE vehicle for their commute mileage. As the country moves toward renewable fuels, that average will go down, reducing the amount of the tax credit GRADUALLY. Meanwhile, the tax would be dedicated to three things: helping to finance research to make renewable energy cheaper and more efficient; helping to finance manufacturer retooling to change from inefficient vehicles that must use fossil fuel to efficient vehicles using renewable fuels; AND helping low-to-middle-income workers finance their OWN transition to more fuel efficiency.

    As long as proposed carbon taxes are NOT balanced by help for “Joe Lunchbucket” who lives in, say, Canton, GA and drives an old Ford pickup to his job in south Atlanta, this very demographic will dig in their heels AGAINST “government regulation” that costs THEM money in the short term. So let’s get together and brainstorm new ways to shift the cost of the transition to the more affluent and to the future in which the transition will pay us back, both economically and environmentally.

    Otherwise, invest in some OCEANFRONT property in Valdosta.

  7. Laughing Nimbus May 4, 2013

    Will this CARBON TAX cover all of the money that Bernanke and his Ivy-League Cabal are printing and leveraging? Let’s give it a sound-byte: “FEES FOR TREES”.


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