Republican elders float carbon tax, plan White House lobbying campaign

CNN Politics
February 7, 2017
By John King

Hoping to jump-start the debate on climate change, a group of high-profile Republicans that includes three former Cabinet secretaries is calling for a substantial new carbon tax, and then to offset the pain higher prices cause the middle class by returning all money raised to American taxpayers.

The plan, set to be released in Washington, includes a direct challenge to Republican politicians who have denied or played down the idea that human behavior is a significant factor in climate change.

President Donald Trump, of course, is on that list.

The vast majority of the scientific community agrees that humans are warming the planet, primarily by burning fossil fuels.

A draft of the new group’s mission statement, obtained by CNN, says in part: “Now that the Republican Party controls the White House, both chambers of Congress and a majority of state legislatures, it has the opportunity and responsibility to promote a climate plan that showcases the full power of enduring conservative convictions”

The group is meeting Wednesday morning at the White House with Gary Cohn, the former Wall Street executive who is Trump’s top economic adviser. Among the key White House advisers tentatively scheduled to join or at least drop by that meeting are Ivanka Trump, her husband, Jared Kushner, and Chief of Staff Reince Priebus.

Additional meetings with Trump Cabinet members and key congressional players also are scheduled beginning Wednesday. They also hope to meet with Vice President Mike Pence.

The group, which is releasing its plan under the auspices of the Climate Leadership Council, includes James Baker, the only person to have served as White House chief of staff, treasury secretary and secretary of state.

“We have a Republican administration now – a Republican administration that could show leadership on this issue and present to the blue collar workers who were so important to Trump’s victory – something that does not increase, build government, that is conservative, that is free market – let the market determine – and there is some support out there for that now and from some quarters that normally didn’t support this kind of thing,” Baker told CNN.

Baker believes returning the carbon tax proceeds in checks to families would have appeal with Trump’s blue collar base. The logic behind a carbon tax is that it makes polluting the atmosphere – such as by burning coal, oil and natural gas – more expensive. And it creates an incentive for companies and people to move toward cleaner, renewable sources of energy.

The idea of a major carbon tax – the group suggests an initial rate of $40 a ton and then escalation from there – is at first glance a non-starter in a Washington now run by a GOP president skeptical that climate change is real and a Republican Congress looking to cut taxes.

But Baker and others in the group believe they can at least change the conversation by adding new ideas and new pressure for Republicans to use their power to act.

Other members of the new group include:

  • George Shultz, who has led the Labor, Treasury and State departments as well as serving as director of the Office of Management and Budget;
  • Hank Paulson, who was Treasury secretary in the George W. Bush administration;
  • Martin Feldstein, a conservative economist who led President Ronald Reagan’s Council of Economic advisers;
  • Greg Mankiw, the CEA chief for George W. Bush;
  • Rob Walton, former Walmart chairman of the board of directors;
  • California venture capitalist Thomas Stephenson;
  • Ted Halstead, founder of the New America Foundation.

For most of the group, including Baker and Schultz, it is a first foray into the climate debate, but they are hopeful other Republicans will join the effort and they are in conversations with several other leading Republicans about either joining the push directly or offering words of support. Republicans have backed carbon tax proposals in the past, but not in recent years.

This new group’s members are well aware of the tough political climate at the White House and on Capitol Hill, but say their proposal is crafted to deal with many of the objections raised when a carbon tax has been floated before.

Some of the specifics:

*An Escalating Carbon Tax: Starting the tax at $40 a ton, with an understanding it would eventually have to be raised to $50 or more to have the desired impact on consumption and emissions. At $40 a ton, the group estimates its carbon tax would raise $300 billion annually. At $40, the tax would add an estimated 36 cents per gallon to gas prices.

*Carbon Dividends: All revenue from the new tax would be rebated back to American taxpayers. The plan calls for the Social Security Administration to administer the plan and estimates the typical family of four would receive $2,000 a year. Conservative critics of the carbon tax, including the Koch brothers organizations, have criticized carbon tax proposals as unfair to working families. The dividend idea in the new plan is designed to address that and to keep the proposal neutral from a government revenue perspective.

*Border Adjustment Fee: High carbon imports would be subject to a tariff adjustment similar to the proposal House Republicans are considering as part of their broader tax reform proposal.

*Regulatory Rollout: The plan calls for the repeal of the Obama administration’s Clean Power Plan and a host of other Environmental Protection Agency regulations aimed at reducing carbon emissions. To make this politically palatable, the authors call for an initial carbon tax rate high enough to guarantee emissions reductions that exceed those forced by current regulations.

“Such a plan could strengthen our economy, benefit working-class Americans, reduce regulations, protect our natural heritage and consolidate a new era of Republican leadership,” the group argues in its mission statement. “These benefits accrue regardless of one’s views on climate science.”

Trump at times has dismissed the severity of the issue and even called climate change a “hoax” generated by China. But at other times, including in an interview with The New York Times not long after winning the election, he said he has an open mind and acknowledged “some connectivity” between warming temperatures and human behavior.

“There is some, something,” he told The Times. “It depends on how much. It also depends on how much it’s going to cost our companies. You have to understand, our companies are noncompetitive right now.”

One interesting wrinkle in the new group’s pitch: Republicans of yesterday trying to shake the party’s current leadership to move on an issue they cast as critical to the GOP’s future.

“Increasingly, climate change is becoming a defining issue for this next generation of Americans, which the GOP ignores at its own peril,” the new proposal says. “Meanwhile Asians and Hispanics – the fastest growing demographic groups – are also deeply concerned about climate change. A carbon dividends plan offers an opportunity to appeal to all three key demographics, while illustrating for them the superiority of market- based solutions. “