I recently joined several other former senior Republican officials in proposing a plan to limit carbon dioxide emissions. The group includes Jim Baker, Henry Paulson, and George Shultz — all of them Republican former Treasury secretaries — as well as my Harvard colleague Greg Mankiw, who served as Chairman of the President’s Council of Economic Advisers under George W. Bush. I served in the same role under President Ronald Reagan.
I cite these participants to emphasize the level of conservative support for this proposal, which comes at a time when Republicans have generally opposed government efforts to limit CO2 emissions, while Democrats have favored such plans. We hope that Republican support for our plan will provide the basis for bipartisan legislation.
The plan calls for combining taxes on all sources of CO2 with a rebate of the collected revenues to all households on a per capita basis. Experts tell us that a tax of $40 per metric ton would achieve greater reduction in CO2 than all of the existing emissions regulations. Our plan therefore calls for legislation that eliminates all of this intrusive regulation in tandem with the tax-and-dividend plan.
The strategy of a carbon tax is very simple: require each household and business that causes CO2 emissions to pay a tax in proportion to the volume of emissions that they create – whether by using gasoline to drive their car or oil to heat their home or in operating a business.
We believe the risk that CO2 emissions will lead to dangerous future increases in global temperature is high enough that a policy should be adopted to reduce it.
After this plan was publicly released earlier this month, I received a very large number of emails from individuals on the left and right saying how much they like the idea. Democrats applaud Republicans for proposing a plan to reduce CO2 emissions and combat global warming. Republicans like the idea of dealing effectively with global warming while eliminating the existing environmental regulations.
Democrats are traditionally the main U.S. advocates of legislation to reduce CO2 emissions. With Republicans now in control of both houses of Congress and the presidency, the time is right to enact a plan that will command bipartisan support.