Statements on Introduced Bills and Joint Resolutions
Floor Speech
By Mr. WHITEHOUSE (for himself and Mr. SCHATZ):
S. 2940. A bill to provide for carbon dioxide and other greenhouse gas emission fees; to the Committee on Finance.
Mr. WHITEHOUSE. Mr. President, I am here now for the, I guess, 80th time in my weekly series of speeches about carbon pollution to ask the Senate and Congress to wake up to the growing threat from climate change, and today I am also announcing the introduction of the American Opportunity Carbon Fee Act.
Carbon dioxide from burning fossil fuels is changing the atmosphere and the oceans. We see it everywhere. We see it in storm-damaged homes and flooded cities. We see it in drought-stricken farms and raging wildfires. We see it in fish disappearing from warming and acidifying waters. We see it in shifting habitats and migrating contagions.
All of these things we see carry costs--real economic dollars-and-cents costs--to homeowners, to business owners, and to taxpayers. That cost is described as the social cost of carbon. It is the damage that people and communities suffer from carbon pollution and climate change. None of those costs from carbon pollution are factored into the price of the coal or the oil or the natural gas that releases this carbon. The fossil fuel companies that sell and burn those products have taken those costs and offloaded them onto society--onto the rest of us.
That is not fair. If you rake your lawn, you don't get to dump all the leaves over your neighbor's fence and leave him or her the problem of cleaning up your leaves. If you are located on a river, you don't get to dump your garbage in the river and leave it to the downstream property owners to clean up your mess. Yet the big carbon polluters transfer the costs--all those costs of climate change--onto everyone else--all the rest of us.
The U.S. Government has done some estimating about what that social cost of carbon pollution is and their estimate is that it is around $40 per ton of carbon dioxide emitted, and that that amount rises over time as carbon pollution creates more and more harm and havoc. So a climbing $40 per ton is the cost, but the current effective price on carbon pollution is zero.
By making their carbon pollution free, we subsidize fossil fuel companies to the tune of hundreds of billions of dollars annually. By making their carbon pollution free, we actually rig the game, giving polluters an unfair advantage over newer and cleaner technologies. It is a racket. It is a form of cheating. And corporate polluters love it because it gives them advantage, and they fight tooth and nail to protect it in this body. But it is wrong.
As University of Chicago economics professor Michael Greenstone recently explained, this concept--that offloading social costs is wrong and that there should be a proper price on carbon--is very widely accepted. Here is what he said:
The media always reports that there's near consensus among scientists about the fact that human activity impacts climate change. What does not receive as much attention is that there's even greater consensus among economists, starting from Milton Friedman and moving into the most left-wing economists that you could find, that the obvious correct public policy solution to this is to put a price on carbon. It's not controversial.
Mr. President, I ask unanimous consent to have printed in the Record, at the conclusion of my remarks, an article from The Economist magazine.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. WHITEHOUSE. The economics editor of The Economist magazine--which is certainly no hotbed of left wing sentiment--Ryan Avent, has posted a comment on climate policy and his question is: ``Do economists all favour a carbon tax?'' He says:
The economic solution is to tax the externality--
That is the offloaded cost.
--so that the social cost of carbon is reflected in the individual consumer's decision. The carbon tax is an elegant solution to a complicated problem.
So today I am introducing this bill to put a price on carbon emissions. It is simple. It will require the polluters to pay a per-ton fee for their pollution and all of the revenue generated by those payments will go back to the American people.
I want to thank Senator Brian Schatz of Hawaii for cosponsoring this measure. He has been a great colleague on environmental issues and on our discussion regarding climate change. The bill that we introduce today establishes an economy-wide fee on carbon dioxide and other greenhouse gas emissions, tracking that social cost of carbon, starting at $42 per ton and going up by 2 percent per year, plus inflation.
We know how much carbon dioxide each unit of coal, oil, and natural gas produces, so we assess the fee on fossil fuel producers, processors, and importers. That makes it simple to administer. The whole bill is only 29 pages long.
For other varieties of greenhouse gases and nonfossil fuel sources of CO2, we assess our fees only on the very largest emitters--those emitting more than 25,000 tons a year. This is the same universe of companies that we already require to monitor and report on their carbon emissions.
A significant greenhouse gas concern is the methane that escapes throughout production and distribution. To address this, we require annual reports on methane leakage and direct the Treasury Secretary to adjust the fees on fossil fuels to account for that leakage. This fee will promote innovation and help further reduce carbon emissions.
Fossil fuel companies that capture and sequester or use carbon dioxide or innovate new ways to encapsulate it in materials or products will get credits to offset the carbon fee.
We also take care to ensure that American manufacturers are not put at a competitive disadvantage globally. Imports from nations that don't price emissions will face a tariff that the Treasury Secretary is authorized to impose at the border. Likewise, the Secretary is authorized to rebate American producers on their exports.
I would note one thing. Since regulation is usually a response to market failure, a well-designed carbon fee would also properly open a conversation about which and, indeed, whether carbon regulations are still needed. A carbon fee by itself is much more efficient and predictable than complex regulations, and I am open to that conversation.
That is it. It is that simple. Make the polluters pay the full costs of their products; end the cheating; level the playing field for other forms of energy, such as wind and solar, to compete fairly; keep the fee mechanism simple; and maintain a border adjustment that keeps American goods competitive. Twenty-nine pages.
On the flip side, the carbon fee will generate significant new Federal revenue. The technicians are still working on the official revenue estimate for the bill, but it should be at least $1.5 trillion and perhaps more than $2 trillion over the 10-year budget periods we work with in Congress and on the Budget Committee.
Whatever the exact number is, all of it should be returned to the American people. So the bill establishes an American opportunity trust fund to hold the revenue and return it to the American people. This could include through tax cuts, through student loan debt relief, through increased Social Security benefits for seniors, through transition assistance to workers in fossil fuel industries, or even just a direct dividend back to the American family. I am looking forward to deciding with my colleagues on both sides of the aisle what is the best way to return this revenue, but I do believe every dollar should go back to the American people in some form. To use economic jargon, this should be revenue neutral.
This is one example to consider, just a hypothetical: What could we do? We could cut the corporate tax rate in America from 35 percent to 30 percent. That has been a bipartisan goal for a long time. It was part of Romney's Presidential campaign. We could accomplish it with this measure.
We would have enough money left to go to the payroll tax and for every worker rebate the first $500 they paid in payroll tax. So every American worker who paid more than $500 in payroll tax would get a $500 check to spend on whatever they wanted. The first tax reduction at the corporate level uses about $600 billion to offset. This uses about $700 billion to offset.
Third, we could add to that a boost to the EITC--the earned income tax credit--which supports many American families at the very low end of the economic spectrum. We could do that by literally hundreds of dollars a year for millions of lower income families. Again, there has been bipartisan support for expanding the earned income tax credit.
Three important goals, all reducing taxes or adding to a tax credit--all should have strong bipartisan support.
The American Opportunity Carbon Fee Act has revenue that could make our companies more competitive, could give every single worker a tax rebate, and could boost benefits for struggling low-income families.
Last month the Des Moines Register ran a column titled `` `Carbon tax' would help Iowa, planet.'' The column said this:
The United States could take the lead by acting on its own, watch its economy grow, and let the rest of the world catch up.
In the process, the United States would gain mastery of the sustainable-energy technology that will drive economic growth in the future.
I ask unanimous consent that the article be printed in the Record at the end of my statement.
George W. Bush's Treasury Secretary Hank Paulson gave the same message earlier this year, saying:
A tax on carbon emissions will unleash a wave of innovation to develop technologies, lower the costs of clean energy and create jobs as we and other nations develop new energy products and infrastructure.
Emphasizing that, coincidentally, is an article in today's New York Times headed ``A Carbon Tax Could Bolster Green Energy.'' As we all know, green energy jobs are exploding in this country, and we need more of them.
Treasury Secretary Paulson continued:
Republicans must not shrink from this issue. Risk management is a conservative principle.
Secretary Paulson is not alone. Conservative figures such as George Shultz, who was Secretary of State under President Reagan, emphatically support a carbon fee as the best way to address carbon pollution.
Art Laffer, one of the architects of President Reagan's economic plan, had this to say about a carbon tax and related payroll tax cut:
I think that would be very good for the economy and as an adjunct, it would reduce also carbon emissions into the environment.
I ask unanimous consent that a 2013 New York Times op-ed be printed in the Record at the conclusion of my remarks.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. WHITEHOUSE. In this New York Times op-ed, Bill Ruckelshaus, Christine Todd Whitman, Lee Thomas, and William Reilly wrote:
A market-based approach, like a carbon tax, would be the best path to reducing greenhouse-gas emissions.
I know the big carbon polluters want this issue ignored. I know that. They want to squeeze one more quarter, one more year of public subsidy for their product from the rest of us. From their point of view, lunch is good when someone else is picking up the tab. But notwithstanding the power of the big carbon polluters, I still believe this is a problem we can solve.
Not long ago this would have been a bipartisan bill. Not long ago leading voices on the Republican side agreed with Democrats that the dangers of climate change were real. Not long ago leading Republican voices agreed that carbon emissions were the culprit. And it was not long ago that leading Republican voices agreed that Congress had a responsibility to act. One Republican Senator won his party's nomination for President on a solid climate change platform. Other Republican colleagues in the Senate introduced, cosponsored, or voted for meaningful climate legislation in the past. Some of the proposals were market-based, revenue-neutral solutions aligned with Republican free market values, just like my bill today.
The junior Senator from Arizona--a Republican--was an original cosponsor of a carbon fee bill when he served in the House of Representatives. That proposal, introduced with former Republican Congressman Bob Inglis, would have placed a $15-per-ton fee on carbon pollution in 2010, more than $20 in 2015, and $100 in 2040. At the time, our colleague from Arizona had this to say:
If there's one economic axiom, it's that if you want less of something, you tax it. Clearly, it's in our interest to move away from carbon.
We simply need conscientious Republicans and Democrats to work together in good faith on a platform of fact and common sense. We know this can be done because it is being done.
At the end of a speech about the American Revolution, the historian David McCullough was asked by someone in the audience why it was that our Founding Fathers had the courage to pledge their lives, their fortunes, and their sacred honor to the cause of independence when signing the Declaration was signing their own death warrant. He had a very simple answer. He said: It was a courageous time.
Well, clearly in courageous times Americans have done far more than simply stand up to polluters to serve the interests of this great Republic. It only takes courage to make this a courageous time too.
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