[Congressional Record Volume 161, Number 92 (Wednesday, June 10, 2015)]
[Senate]
[Pages S4031-S4033]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. WHITEHOUSE (for himself and Mr. Schatz):
  S. 1548. A bill to amend the Internal Revenue Code of 1986 to provide 
for carbon dioxide and other greenhouse gas emission fees, reduce the 
rate of the corporate income tax, provide tax credits to workers, 
deliver additional benefits to retired and disabled Americans, and for 
other purposes; to the Committee on Finance.
  Mr. WHITEHOUSE. Mr. President, I rise this evening to introduce, 
along with my lead cosponsor, Senator Schatz of Hawaii, the American 
Opportunity Carbon Fee Act of 2015.
  We announced this legislation this afternoon at an event hosted by 
the American Enterprise Institute, and I want to thank the American 
Enterprise Institute for their hospitality. I think their interest in 
this idea clearly reflects the difference between core conservative 
economic principles and simply being pushed around by the hectoring of 
the fossil fuel industry. There is a difference between the two, and 
this bill meets legitimate conservative economic principles.
  I will start by saying the obvious, which is that climate change is 
real. It is virtually universal in peer-reviewed science that climate 
change is real, that carbon pollution from burning fossil fuels is 
causing unprecedented climate and oceanic changes. Every major 
scientific society in our country has said so. Our brightest scientists 
at NOAA and at NASA are unequivocal. The fundamental science of climate 
change is, indeed, settled.
  In the details of local application and the extent to which a 
particular storm is caused by or exacerbated by climate change, in the 
vagaries of prediction about how things are going to be 10 or 15 years 
out at those margins, yes--there is always room for conversation and 
debate at the margins, but the core science of climate change is beyond 
legitimate debate. It is known science, like debating gravity.
  Americans get it. In poll after poll, Americans understand that 
climate change is real, know that humans are the cause, and want their 
government to do something about it.
  Climate change is not our only national challenge. The Federal Tax 
Code, for example, is a mess, with one of the highest corporate tax 
rates in the developed world, while some take advantage of loopholes to 
pay far less than others and, indeed, some pay nothing at all. We have 
an economic recovery that has left far too many Americans behind, and 
we have a job market that has still not fully rebounded.
  What if our answer to climate change helped address those other 
concerns as well? What if that approach was firmly grounded in core 
conservative economic principles, values such as property rights, 
market efficiency, and personal liberty?
  Aparna Mathur of the free-market think tank the American Enterprise 
Institute conducted an analysis with a colleague from the Brookings 
Institution showing that a carbon fee could reduce emissions, shore up 
the country's fiscal outlook, and play an important part in broader tax 
reform. AEI's Kevin Hassett, Steven Hayward, and Kenneth Greene have 
pointed out that a carbon fee could obviate some environmental 
regulations. The idea behind it is extremely simple. You levy a price 
on the thing you don't want--carbon pollution--and you use the revenue 
to help with things you do want.
  Whether they are called neighborhood effects or negative 
externalities, the effects of carbon pollution harm us all. 
Conservative economist Milton Friedman wrote that the government exists 
in part to reduce such harms. When the costs of such externalities 
don't get factored into the price of a product, conservative economic 
doctrine--indeed, all economic doctrine--classifies that as a subsidy--
a market failure. Right now for fossil fuel producers, that subsidy is 
immense, giving them artificial advantage over cleaner energy sources. 
The International Monetary Fund just postulated that the annual subsidy 
just in America to the fossil fuel industry is $700 billion. We tend to 
talk around here in budget cycles of 10 years. That means it is $7 
trillion in a budget cycle. That is a subsidy, all right.
  A carbon fee can repair that market failure by incorporating unpriced 
damage into the costs of fossil fuels. Then the free market--not 
industry, not government--can drive the best energy mix for the 
country, with everyone competing on level ground.
  That is how Nixon's Treasury Secretary and Reagan's Secretary of 
State George Shultz sees it. He and the late Nobel laureate Gary S. 
Becker made the case for a carbon fee in the Wall Street Journal. They 
wrote:


[[Page S4032]]


       Americans like to compete on a level playing field. All 
     players should have an equal opportunity to win based on 
     their competitive merits, not on some artificial imbalance 
     that gives someone or some group a special advantage.

  Such as a $700 billion-a-year special advantage.
  Just last week, even the CEOs of Europe's major oil companies called 
on governments to institute national prices on carbon.
  This could be a big economic win. George W. Bush's Treasury Secretary 
Hank Paulson said, ``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.''
  It is in that spirit that I am introducing the American Opportunity 
Carbon Fee Act--a framework I hope both Republicans and Democrats can 
embrace. The bill would establish an economy-wide carbon fee on carbon 
dioxide and other greenhouse gas emissions. The fee would be assessed 
way upstream where it is easiest to administer, minimizing the universe 
of taxpayers and the compliance burden--at the coal mine, at the 
natural gas processing station, and at the petroleum refinery.
  Other sources of greenhouse gas emissions would be charged at 
existing reporting requirements that are rate tied to the carbon 
dioxide equivalency of each gas. Fluorocarbons are assessed at a 
special rate that accounts for their high greenhouse potency. 
Sequestering, utilizing, or encapsulating carbon dioxide earns you a 
credit.
  My bill sets the fee per ton of carbon emitted at $45 for 2016. That 
is the central range of the social cost of carbon as estimated by the 
Office of Management and Budget. That fee would increase each year at a 
real 2 percent. When emissions fall 80 percent below 2005 levels, the 
annual adjustment falls to inflation.
  Border adjustments for the trade of energy-intensive goods include 
tariffs on such goods imported from countries with weaker or no carbon 
pricing--to make sure we protect our industries at home--and rebates 
for U.S. exporters of energy-intensive goods. We took care to design 
the border adjustments to achieve harmony with World Trade Organization 
rules.
  According to the nonpartisan group Resources for the Future, this 
carbon fee proposal would reduce U.S. CO2 emissions by more 
than 40 percent by 2025.
  In addition to the environmental benefits, of course, a carbon fee 
also generates revenue. In this case, it would generate over $2 
trillion in revenue over 10 years. We intend to return every dime of 
that to the American people. Here is how.
  First, the bill lowers the top marginal corporate income tax rate 
from 35 percent to 29 percent. This would cut American corporate taxes 
by almost $600 billion over the first decade.
  Second, it provides workers with a $500 refundable tax credit--$1,000 
for a couple--to offset the first $500 paid each year in Social 
Security payroll taxes. The credit would grow with inflation. The tax 
credits would return over $750 billion to American households over the 
first 10 years.
  Third, it would give benefits to Social Security recipients, veterans 
program beneficiaries, and certain other groups of retirees at the same 
level as the tax credit. These benefits would total more than $400 
billion over 10 years.
  Finally, the bill would establish a block grant for States, totalling 
$20 billion in 2016 and growing with inflation, to help with low-income 
needs, rural households, and transitioning workers. Governors in these 
States will know best what to do with the funds. In West Virginia, for 
example, they could use the money to transition coal workers into the 
technology jobs of the future or to shore up the beleaguered pension 
plans of coal miners. Rhode Island, on the other hand, might choose to 
make homes more energy efficient. And we have a reporting mechanism for 
the public to transparently track where the money is going to assure 
that it is all going back to the American people.
  The entire bill is 37 pages long--short, simple, straightforward. It 
would cut back on the pollution that threatens dramatic changes to our 
home planet. It would cut taxes. It would end a grievous market 
distortion. It would start a wave of investment and innovation.
  With this bill, Senator Schatz and I extend an open hand, or as one 
Republican former Congressman who cares about the climate change 
problem said: It extends an olive limb to conservatives everywhere.
  Whether you want to pursue tax reform or support the free market for 
energy, or as Senator Graham suggested this week, honestly address the 
real effects of climate change, this can be a vehicle. I hope my 
colleagues will agree with me that this is a discussion that we can 
continue. I look forward to trying to find a way forward that is better 
than simply ignoring this problem, pretending that it does not exist, 
and sleepwalking through our moment in history.
  It is time to wake up. I have an attachment here that summarizes some 
of the support from conservatives and business leaders for a carbon 
fee. I ask unanimous consent that this document be printed in the 
Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

        Conservatives and Business Leaders Support a Carbon Fee


                      Former Republican Appointees

       ``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.''--Henry M. Paulson, 
     Treasury Secretary under President George W Bush
       ``How can you possibly create a level playing field? By 
     taking a step that makes all forms of energy bear not only 
     their immediate costs of energy, but also the costs of the 
     pollution they emit . . . So my proposal is to have a 
     revenue-neutral carbon tax.''--George P. Schultz, Secretary 
     of Labor under President Nixon, Treasury Secretary under 
     Presidents Nixon and Ford, and Secretary of State under 
     President Reagan
       ``A market-based approach, like a carbon tax, would be the 
     best path to reducing greenhouse-gas emissions . . . Rather 
     than argue against [President Obama's] proposals, our leaders 
     in Congress should endorse them and start the overdue debate 
     about what bigger steps are needed and how to achieve 
     them.''--William D. Ruckelshaus, EPA Administrator under 
     Presidents Nixon and Reagan; Lee M. Thomas, EPA Administrator 
     under President Reagan; William K. Reilly, EPA Administrator 
     under President George H. W. Bush; and Christine Todd 
     Whitman, EPA Administrator under President George W. Bush


                    Conservative Members of Congress

       ``I am no scientist, but I've traveled throughout the world 
     with Senator McCain and others, and seen the effects of a 
     warming planet. . . . I've been told by a lot of business 
     leaders in South Carolina, `Senator Graham, once you price 
     carbon in a reasonable way, this green economy that we're 
     hoping for really will begin to flourish.''--Senator Lindsey 
     Graham (R-SC)
       ``I wish we would just talk about a carbon tax, 100 percent 
     of which would be returned to the American people.''--Senator 
     Bob Corker (R-TN)
       ``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.''-- Senator Jeff Flake (R-AZ)
       ``We should eliminate all the subsidies. No more Solyndras. 
     No more production tax credits for wind. No more credits for 
     electric vehicles. No more special tax provisions for oil and 
     gas. Level the playing field. The big challenge is reaching 
     fellow conservatives and convincing them that the biggest 
     subsidy of all may be to belch and burn into the trash dump 
     in the sky--for free. That lack of accountability may be the 
     biggest subsidy of them all.''--former Representative Bob 
     Inglis (R-SC)


                        Former Republican Aides

       ``The scientists tell us that world temperatures are rising 
     because humans are emitting carbon into the atmosphere. Basic 
     economics tells us that when you tax something, you normally 
     get less of it. So if we want to reduce global emissions of 
     carbon, we need a global carbon tax.''--N. Gregory Mankiw, 
     economic advisor to Mitt Romney's presidential campaign and 
     Harvard economist
       Using a carbon tax to fund a payroll tax cut ``would be 
     very good for the economy and as an adjunct, it would reduce 
     also carbon emissions into the environment.''--Arthur B. 
     Laffer, economic advisor to President Reagan
       ``Although a general carbon fuel tax is moot for the 
     moment, the idea will not go away. If carbon dioxide 
     emissions are to be reduced further in the U.S., such a tax 
     will achieve the goal with less economic waste than new 
     bureaucratic hurdles.''--Martin Feldstein, former Chairman of 
     President Reagan's Council of Economic Advisors


              Conservative Thought-leaders and Economists

       [Why a carbon tax?] ``First, it is a less expensive, more 
     efficient and more effective

[[Page S4033]]

     policy than the status quo. . . . Second, greenhouse gas 
     emissions impose risk. . . . Third, it is the principled 
     conservative position. Government's role is to protect the 
     rights to life, liberty, property and the pursuit of 
     happiness.''--Jerry Taylor, former vice president at the Cato 
     Institute and cofounder of the Niskanen Center
       ``We have a unique opportunity to end the rancorous debate 
     about climate change, a debate that is poisoning the air--the 
     political air, that is--and inhibiting progress on two 
     fronts: progress on addressing the possibility that we are on 
     the road to a catastrophic warming of the globe, and progress 
     on reforming our anti-growth tax structure, which is so 
     inequitable that it is straining the public's belief in the 
     fairness of capitalism and what we like to call `the American 
     Dream.' All we need do is stop pretending that the cost of 
     carbon emissions is certainly zero, and that regulation 
     provides a more efficient solution than the Market.''--Irwin 
     M. Stelzer, senior fellow at the Hudson Institute


                              Corporations

       This month, the top executives for six major oil and gas 
     companies penned a letter to the United Nations Framework 
     Convention on Climate Change calling for a worldwide price on 
     carbon:
       BP, Statoil, Shell, Eni SpA, Total, BG Group.
       Many other major companies have integrated an ``internal 
     carbon fee'' as part of their long-term financial planning. 
     Companies that have reportedly adopted an internal carbon 
     price include:
       Wal-Mart Stores; Delphi Automotive; Devon Energy 
     Corporation; Total; Delta Airlines; Jabil Circuit Inc.; 
     American Electric Power Co.; Entergy Corporation; Xcel Energy 
     Inc.; Microsoft; Chevron Corporation; Hess Corporation; Wells 
     Fargo & Company; General Electric Company; E.I. du Pont de 
     Nemours & Co.; CMS Energy Corporation; Integrys Energy Group; 
     Walt Disney World; ConocoPhillips; Royal Dutch Shell; Cummins 
     Inc.; Google Inc.; Ameren Corporation; Duke Energy 
     Corporation; PG&E Corporation.

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