[Congressional Record (Bound Edition), Volume 161 (2015), Part 6]
[Senate]
[Pages 8060-8061]
[From the U.S. Government Publishing Office, www.gpo.gov]




                             CLIMATE CHANGE

  Mr. WHITEHOUSE. Madam President, today I am here for the 101st time 
to urge this body to wake up to the threat of climate change. It is 
real, it is caused by carbon pollution, and it is dangerous.
  There is a legislative answer to this problem that my Republican 
colleagues should consider, and that is a carbon fee.
  The unpleasant fact here in Congress presently, anyway, is that 
Congress is ruled by the lobbyists and the political enforcers for the 
fossil fuel industry. But outside this Chamber, where the fossil fuel 
industry's power is less fierce, there is considerable conservative 
support for a carbon fee.
  Leading right-of-center economists, conservative think tanks, and 
former Republican officials, both legislative and executive, all say 
that putting a price on carbon pollution is the right way to deal with 
climate change. They know that climate denial cannot stand against the 
facts. As the Washington Post reported last month, prominent thinkers 
on the right are ``increasingly pushing'' for a climate policy based on 
conservative principles and on values such as property rights, market 
efficiency, and personal liberty. They recommend pricing carbon.
  Jerry Taylor, a former vice president at the CATO Institute now leads 
his own Libertarian think tank, which is making the case for a carbon 
fee. He recognized that ``the scientific evidence became stronger and 
stronger over time.'' He knows climate denial is not an option. He says 
that ``because catastrophic climate change is a non-diversifiable risk, 
we should logically be willing to pay extra to avoid climate risks.'' 
Taylor points out that hedging against terrible outcomes is what we 
expect in our financial markets. Why should we not do the same for 
climate change?
  Conservatives have also long agreed that government should prevent 
one group harming another. Conservative economist Milton Friedman still 
tops the reading lists of Republicans in Congress. Republican 
Presidential hopefuls still invoke his name to show their free market 
bona fides. Asked whether the government had any role to play in 
reducing pollution, Friedman said:

       There's always a case for the government to do something 
     about it. Because there is always a case for the government 
     to some extent when what two people do affects a third party.

  Friedman is describing what he called ``neighborhood effects'' or 
what many economists call ``negative externalities.'' A negative 
externality is when two parties engage in a transaction and the result 
of that transaction causes damage to a third party--a third party that 
did not consent to the arrangement. That is an externality, and when 
the consequence is harmful, it is a negative externality. In a free 
society, wrote Friedman, government exists, in part, to diminish those 
negative externalities.
  When the costs of such negative externalities don't get factored into 
the price of a product, even conservative economic doctrine classifies 
that as a subsidy. For the polluters who traffic and burn fossil fuels, 
that subsidy is huge.
  In a finding it describes as ``shocking,'' the International Monetary 
Fund estimated the true costs of fossil fuel energy, taking into 
account public health problems, climate change, and other negative 
externalities, and they added it up to a polluter world subsidy of $5.3 
trillion a year. The subsidy here in the United States for the fossil 
fuel industry will hit $699 billion this year.
  It is no wonder the fossil fuel enforcers wield their clout in 
Congress so energetically. At $700 billion a year just in the United 
States, why would the big polluters not want to squeeze one more fiscal 
quarter, one more year of public subsidy out of the rest of us at $700 
billion a year? We usually talk about big numbers here in the Senate 
over a 10-year period. That is the way our budget works. Over a 10-year 
budget period, that is $7 trillion. No wonder they are so remorseless.
  From their point of view, lunch is good when someone else is picking 
up the tab, and Senate Republicans have been far too willing to let the 
polluters dine for free. Outside of this Chamber, however, conservative 
economists call such an enormous public subsidy a market failure. The 
price of fossil fuel energy does not match its true costs. That market 
imbalance artificially favors polluting fuels and their producers--
picking winners and losers, if you will.
  A carbon fee can make the markets more efficient and level the 
playing

[[Page 8061]]

field for different types of energy. Anyone who really believes in a 
free market should favor a carbon fee. That is what makes it work.
  Harvard Professor N. Gregory Mankiw has been an economic adviser to 
President George W. Bush and to Presidential candidate Mitt Romney. He 
has pointed out that a carbon fee can help repair such a market failure 
and that ``the idea of using taxes to fix problems, rather than merely 
raise government revenue, has a long history.''
  In a 2013 New York Times op-ed, former Republican EPA Administrators 
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.''
  A carbon fee can also generate significant revenue, and this could 
help achieve conservative priorities, such as lowering taxes. Art 
Laffer, one of the architects of President Reagan's economic plan, 
popularizer of the famous ``Laffer curve,'' has looked at using a 
carbon tax to fund a payroll tax cut. He said: ``I think that would be 
very good for the economy.''
  Did you get that? Arthur Laffer, President Reagan's economic adviser, 
said that a carbon tax, funding a payroll tax cut, ``would be very good 
for the economy.'' And as an adjunct, he continues: ``It would also 
reduce carbon emissions into the environment.''
  It is a pretty simple idea. You can lessen the tax burden on things 
that you do want--employment, jobs, profits--and make up for the lost 
revenue by ending the subsidy of something you don't want--pollution.
  What is not to love unless you are a big polluter? Dr. Irwin Stelzer, 
an editor at the Weekly Standard and director of economic policy 
studies at the conservative Hudson Institute, said that for a tax-
swapping carbon fee, ``conservative support would depend solely on a 
desire to get the economy growing faster by shifting the tax burden 
from good stuff like work to bad stuff like pollutants.''
  The fundamental conservative faith in the free market points to a 
carbon fee. A carbon fee priced at the true social cost of carbon would 
allow the market--not the polluters, not the government--to sort out 
which energy mix is best for society. On this question, Republicans 
have a choice to make: Are they real conservatives who will support a 
free market solution or are they the playthings of the fossil fuel 
industry, which will not pick up this question at all?
  Well, if you do not like picking winners and losers, then quit 
favoring fossil fuel to the tune of $700 billion a year just in America 
and level the playing field with a good, conservative, deficit neutral 
carbon fee. Level the playing field.
  That is how George Shultz sees it. George Shultz was President 
Nixon's Treasury Secretary and President Reagan's Secretary of State. 
He and Nobel laureate economist Gary S. Becker made the case for a 
carbon fee in the Wall Street Journal:

       Americans like to compete on a level playing field. All the 
     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.

  That is why Secretary Shultz supports a price on carbon.
  As an addition, there is also a huge economic win that will result, 
according to knowledgeable conservatives. Last year, 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.''
  Former Republican Congressman Bob Inglis has become a leading 
conservative voice in the fight against climate change. He specifically 
supports using a carbon fee and even introduced legislation when he was 
in Congress to price carbon and cut payroll taxes, the Laffer 
combination. Last year, he told the Dallas Morning News that this would 
create economic opportunity.
  He said:

       [W]e are discovering in climate science . . . that there is 
     a risk that we can avoid from the creative innovation that 
     comes from free enterprise. We have a danger and an 
     opportunity. As a conservative, I say what a great 
     opportunity to create wealth, innovate, and sell innovation 
     around the world.

  By the way, Representative Inglis's dedication to this issue recently 
earned him the John F. Kennedy Profile in Courage Award. I offer him my 
sincere congratulations. It does, indeed, take courage to come out from 
behind the veil of skepticism and denial to face the plain truth and to 
propose real, concrete solutions. That is especially true when the 
fossil fuel industry wields such relentless, remorseless power over the 
Republican Party today.
  President Obama's Clean Power Plan is at last putting an end to the 
free lunch for the fossil fuel industry. This ought to motivate the 
industry to rethink its inequitable, subsidy-ridden business model. 
Which is more efficient, anyway--government regulation or proper market 
pricing?
  As American Enterprise Institute scholars Kevin Hassett, Steven 
Hayward, and Kenneth Greene put it, ``Because a carbon tax would cause 
carbon emissions to be reduced efficiently across the entire market, 
other measures that are less efficient--and sometimes even perverse in 
their impacts--could be eliminated . . . As regulations impose 
significant costs and distort markets, the potential to displace a 
fairly broad swath of environmental regulations with a carbon tax 
offers benefits beyond [greenhouse gas] reductions''--i.e., economic 
benefits.
  Republicans in Congress have a real chance to help remake the U.S. 
energy market under conservative, free market principles. As far back 
as 1992, former Chairman of President Reagan's Council of Economic 
Advisers, Martin Feldstein, wrote in the Wall Street Journal:

       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.

  Why don't today's Republicans abide by this conservative principle? 
As Douglas Holtz-Eakin, CBO Director under the prior Republican 
Congress and economic adviser to our friend Senator McCain's 
Presidential bid, wrote in the National Review, ``In the bad old days, 
Democrats bad-mouthed trading systems and price mechanisms; Republicans 
opposed rifle-shot subsidies and mandates. Weirdly, conservatives have 
a need to relearn these lessons.''
  Well, the carbon fee is right in line with Douglas Holtz-Eakin's 
lessons to be learned.
  On June 10, I will introduce my carbon fee proposal at an event 
hosted by the American Enterprise Institute. I hope that once my 
colleagues see the details, they will take seriously the promise of a 
free market solution to climate change. For any Senator who wants to 
engage on this issue, I am interested. I will gladly work with any 
Republican colleague. What we cannot do is stay in denial. For both our 
environment and our economy, and indeed our honor, we cannot afford to 
keep sleepwalking. It is time to wake up.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Pennsylvania.

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