Clinton and the Carbon Tax
When Bernie Sanders endorsed Hillary Clinton in a high-profile event on Tuesday, it marked the end of intense negotiations about the contents of the Democratic Party Platform. Surrogates from both campaigns had huddled for weeks to discuss specific policies and chart a clear direction for the Democratic Party. They agreed, for example, to support a $15-dollar minimum wage and the abolition of the death penalty. Other measures, like calls to ban fracking and halt the Trans Pacific Partnership trade deal, were excluded.
One of the most significant disputes centered around the proper response to climate change. While both campaigns supported robust carbon reduction efforts in line with the targets set by the 2015 Paris Climate Accords, the two sides diverged on the question of a carbon tax. The Sanders campaign firmly supported it, while the Clinton camp did not. Ultimately, although the platform committee firmly endorsed carbon pricing, the Clinton campaign distanced itself from the policy. “Her plan is clearly articulated on her website,” explained Clinton energy adviser Trevor Houser. “[A carbon tax] is not her plan.”
Among policy experts both liberal and conservative, however, there is strong consensus that carbon pricing represents the single-most effective response to climate change. A 2011 IGM survey of economists found that 90% support carbon pricing. The reason is simple: no other policy would be as simple, efficient, and minimally invasive. By pricing carbon to reflect the true costs it exacts on society, companies and individuals would be incentivized to slash their fossil fuel use and embrace green alternatives. Moreover, if devised to be a revenue-neutral policy—that is, pairing carbon fees with equally sized tax cuts—the tax burden on society would remain unchanged, as would the size of government.
For a challenge as daunting and important as climate change, the carbon tax offers a strikingly elegant solution. Paul Krugman, the Nobel Prize winning economist, has called it the “Economics 101 solution.” Greg Mankiw, who chaired the Council of Economic Advisers in the second Bush administration, has praised the policy as “eminently sensible.” And economist Joseph Stiglitz, another Nobel Prize laureate, has called it inevitable. “Over the long run, we will have to have a carbon tax,” he said in 2014. “The world will come around to this.”
Given the broad agreement among policy experts about the merits of carbon pricing, how can Clinton’s position on the policy be explained? Notably, when asked about the carbon tax at a Democratic Primary Debate in April, Clinton balked. Rather than spell out a clear position on the policy, Clinton spoke generally about the importance of battling climate change. This exchange bolstered what many believe: Clinton supports a carbon tax on the merits, but has postponed taking a position on the issue in her run for the White House. The politics are simply too toxic.
“The clearest and most obvious way to reach the climate targets is with a nationwide carbon pricing method, whether a carbon tax or a cap and trade,” said Robert Stavins, the head of the environmental economics program at Harvard University, in an interview with The New York Times. “But it’s not surprising, given the politics, that Secretary Clinton would not want to explicitly talk about carbon pricing.” Much of the public remains deeply skeptical about the science of climate change, and the prospect of a sweeping new tax is likely to agitate many voters.
Instead, the Clinton campaign has proposed a climate change agenda that doesn’t just consider the possibility of political gridlock; it assumes it. Her plan sidesteps Congress altogether and instead relies on the powers endowed by the Clean Air Act to slash carbon. As her campaign framed it in an email, “Secretary Clinton believes that meeting the climate challenge is too important to wait for climate deniers in Congress to pass comprehensive climate legislation.”
However, executive actions alone are unlikely to produce the carbon cuts needed to stave off the worst effects of climate change. “The overwhelming view of the people who have looked at this is that there’s no way to get to the 2050 goal [from the Paris Climate Agreement], without a carbon price,” said Jessica Tuchman Mathews, a former president of the Carnegie Endowment for International Peace. “At the very least, it would be like attempting to climb a very steep mountain with one leg tied behind your back.”
This point is unlikely to have escaped the detail-oriented Clinton team. After all, Clinton herself boasts a long record of consulting extensively with policy experts on a broad range of issues. However, given the political pressures of the moment, Clinton’s stance on carbon pricing is understandable and even wise. Large swaths of the American public—including the likely Republican nominee for president—continue to deny the science of climate change. And among those who do acknowledge it, beliefs about how to confront the problem vary widely. This is in addition to the fact that calling for new taxes in an election year could prove politically perilous.
Accordingly, the Clinton campaign can afford to be vague—and even wrong—about climate policy. From a Clinton White House, however, likely expect a different tune.