This weekend, Hank Paulson, the Republican former Treasury Secretary and Goldman Sachs CEO, wrote an op-ed calling for a carbon tax. Has the political landscape shifted enough to make a carbon tax a real possibility?
It's doubtful! If it had, then Paulson's op-ed would have been completely unremarkable. As it is, it was remarkable more for who Paulson is—an establishment Republican and prominent Wall Streeter—than for its content. Paulson does his best to rally Republicans to the cause of a carbon tax, writing "The solution can be a fundamentally conservative one that will empower the marketplace to find the most efficient response."
In this, he is correct.
Paul Krugman, who sits well to the left of Paulson on the political spectrum, agrees with Paulson's position (he writes today, "Emissions taxes are the Economics 101 solution to pollution problems; every economist I know would start cheering wildly if Congress voted in a clean, across-the-board carbon tax"), but he is not optimistic about such taxes becoming a reality any time soon, due to the fucking idiocy of the Republican Party, which is essentially a gigantic scheme by business interests to trick the poor into voting for policies that favor the rich (I'm paraphrasing here). Krugman says that, because of Republican recalcitrance, Democrats will likely have to settle for "second-best" solutions like fuel efficiency standards and various pro-alternative-energy measures, which are inferior to the best and most obvious solution to dangerous carbon emissions: a carbon tax.
I'm not so sure. The clearer the reality of global warming becomes, and the more evident its negative effects on the lives of everyday people become, the louder the vague outcry will become from the generally self-interested public to "do something." The only "something" that has a real chance of cutting carbon emissions significantly before severe(-est) disaster strikes is a carbon tax. Democrats can pitch a carbon tax as a way to make dirty corporate polluters pay for the mess they're making with all of our lives. Republicans can pitch a carbon tax as a market-based solution that doesn't rely on high-handed hard-line government rules, an example of capitalism's ability to stop itself from destroying us all. It doesn't really matter how the carbon tax gets sold to the public. Hank Paulson's advocacy shows that the smart side of the Republican party (that is, the ones who are Republicans primarily because they're greedy, rather than because they're stupid) already understands that a carbon tax makes abundant sense. It's a plan that can work. And we need it sooner rather than later.
[For a good primer on the relative merits of cap-and-trade and carbon taxes, see here. Photo: AP]