The Peter G. Peterson Foundation asked six think tanks representing "the wide scope of American political thought" to develop comprehensive plans for putting the country on a fiscally sustainable long-term path. Four out of the six groups concluded that the US should eliminate subsidies for fossil fuels and impose either a carbon tax or a cap-and-trade program to increase federal revenues.
The American Enterprise Institute argued that the US should end energy subsidies and greenhouse gas regulations in favor of a carbon tax. AEI would begin with a tax of $26 per metric ton of carbon emissions to be phased in between 2013-2017, and then increased by 5.6% per year through 2050.
This is not coming from a bunch of tree-hugging socialists. You may recall AEI as the home of many of the intellectuals and business leaders who formed the brain trust of the Reagan Administration. Not much has changed. The AEI Board of Trustees continues to include a who's who of conservative and libertarian academics and business leaders, including former Vice President Dick Cheney.
Nor is this a new position for AEI. In 2007, AEI argued that "the best way to reduce greenhouse gas emissions is to tax the carbon content of fuel to build in the cost of the environmental impact." AEI now argues that taxing carbon emissions is also a good way to reduce the federal deficit.
The Economic Policy Institute proposed using a carbon tax or a cap-and-trade program to address the societal cost of greenhouse gas emissions and reduce the federal deficit. It also called for a gradual increase in the motor fuel excise tax by 15 cents in 2019 and 25 cents in 2024.
The Roosevelt Institute Campus Network proposed a carbon tax as more efficient than a cap-and-trade system, because a carbon tax would provide more certainty about future prices. It called for an upstream tax on carbon of $24.33 per metric ton beginning in 2013 with an increase of 5.6 percent each year. According to the Congressional Budget Office, this would reduce carbon emissions by 36 percent by 2026.
The Center for American Progress called for reducing greenhouse gas emissions and reliance on foreign oil with a price on carbon and an oil import fee. It proposed a $5 per barrel tax on oil imports and an unspecified price on carbon emissions.
Two other think tanks also participated in the Peterson Foundation's efforts to find sustainable fiscal solutions.
The Bipartisan Policy Center could not reach agreement within its organization on the issue of a carbon tax, but its report did note that “a tax of $23/mt of CO2 emissions in 2018, increasing at 5.8pc annually” would raise $1.1 trillion to reduce the deficit while cutting carbon emissions by 10%
The Heritage Foundation was the only think tank that did not include a carbon tax or cap-and-trade program in its recommendations.
What to make of all this? Not much, I'm afraid. Remember the Simpson-Bowles Deficit Reduction Plan? They also proposed some honest, tough measures to get us out of our fiscal and environmental mess. But it's not clear that we want to take the medicine.
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