Climate-fixing stimulus for the middle class

What if there was a way to help 90 percent of Americans economically while addressing climate change?  A bill introduced on February 24th by Rep. Chris Van Hollen (D-Md.) would do exactly that.  

2014 was the warmest year on record. Global warming is already affecting the earth’s overall climate system, bringing about extreme weather disasters — heat waves, fires, droughts, floods, hurricanes, even freezes and blizzards. Their cost in suffering, death, and economic damage is huge and increasing.

{mosads}Meanwhile middle class life is getting tougher, as the share of the economy’s wealth for the bottom 90 percent has dropped from about 36 percent to 22 percent over the last 30 years.

Van Hollen’s bill, The Healthy Climate and Family Security Act, would take a major step to solving both of these problems, through a mechanism called cap-and-dividend. Here is how cap-and-dividend works: The world’s biggest companies make vast profits producing dirty fuel (coal, oil, natural gas) that dumps greenhouse gas pollutants into our atmosphere. This pollution causes global warming. With cap-and-dividend, the companies would be held accountable for this pollution by purchasing dumping permits.

In the Healthy Climate and Family Security Act, each permit would allow the production of the dirty fuel equivalent of a ton of carbon dioxide, (monitored by computer). The permits will be sold at a Treasury Department auction each year, with a starting price per permit. Each year, for 35 years, the number of permits is slowly reduced, so that companies must compete for permits to sell dirty fuel. As the number of permits decreases, a market in permits is created for producing companies (not Wall Street investors), with the value of permits increasing as the number decreases, giving clear certainty to the businesses.

The reductions are predictable and monitored, with the goal of 80 percent reductions below the 2005 level by 2050 the reductions needed to halt unstoppable runaway global warming. Targets are gradual: one and a half percent a year for five years, and two percent a year for thirty years.

Despite this gradual approach, the money produced by selling permits is estimated at half a trillion dollars  in the first decade alone. Where does the money go? Not to the government or to Congress. Instead it goes into a trust, where 100 percent is distributed every three months equally to all Americans with a social security number — equally, rich or poor – through electronic transfer to our bank accounts.

How would this work in practice? It’s estimated that an individual could eventually receive $1,000 a year, and a family of four as much as $4,000 a year. Over each decade, 90 percent of those hundreds of billions would go to the bottom 90 percent of the population and into the economy, increasing economic growth and wealth for all. The increase in economic growth is great for business. And the fact that change is gradual and predictable also helps businesses, allowing them to plan ahead in shifting their investments from dirty to clean energy.

What about polluters from other countries? We import items from countries that now use dirty fuels to produce items like iron, steel, aluminum, cement, glass, pulp, paper, chemicals, and industrial ceramics. A fee would be placed on such imports equal to the permit cost for producing such products in the United States. What about U.S. exporting companies that compete with companies in non-permit countries? The bill would provide financial help commensurate with import fees from those countries. This puts pressure on polluting countries to end their pollution through a permit process like ours, leveling the playing field. And it provides an example and incentive for countries around the world to adopt a permit system and move toward clean energy as sources become cheaper and more available. The bill is national, but the goal is global.

Addressing climate change doesn’t need to be complicated. There is a clear path for U.S. legislators to address this challenge while giving certainty to businesses and driving economic growth. What’s not to love?

Lakoff is Distinguished Professor of Cognitive Science and Linguistics at the University of California, Berkeley.


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