A remarkable event occurred recently — a call for action by 45 of America’s best-known economists. This bipartisan group of Republicans and Democrats included all living Federal Reserve chairmans, the chairman of the Council of Economic Advisors for every one of the last six former presidents, and many Nobel Laureates in economics. They specifically recommended putting a price on carbon via a revenue-neutral carbon tax.

What was remarkable was that their bipartisan call to action not only occurred during a particularly divisive time in our history, but it urged policy action on climate change, generally regarded as one of the more politically divisive issues of our time.

Why this call to action at this time? Let me share four reasons.

1. Economic studies make clear that the cost of reducing the emissions responsible for the climate modification is considerably less than the damage that would be caused by those emissions.

2. Delays raise the cost of taking action. Estimates suggest that a delay of a decade, for example, raises the cost of reaching exactly the same target by 40 percent.

3. Putting a price on carbon is the most cost-effective means of reducing emissions. This policy approach particularly appeals to those who see the need to reduce emissions, but want to do it efficiently.

4. Revenue-neutral taxes have political and ethical advantages. Since the revenues are returned to the people, they do not fund a bigger government, but they can be used to make sure the policy is fair.

Because this path offers a prudent, cost-effective and ethical solution to a (the?) major challenge our society faces, it not only appeals to economists, but increasingly, as polls show, to voters across the political spectrum. This may provide a new political opportunity for those willing to pursue bipartisan solutions for the common good.

Tom Tietenberg


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