The Jobs Plan the President Missed
Reprinted from the San Diego Union Tribune
By John Reaves
President Barack Obama’s jobs plan offers a costly cushion with little hope for lasting change. Extending payroll tax cuts exacerbates underfunded Social Security. Carrying certain state jobs is not sustainable, and extending unemployment benefits likely postpones the inevitable. Limited investing in infrastructure and clean tech may create some new jobs in desirable sectors, but not enough. Regardless, the total cost is nearly $450 billion and Congress is in no mood to approve new spending.
There is a plan, however, that requires no government investment and will create countless jobs while restructuring our economy in several beneficial ways. The plan the president missed would boost jobs across all sectors, nudge everyone to conserve and use energy more efficiently, and trigger a massive investment of private capital into new businesses that see opportunities. I am talking about a revenue-neutral carbon fee combined with a full dividend, or rebate, that is recycled to all households.
Here is the plan: A steadily increasing carbon fee beginning at $15 per ton per year would be assessed by the IRS at the source – the wellhead (e.g., oil), mine (e.g., coal) and port of entry – and placed in a dedicated trust fund. The cost would trickle down and affect choices consumers make. More importantly, it would send a strong, predictable price signal to the market and create vast opportunities for those who make cleaner products and conserve use of fossil fuels. Venture capital would flood into the market without government direction.
It is hard to imagine any sector of our economy that would not find new opportunities and create new jobs. Moreover, investments in clean tech would lead to breakthroughs that further help us solve a handful of serious, intertwined issues (national security; economy; climate change; health; environmental degradation caused by securing and burning fossil fuels).
To protect our imports and exports under the plan, if another country lacked a comparable carbon fee, the Department of Commerce would place a tariff for the difference on the import. That would create a “reverse domino” affect, encouraging other countries to collect the fee themselves, which would propel them to cleaner energy. If an American business were to export a product to a country without an equivalent carbon fee, we would pay such business the difference in fees from the trust fund to stay competitive. We could find the world follows our clean lead.
Here is one of the best parts of the plan: All of the money would be returned equally to all households as a dividend (one share for each adult (up to two) and one-half share for children (up to two) per household). About 60 percent to 70 percent of households would receive dividends that exceed or equal the fees paid. Thus, the plan is progressive. While there have been variations on the theme, such as a Republican proposed reduction of payroll taxes, payments to a broader range of affected people would be more fair and immensely popular. Payments could be made by monthly check, debited to bank accounts, payroll tax offset or credit to tax returns.
We all agree on the benefit of switching to cleaner energy, whether to reduce greenhouse gases, breathe cleaner air, reduce premature deaths and asthma, reduce dependence on foreign oil, increase national security, avoid higher-risk oil and gas explorations, avoid grinding vast landscapes for highly polluting tar sand oil, or to hedge against volatile oil prices as we venture past world peak oil production. We must also remain competitive with China, which is investing billions more than we are in the future of renewables. No doubt, the winner of the clean energy revolution will enjoy world prominence and power.
What may seem remarkable to some is that there is bipartisan support for fee-and-dividend because it would not create fiscal drag, money would stay out of government coffers, and government would not pick winners, as touted by President Ronald Reagan’s secretary of state, George Shultz. The marketplace would decide the winners. Economists and businesses like the plan because it would provide a predictable rise in fees on which investment decisions can be based. Further, research has shown that a dollar invested in clean tech grows twice as many jobs as oil and gas.
The benefits of moving away from fossil fuels are manifold. When people appreciate the scale of positive change that would result from fee-and-dividend, they will finally have real reason for hope.
Reaves is an environmental lawyer and board member of the San Diego-based Citizens Climate Lobby.