The Market and Mother Nature

by Thomas Friedman (New York Times) Whenever I hear the word “cliff,” I am reminded of something that President Obama’s science adviser, John Holdren, used to say about how we need to respond to climate change because no one can predict when it might take a disruptive, nonlinear turn. “We are driving toward a cliff in a fog,” said Holdren about the climate, and that’s always a good time “to start tapping on the brakes.”

...We can’t go off coal overnight, and we can’t go into recession by cutting spending overnight, but we need to start tapping on the brakes in both realms by agreeing on spending cuts, tax increases and new investments that would be phased in as the economy improves, as well as higher efficiency standards for power plants, buildings, vehicles and appliances that would be phased in, too.

A carbon tax would reinforce and make both strategies easier. According to a September 2012 study by the Congressional Research Service, a small carbon tax of $20 per ton — escalating by 5.6 percent annually — could cut the projected 10-year deficit by roughly 50 percent (from $2.3 trillion down to $1.1 trillion).

What would you rather do to help solve our fiscal problem: Give up your home mortgage deduction and wait two more years for Social Security and Medicare, or pay a little extra for gasoline and electricity? These will be our choices. I’d rather pay the little carbon tax, especially since it would clean up the air for our kids, drive innovation and make us less dependent on the most unstable region in the world: the Middle East. READ MORE