Coming around to a carbon tax

Breaking with much of their party’s doctrine on the planetary threat posed by climate change—and the outright climate skepticism expressed by President Donald Trump—two former Republican secretaries of state, George P. Shultz and James A. Baker III, are recommending that the United States implement a carbon tax to help mitigate climate damage.

“Just as in the 1980s, there is mounting evidence of problems with the atmosphere that are growing too compelling to ignore,” Shultz and Baker wrote in an op-ed published in the Wall Street Journal on February 7. “And, once again, there is uncertainty about what lies ahead. The extent to which climate change is due to man-made causes can be questioned. But the risks associated with future warming are so severe that they should be hedged.

“The responsible and conservative response should be to take out an insurance policy,” the two senior Republican leaders continued. “Doing so need not rely on heavy-handed, growth-inhibiting government regulations. Instead, a climate solution should be based on a sound economic analysis that embodies the conservative principles of free markets and limited government.”

Their detailed recommendations, “The Conservative Case for Carbon Dividends,” were published by the Climate Leadership Council.

The ideas put forth by Shultz and Baker closely track a carbon tax proposal suggested by William Gale of the Brookings Institution in an essay for the Miller Center’s First Year Project published in February 2016.

Gale, a senior economist for the Council of Economic Advisers under President George H.W. Bush, noted that “there is a conservative case [for a carbon tax], focusing on the role of public policy to provide insurance against adverse outcomes, to get market incentives right, and to obviate more costly approaches, such as regulations, subsidies, and mandates.”