Lindsey Graham Backs Carbon Fee

The drive to enact a carbon royalty (or fee) received an important boost last week. South Carolina Senator Lindsey Graham became the first Republican in the Senate to publicly endorse a "price on carbon” to fight climate change.

"I'm a Republican. I believe that the greenhouse effect is real, that CO2 emissions generated by man is creating our greenhouse gas effect that traps heat, and the planet is warming," said Graham. "A price on carbon—that's the way to go in my view."

He said that he is working with Senator Sheldon Whitehouse (D, RI) on legislation. Whitehouse and Senator Brian Schatz (D-HI) introduced a carbon tax bill in July, appearing at the American Enterprise Institute (AEI) to announce it. Graham, who said he would take the idea to the White House for consideration, called for climate change legislation during the 2016 election but did not mention a price on carbon explicitly.

From our meetings with scores of senators and their aides over the past three years, we know that a number of them privately support this free-market idea or are at least open to it. We will try to persuade them to join Graham in speaking out publicly.

But we also know that an important factor in their willingness to do so is support of such a fee from business leaders in their states. That’s why we are working with a growing coalition to develop this support. Our partners include Business Forward, the Evangelical Environmental Network, the American Sustainable Business Council, the National Wildlife Federation, and the Citizens’ Climate Lobby.

Graham’s statement is the latest sign of GOP movement toward national action to counter climate change. In February seven prominent Republican elder statesmen, including former Secretaries of State James Baker and George Shultz and former Treasury Secretary Henry Paulson, proposed a carbon fee with all proceeds being paid as a regular dividend to taxpayers. Meanwhile, the House Climate Solutions Caucus continues to grow and now has 56 members, half of them Republicans. The latest additions are Pat Tiberi (R-OH), Nydia Velazquez (D-NY), John Larson (D-CT), and Chris Collins (R-NY).

Like Graham, Senator John McCain (R-AZ) spoke last week about the importance of action, though he did not indicate his preferred solution. "I believe it is our responsibility to safeguard our environment and protect the planet," he said. "Climate change is real and requires pragmatic problem-solving to address."

This increasing receptiveness to a royalty fee coincides with the GOP’s drive to pass tax reform legislation. Because tax reform proponents are having trouble finding a way to make up for the revenue reduction that large tax cuts would cause, we are continuing to make the case that a carbon royalty could prevent a tax cut package from driving up the national debt--while enabling the United States to do its part to reduce greenhouse gas emissions. It is dealmaking season in Washington, and we intend to do whatever we can to move this idea into the final bill.

Reasons to Be Upbeat

Harvey, congressional gridlock, the U.S. withdrawal from the Paris accord, climate change deniers in high places…. These are just some of the things that can discourage someone who believes we need to take action on climate change.

But there are also reasons to be upbeat:

  • While Congress has a disproportionate number of members who are content to sit on their hands as the climate changes at an alarming pace, the House Climate Solutions Caucus has grown to include 52 members--half of them Republicans.

  • After a bipartisan vote in July left climate language in the annual defense authorization bill, Climate Solutions Caucus Co-Chairman Carlos Curbelo voiced optimism that lawmakers may actually begin to engage earnestly on the subject. "We have a lot of Republicans, even from the deep South, who everyday come to me and say, 'Well, let's talk about this climate change thing and sea level rise,'" Curbelo told a Florida radio station. "There is growing interest, and my hope is that we can build that coalition, that bipartisan coalition, as quickly as possible just so that we can advance common-sense policy solutions."

  • The House Problem Solvers Caucus now includes 43 Republicans and Democrats. Founded by Congressmen Tom Reed (R-NY) and Josh Gottheimer (D-NJ), this caucus hopes to build support for common-sense solutions to climate change, health care, immigration, and other challenges that have stymied Congress.

  • Nine northeastern states agreed recently to cut greenhouse gas emissions from power plants by an additional 30 percent by 2030--on top of the 40 percent reduction achieved since 2009. And California has just strengthened its emission-reduction program.

  • Seven GOP luminaries continue to advocate a carbon fee proposed by the Climate Leadership Council: James A. Baker, III, George P. Shultz, Martin Feldstein, N. Gregory Mankiw, Henry M. Paulson, Jr., Thomas Stephenson and Rob Walton. They call it “a conservative case for a climate solution.”

  • More and more corporate leaders are calling for pricing carbon and other action to counter climate change. Leadership is coming not only from individual CEOs, including some with major oil companies, but from organizations such as the American Sustainable Business Council and Business Forward.

  • The horror of Harvey is a stark lesson in the threats posed by climate change. Harvey cannot be blamed on climate change, but scientists believe that the amount of rain was increased by rising temperatures.

  • Seventy percent of Americans now support requiring fossil fuel companies to pay a carbon tax paired with cutting other taxes (like income taxes), according to a recent survey by researchers at Yale and George Mason universities. Two-thirds of independents and slightly under half of Republicans polled back those policies.

  • The  most plausible option for enacting a carbon fee is a tax reform bill that employs the fee to pay for tax cuts, and there is a growing determination among Republicans to pass such legislation this year. Their eagerness means that they will be more inclined to bargain. Politico’s Nancy Cook had this quote: “People are feeling optimistic because they do not see failure as an option. They’ve put all of their eggs in one basket now, and that basket is tax reform,” said one source familiar with the administration’s tax talks. “The fear of failure on this will cause people to agree with things they may not normally agree to.”

All of this is not to say that it’s time to bet your Tesla on passage of a carbon fee this year. But there are some promising forces at work, and those of us who support such a fee should keep making the case. If an opportunity develops, we must seize it.

The best way to pay for tax reform

Most in the GOP see tax reform as the next act. It has been a priority even longer than repeal of Obamacare. House leaders definitely have their eyes on this prize: House Speaker Ryan recently told the Wisconsin State Journal that he plans to introduce a tax overhaul bill in September with the goal of moving it through the House by the end of the year. According to Politico, Senate Finance Committee Chairman Orrin Hatch said, “We’re not going back to health care. We’re in tax now. As far as I’m concerned, they shot their wad on health care and that’s the way it is. I’m sick of it.” For its part, the White House wants a bill on the president’s desk by December.


Here’s a central question: Will the bill run up the national debt even higher? That would be irresponsible. Publicly held national debt already exceeds $14 trillion. Without any tax cuts or new spending, it is headed for $25 trillion in 10 years. That would produce the highest debt-to-GDP ratio in modern times--crippling our ability to fund a strong national defense, pay for basic services, and care for an aging population.

House Vote is Sign of Hope for Bipartisanship

Take a moment to digest - and applaud - a sign of bipartisan support for dealing with climate change. Last week (July 13) 46 House Republicans voted to reject a measure that would have deleted from the annual defense authorization bill a requirement that the Department of Defense study its vulnerability to climate change. With that Republican support, the amendment was defeated, 234-185