Current Events Paper: Analyzing the Feasibility of U.S. Conservative Environmentalism

In June 2017, the Climate Leadership Council (CLC), a recently formed alliance of corporate giants, nonprofits, and high-profile conservatives pitched their plan for conservative environmentalism through a “Carbon Dividend Program.”  Two of its members, George P. Shultz and Lawrence H. Summers (2017), wrote an opinion piece for the Washington Post in which they expanded on the idea of a carbon tax, or a “carbon dividend,” which would do the same job as Obama-era regulations but would preserve, rather than suppress, economic growth.  Shultz and Summers (2017) ultimately make the point that a carbon tax may be the only politically feasible option.  According to them, environmental action must “appeal to the general public, corporate America and leaders in both parties.” (Shultz & Summers 2017).  Indeed, the current political climate makes it difficult to take effective environmental action, making a moderate conservative measure potentially the only option that can actually endure the American legislative gauntlet.  In order to evaluate Shultz and Summers’ claim, this paper performs a stakeholder analysis of the carbon tax, evaluating the interests of the corporate actors behind the CLC and the interests of American citizens through the financial and social effects of a carbon tax plan.  Through such an evaluation, this paper establishes that such a plan would be feasible but politically costly for conservative lawmakers to implement.

The Climate Leadership Council represents both a large number of corporate actors and high-profile conservative individuals with vested interests in dismantling Obama-era regulations (“Founding Members” 2018).  The organization’s website lists a number of corporate actors who would benefit directly or indirectly from the roll-back of regulations (“Founding Members” 2018).  Corporate giants such as ExxonMobil, Shell, BP, General Motors, and Schneider Electric support the CLC’s plan, demonstrating the expansive corporate interests that the CLC represents (“Founding Members” 2018).  The plan itself calls for a $40/ton tax on all carbon emissions, the money from which would be issued to Americans as uniform dividends (“Our Plan” 2018).  It also calls for sanctions on imports from countries without similar sanctions, and finally a roll-back of Obama-era regulations, including the repeal of the Clean Power Plan (“Our Plan” 2018).  The CLC’s members are one of its greatest strengths, as such affected members possess a massive amount of political capital, in both financial contributions and political relationships, which they can leverage for the organization’s objective.  The current political climate of gridlocked conservative strength also presents a good opportunity to execute their plan, since only an environmental plan with significant bipartisan support could pass the current legislature.  Its central weakness, however, is that any plan to roll back regulations, driven by the central beneficiaries of the roll-back of such regulations, could never be taken as unbiased.  Hardline lawmakers on both political extremes would resist such a policy, as hardline Republicans refuse to acknowledge the existence of climate change and hardline Democrats would reject anything with such a corporate brand on it.

This paper uses a comprehensive study conducted by the American Enterprise Institute, that evaluated the effects of such a carbon tax on the general public (Brill & Ganz 2018), to conduct a stakeholder analysis of American citizens.  The AEI study calculated the financial and social effects of such a carbon tax, accounting for a raise in taxes through the literal carbon tax.  The value of the tax increase was then subtracted from the basic income tax, which was exhibited with and without deducting the potential environmental damage (social cost) that such a tax could prevent, by county (Brill & Ganz 2018).  Based on this combined analysis, the study found that 58% of the U.S. population would receive net gains from a carbon tax and that 43% of those beneficiary counties are Republican (Brill & Ganz 2018).  Most importantly, AEI found that the populations of all but five of the 2,998 U.S. counties analyzed would experience less than a 1% change, positive or negative, in average net income through a carbon tax (Brill & Ganz 2018).  Thus, while the American citizenry are the single most powerful actor in American politics, the effects of a carbon tax would be so negligible for the vast majority of them that only a few counties would show any widespread interest.  Moreover, 57% of Republicans nationwide support policies that mitigate climate change according to a recent New York Times article (Popovich & Albeck-Ripka 2017).  With most issues, the fact that it exerts such a small effect on the general public and has widespread passive public backing would allow such a tax to pass easily, but neither the CLC’s approach nor the AEI study takes hardline Republican support into account.  Those lawmakers who ran on a platform of absolute denial of climate change would find it difficult to change course, and if they perceive a carbon tax as a threat to their ideology, they could unite with far more dedication compared to more complacent, moderate Republicans.

This stakeholder analysis reveals that lawmakers interested in passing a carbon tax law could do so with strong support from certain corporate backers, provided they dismantle Obama-era regulations as part of the package.  Such a move would definitely yield some public resistance, but even if not supported would be passively accepted by the majority of Americans.  The biggest issue would be the possibility of hardline Republicans perceiving the tax as a threat to their ideology and rallying against it on moral rather than economic grounds.  There is also a critical inconsistency between the CLC proposal and the AEI study: the CLC calls for a $40/ton tax, whereas the AEI study analyzes a hypothetical $25/ton tax.  A $40/ton tax could have significantly stronger negative impacts on some counties than a $25/ton tax, increasingly public resistance.  Nevertheless, this paper ultimately concludes that, from a stakeholder perspective, a carbon tax could conceivably pass the American legislative gauntlet.

Bibliography

Brill, Alex, and Scott Ganz. 2018. The Political Economy of a Carbon Tax: A Country-by-Country Investigation. American Enterprise Institute. AEI Economics Working Paper. https://www.aei.org/publication/the-political-economy-of-a-carbon-tax-a-country-by-country-investigation/ (February 1, 2018).

“Founding Members.” Climate Leadership Council. https://www.clcouncil.org/founding-members/ (February 2, 2018).

“Our Plan.” Climate Leadership Council. https://www.clcouncil.org/our-plan/ (February 2, 2018).

Popovich, Nadja, and Livia Albeck-Ripka. 2017. “How Republicans Think About Climate Change — in Maps.” The New York Times. https://www.nytimes.com/interactive/2017/12/14/climate/republicans-global-warming-maps.html (February 13, 2018).

Shultz, George P., and Lawrence H. Summers. 2017. “Opinion | This Is the One Climate Solution That’s Best for the Environment — and for Business.” Washington Post. https://www.washingtonpost.com/opinions/this-is-the-one-climate-solution-thats-best-for-the-environment–and-for-business/2017/06/19/9736b72c-542f-11e7-a204-ad706461fa4f_story.html (February 2, 2018).

On my honor I have neither given nor received unauthorized information regarding this work, I have followed and will continue to observe all regulations regarding it, and I am unaware of any violation of the Honor Code by others.