Crafting a Just Budget Deal for Future Generations: The Case for a Carbon Tax

Future generations will be affected not only by the amount of debt we leave them, but also by the infrastructure, educational system, and environment that are left to them. Arguing for cuts to Head Start, or WIC, or to scale back environmental protections in order to temporarily boost growth on the grounds that we owe it to future generations makes no sense. If we are actually concerned about future generations, then our goal is not to myopically focus on the debt and deficit, but to focus on the entirety of what we leave to our children. This is why a carbon tax needs to re-enter public discussion and be linked to deficit reduction.

A carbon tax can raise money to close the deficit while also beginning to address climate change, an issue that is a much bigger threat to future generations than the deficit. It is a generally accepted principle that when given a choice we should tax the things we want less of (carbon) and avoid taxing things we want more of (income). On those grounds alone a carbon tax is clearly preferable to an increase in income taxes. Imposing a carbon tax is also a matter of correcting for a market externality. Because no one person or company owns the climate, any damage that occurs to the climate is off the books, so to speak. In a society that relies on good data in order to make cost-benefit analysis leaving out the costs of pollution leads to decisions that produce more harm than good. By pricing in the cost of carbon pollution we can make a significantly more accurate assessment of the costs and benefits of certain production decisions. If the benefits still outweigh the costs then we move ahead, but ignoring certain costs is foolish and leads to sub-optimal societal outcomes.

Recent evidence suggests that climate change is probably proceeding even faster than most models had predicted. It is clear that we are already feeling the affects of climate change in extreme weather events. Yes, no one event can be directly linked to climate change any more than one of Barry Bonds home runs can be linked to steroid use. But the science tells us that the steroids are making a difference. We now have weather on steroids, and even if we stopped emitting carbon today the problem would continue to get worse for years. Climate change, far more than debt, will be the legacy that this generation is remembered for. By implementing a carbon tax we have a chance to both cut the deficit and slow climate change. A carbon tax will not solve the deficit by itself (only health care reform could do that), but it will make tax hikes and spending cuts less draconian. It also will not be sufficient to deal with the full implications of climate change; but it is a significant start.

Just four years ago it seemed like a carbon tax or a cap and trade system was on its way to becoming a reality. Now it is not even being discussed as a way to reduce the deficit. We need to change that. It’s not only a matter of inter-generational equity, it’s also a matter of good stewardship. The Bible is very clear that creation is good and creation is God’s.  Creation and climate are given to us from God to steward responsibly and pass on intact to future generations. As noted Kentucky author, poet, and farmer Wendell Berry writes, “It’s a terrible sin to destroy a gift that you cannot make or replace yourself, that is not given to you except in trust for those who are still to come.” By making a carbon tax part of any budget deal we can preserve creation while simultaneously mitigating the impact of the necessary tax hikes and spending cuts.

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