Saving our climate and the middle class

by Mike Tidwell and Tyson Slocum

The Hill, September 10, 2014

Our nation faces two great crises. First, climate change is spiraling out of control. In May we learned from the National Climate Assessment that “climate change, once considered an issue for a distant future, has moved firmly into the present.” Storms are heavier and more frequent, droughts are dryer, summers are hotter. The West Antarctic ice sheet was long thought safe, but in May we learned that part of it is melting irreversibly, which will eventually add as much as 13 feet to our already rising seas.

Meanwhile, America’s middle class is shrinking too. Despite the modest economic recovery since 2008, our middle class has seen little benefit. According to the Pew Research Center, one third fewer adults now consider themselves in the middle class compared to 2008 – and with good reason. The median net worth of the middle class has fallen an astonishing one third in recent years, losing all gains since 1983. Most new jobs are in retail and fast food. They are minimum wage, part-time, and without benefits. Even the upper-middle class has been shrinking.

We can’t be a great nation without a strong middle class. And we can’t be a strong nation if our ports and military assets fall to rising seas and storm surges—a serious worry among Pentagon leaders—or if our Kansas breadbasket turns into a scrub desert.

Fortunately, there’s a way to respond to both problems simultaneously: the Healthy Climate and Family Security Act of 2014. This bill, recently introduced by Rep. Chris Van Hollen (D-Md.), would de-carbonize the American economy to fight climate change while at the same time boosting the incomes of middle-class families.

How can one bill do both these things? Answer: By capping carbon, selling permits and returning the revenue to everyone equally. Under Van Hollen’s bill, the first sellers of carbon-based fuels—“upstream” companies like coal wholesalers and oil importers—would purchase permits to introduce carbon into our economy. The number of permits would decline over time, reducing our burning of carbon-based fuels.

The proceeds from the sale of permits would then be distributed to every American with a So­cial Security number — one person, one share. The money would be wired quarterly to bank accounts or debit cards. This recycling of revenue makes moral sense because the atmosphere is a gift of nature to all of us. It also makes economic sense because it would help sustain the purchasing power of American consumers.

Thanks to the dividends, most Americans wouldn’t feel the pinch of rising carbon prices. In fact, the majority of Americans would see their net incomes rise. And the more a household reduces its use of carbon-based fuels, the more it would gain financially.

In addition to increasing net revenue for middle- and lower-income Americans, the measure would improve their prospects of finding good jobs. The renewable energy, green manufacturing and energy efficiency sectors are already among the fastest-growing sectors of our economy, and the incentives created by raising fossil fuel prices would accelerate their growth.

The cap and dividend approach to climate change is an improvement over the cap and trade approach that passed the House of Representatives in 2009 but never got a vote the Senate. That approach lacked certainty in emissions reductions and would not have protected middle-class families. Instead, it would have handed billions of dollars to polluters who would have received free permits and speculators who would have bought and sold carbon permits and “offsets.” That’s what’s happening in Europe, and it’s not working.

We need swift, aggressive action to reduce the harm that catastrophic climate change will inflict on consumer pocketbooks, the economy and the environment. Of course the U.S. Environmental Protection Agency – on behalf of President Obama – is working on regulations to curb carbon emissions from power plants. Although more aggressive reductions are necessary, the EPA’s “Carbon Rule” proposal has the potential to keep consumer electricity costs in check. How consumers fare in any given state will depend on how the state chooses to implement the EPA rule. Good options abound, including promoting energy efficiency among consumers and subsidizing low-income households. States could also adopt their own state-based versions of the Van Hollen cap-and-dividend plan.

But the biggest solution remains passage of a strong federal law by Congress. As a nation, we have faced many great crises in the past – and prevailed. So we can surely overcome the crisis of gridlock on Capitol Hill when the stakes are big enough. Simply put, climate change and our vanishing middle class cannot wait. With each passing year, atmospheric instability and consumer insecurity become more acute and potentially irreversible. The Van Hollen “cap and dividend” bill now before Congress would begin solving both problems in a fair and effective way. It’s time to act.

Slocum is director of the Energy Program at Public Citizen. Tidwell is the director of the Chesapeake Climate Action Network.