Ezra Klein predicts today that we’ll have a compromise on fiscal issues in time for Christmas. I hope he is wrong, because that would be a real tragedy.
Klein was among those speculating earlier this fall that one result of the negotiations could be a carbon tax, but if Congress and President Barack Obama make a deal in the next few weeks, there probably won’t be any major legislation on climate change for at least several more years. The time when the world can act most effectively and least expensively to prevent global warming will end before there is another opportunity like this one.
The “fiscal cliff,” in Ben Bernanke’s phrase, forces members of both parties to negotiate. If Republicans concede an increase in the top marginal tax rate in exchange for other spending reductions and an agreement to deal with the rest of the deficit in 2013, as Klein describes, then all of the president’s leverage will have evaporated. Without the threat of a major penalty like sequestration, there’s little chance Democrats will be able to persuade Republicans to compromise on climate change.
Of all the problems our national leadership must address, global warming is the most urgent. The specific consequences of climate change are notoriously difficult to predict, but we know much more about what will happen to the weather over the next century than we know about what will happen to the federal budget. That will depend on future economic activity and on the decisions of future legislators. For anyone who is thinking more than one move ahead in American politics, two detailed reports released this month offer a clear picture of what the world will be like without international action on climate change. One, commissioned by the World Bank, concludes that an average global temperature increase of 4º C above preindustrial temperatures is likely by the end of this century. The world in 2100 will be as much warmer than it is now as today’s climate is warmer than the last Ice Age.
The other report, written for the Central Intelligence Agency and other spy agencies, describes the political instability that will result from climate change in the next ten years. The report itself is less blunt, but here is John Broder’s summary in the New York Times:
States will fail, large populations subjected to famine, flood, or disease will migrate across international borders, and national and international agencies will not have the resources to cope.
Deficit reduction is important, but the stakes simply aren’t as high. Interest rates and inflation could rise dramatically in a worst-case scenario, creating persistently slow economic growth. But concerns about inflation rising out of control are probably baseless, since our currency is so attractive to foreign investors.
There are a range of ideas for implementing a carbon tax, such as dedicating the revenue to Social Security and Medicare or investing the money in new technologies. I like the idea of tying the revenue from a carbon tax in some way to defense spending. Obama should allow the sequester to go into effect, as Jonathan Chait and Matthew Yglesias have argued, and then agree to restore defense spending only if Republicans agree to a carbon tax and to other climate legislation. That approach seems to be the most likely to succeed in Congress. Republicans wouldn’t be happy, but there wouldn’t be much else they could do.
In fact, Obama will likely compromise with Republicans before he has an agreement with them to address climate change. If he does, the worldwide environmental movement will have substantively failed, and our democratic system will have come up short against the twenty-first century’s most important challenge.
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