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Former Treasury Secretary Henry Paulson Weighs In on the Need for a Climate Tax

RP Siegel | Tuesday June 24th, 2014 | 1 Comment

Henry Paulson I don’t know if it was the cold winter or what, but we suddenly seem to be seeing mass defections from the climate denial bandwagon. Last week it was the former chairman of Shell U.K. This week it’s Henry Paulson, who served as Treasury Secretary during the George W. Bush administration. Paulson was instrumental in that administration’s response to the financial meltdown, a situation he draws as parallel to the climate crisis in a New York Times Op-ed entitled, “The Coming Climate Crash.”

Speaking specifically about climate change, Paulson says: “This is a crisis we can’t afford to ignore. I feel as if I’m watching as we fly in slow motion on a collision course toward a giant mountain. We can see the crash coming, and yet we’re sitting on our hands rather than altering course.”

You would think that as a former Secretary of the Treasury, his call for a carbon tax would be enough to convince his fellow Republicans that not only is this the most effective way to address the issue, but also that the time for procrastination has passed. But Paul Krugman, writing in his response, says: “Every economist I know would start cheering wildly if Congress voted in a clean, across-the-board carbon tax. But that isn’t going to happen in the foreseeable future. A carbon tax may be the best thing we could do, but we won’t actually do it.”

Krugman says that the health care crisis is actually a better parallel to climate change than the financial crisis. Back in 2008, the administration held the specter of an imminent (and plausible) worldwide financial collapse potentially only days away with which to drive urgent and dramatic action. Climate change is very different as it has revealed  and will continue to reveal itself slowly, over a period of decades, at the end of which it will be far too late to do anything but brace for the impact.

Doing the right thing about climate change, by passing a carbon tax, would be like doing the right thing about health care by adopting a single-payer option. That didn’t happen because of the insurance industry and the dozens of politicians beholden to them for campaign contributions. The same will be true, says Krugman, of the carbon tax. Simply substitute the energy for health care.

So, there’s good news and bad news: What we will get, says Krugman, will be a number of “second best” options, not unlike Obamacare, which despite being stripped of many of its most beneficial provisions on the way to political acceptability, is far better than nothing.

What are the second best options for climate change?

The list would include fuel efficiency standards, net metering provisions in the law and the EPA’s use of regulatory authority to control carbon emissions, all of which are already in place. Add to those, subsides and loan guarantees, of which some will fail (e.g. Solyndra) and looking to the states to develop their own cap and trade systems. Local governments and businesses, many of whom have been proactive, will continue to have a major impact.

Democracy is a messy business, and while it’s true that in a time of crisis we might be better off with an autocratic system, the quality of life advantages of democracy, despite its compromises, are overwhelming. Those compromises lead us to another adage: “The best is often the worst enemy of good enough.” But how do we know, with so much at stake, that “good enough” will be good enough?

Image credit: Dartmouth College: Flickr Creative Commons

RP Siegel, PE, is an author, inventor and consultant. He has written for numerous publications ranging from Huffington Post to Mechanical Engineering. He and Roger Saillant co-wrote the eco-thriller Vapor Trails. RP sees it as his mission to help articulate and clarify the problems and challenges confronting our planet at this time, as well as the steadily emerging  list of proposed solutions. His uniquely combined engineering and humanities background help to bring both global perspective and analytical detail to bear on the questions at hand.

Follow RP Siegel on Twitter.


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  • Tj B

    I find it unusual that I’m first to comment…unless this site sucks. As for people like Paulson, Krugman and Obama spouting off about a carbon tax being needed…I have never seen where taxes do not end up screwing some and helping others. The ones controlling the tax laugh all the way to the bank!

    Our (the WORLD’s) problem of not taking care of the only planet we have is far more than carbon dioxide output!!! It is every pollutant we spew everywhere. How we fowl the water with all kind of wastes, plastics, etc. Deforesting large areas limiting the conversion of carbon dioxide in to oxygen. Population explosion, consuming anything and everything at unprecedented rates.

    A carbon tax will not fix that…Why does the US government limit the tax credits you can get for make your home more efficient? The US tax code is a bad joke as far as I’m concerned and a new tax would just make it worst!

    Their methods do not promote “going green” as they say. Just more government bureaucratic garbage and I’m sick of it!!!

    Common sense has become highly uncommon…