As the November midterm elections near, Congress is faced with two big problems: 1) failure to produce energy or climate legislation, and 2) wanting to extend the Bush tax breaks to everyone. Most Americans favor an energy bill that would increase our energy independence, and free us from the huge hidden costs of oil wars or mining fossil fuels, the latter clearly illustrated by the explosion of the Deepwater Horizon drill rig. Voters are jittery about future accidents that could exponentially add to that, or about the hidden costs of mining shale gas, which can contaminate underground drinking supplies. Then, as President Obama noted, there is the problem of giving $700 billion in tax breaks to the rich by extending the Bush era tax cuts, while the rest of the nation struggles economically. Voters are angry, and ready to vote everyone out of Congress. Is there a way out of this mess? Hmmmm. What if we gave that same amount of tax breaks, $700 billion, to roughly the same class of rich taxpayers for investing in clean energy and energy efficiency?
We've written about this solution before, but it's worth repeating because the idea is more timely than ever. Here's how it would work, as outlined in our free online book, Cool the Earth, Save the Economy. Consider a tax break on future profits from the sale of clean energy and energy-efficient products -- products like more energy-efficient automobiles, appliances, factory equipment, and buildings, home solar panels, energy storage devices, and renewable commercial electricity. The money to do this could come from two sources: redirecting the Bush Administration tax break for the richest, and eliminating subsidies for the fossil fuel industries. The plan would be revenue neutral, and, thus, acceptable to politicians.
By making clean energy and energy efficiency cheaper, rather than dirty energy more expensive, this tax policy would be progressive, benefiting the poor more than the rich, although the rich would get their cut, too. Under such a policy, investment capital would flow to firms, large or small, that invest in appropriate research and development of energy sources, such as solar and wind, that do not produce climate-altering carbon dioxide. Investment money tends to come from those who have it, the rich. And under this tax break, the government will not choose winners in advance, for only the eventual winners with marketable clean energy systems will be rewarded with the break on profits taxes. If your idea works, you get richer, and more tax breaks.
Some might argue that this plan will simply encourage people to use more energy, but that is not likely. People generally do not start using more electricity after installing roof-top solar panels. We're not going to wash more clothes or dishes everyday, just because we will use less energy to do so.
There are several reasons to act fast on this. So far, neither carbon tax nor cap and trade schemes have been politically acceptable enough to pass any energy and climate bill. No one likes taxes, especially Congresspeople near election times. But the costs of inaction on energy and climate are eating away at our jobs and economy, and bringing us no closer to energy independence. Both the climate costs (from extreme droughts, floods, hurricanes, etc., predicted under climate change) and the health costs of fossil fuel emissions are staggering. The European Union, for example, found this out from a recent study that showed increasing its 2021 emissions reduction target to a total 30% emissions reduction would result in a total health care savings of $95 billion annually, just from the resulting lack of fossil fuel pollution. And that figure would be much higher if it included savings from the health problems caused by the consequences of climate change -- the spread of formerly tropical infectious disease, floods, etc. On another front, we're being outcompeted bigtime by China, which is attracting more and more US capital investment. This means lost opportunities for US jobs and economic growth through the clean energy sector. How many jobs? For Indiana alone, where unemployment hovers around 10%, it is estimated at over 100,000.
Both major political parties profess commitment to the principles of tax relief, economic fairness, and reliance on market forces to create a decent future for all of us. These are great selling points around election time. Here is an opportunity to put them into practice, and simultaneously strengthen our economy with more jobs, self-paying tax breaks, growing energy independence, and more savings from large, avoidable, health and climate costs.