All Democrats Should Embrace Baker-Shultz, Even if Their Environmental Allies Are Reluctant

By Mike Shatzkin

One simple tactic is available to Democrats that would accomplish all of the following objectives:

Achieving substantial progress on the broadly-accepted goal of “putting a price on carbon” so that fossil fuels are competitively disadvantaged against renewables;
Giving the Democrats the mantel of non-partisanship (or “strengthening the Democratic brand”);
Exacerbating divisions in the Republican Party and making them much more apparent to the voters (or “weakening the Republican brand”);
Gently redistributing income from rich to poor.

The tactic is simple: Democrats should “embrace” the Baker-Shultz Republican carbon tax proposal, now a year old, as a great “starting point for bi-partisan carbon tax negotiations.” In fact, my local Four Freedoms Democratic Club in Manhattan has done precisely that.

Explaining why this such a good idea and how it achieves the objectives claimed for it above is a bit more complicated. And understanding why something like this that appeals to most rank-and-file Democrats isn’t even on the radar screens of most elected Democrats becomes apparent when you think it through.

I tested the idea by explaining the action and its implications to four Democrats running to beat Republicans in 2018. I got 3-to-5 minutes of their 1-on-1 attention by attending Manhattan fundraisers for each of them. Every single one of the candidates grasped the idea instantly. And not one of them seemed previously aware of Baker-Shultz or why it was a proposal worthy of Democratic support.

Beto O’Rourke will likely be the Democrats’ nominee against incumbent Senator Ted Cruz in Texas.
Elaine Luria is seeking the Democratic nomination for a Republican-held Congressional seat that hugs the Virginia coastline.
Pat Ryan is the leading Democrat to take over a Hudson Valley congressional seat now held by a Republican.
And Conor Lamb will, we hope, snatch a staunch Republican Congressional seat in a special election taking place on March 13.

The basic mechanics of the Baker-Shultz proposal aren’t hard to understand. They recommend a substantial carbon tax of $40 per ton of CO2 emissions. This is a big number. That starting point is nearly triple what is charged by California’s cap-and-trade carbon pricing; or what is in place in British Columbia; or what has been proposed by Citizens’ Climate Lobby, a non-partisan organization that has been pushing a carbon tax (which they call “fee”) for a decade.

Baker-Shultz (for James Baker and George Shultz, the two former Republican Secretaries of State who are the leading advocates for the Climate Leadership Council, the group of self-declared Republicans pushing what they label a “Republican market-based idea”) refunds every penny of the money raised by the carbon tax to individuals by social security number. This is similar to what Citizens Climate Lobby (CCL) has proposed in their “carbon fee and dividend” concept.

CLC maintains that the $40 tax (which would raise gas prices by about 40 cents per gallon) would result in a check for $2000 in the first year to a family of four. That’s progressive. Very few poor families of four will spend anything close to that in additional energy costs. And very few wealthy families, with larger and multiple domiciles and more frequent air travel, will come near to recovering what the tax costs them. Meanwhile, everybody and every utility will be economically incentivized to use less or non-polluting energy.

There are two “poison pills” in the CLC idea that progressives would want to negotiate about, and on both, we have really good arguments. CLC wants all carbon regulation eliminated as a price for levying the tax. The energy experts I know assure me that a $40 price (which, remember, is far higher than anybody has had the guts to propose so far) would be so useful that giving up the regulations in exchange would be a environmentally-productive trade-off. Nonetheless, we should try to negotiate a staged reduction of regulations based on real metrics of accomplishment for the tax. As the tax drives down overall CO2 emissions, which we all agree it will, regulations can be progressively relaxed.

The second poison pill is even easier to deal with. Fossil fuel interests, some of which support the CLC proposal, want relief from potential tort liability for the damage from their products. They are afraid of being sued and punished like tobacco manufacturers. Whether any lawsuit would ever succeed is an open question and, if one would, it would take years. Meanwhile, CO2 is a very immediate threat that we can’t wait for a lawsuit to attack.

But in his case, as well, there is a middle position that we could take and which would likely prevail. That is: “sure, no liability, except in case of fraud”. Let the fossil fuel industry and GOP defend protecting miscreant polluters from fraud. This is a conversation we want to have. It would simply result in a bigger political win for Democrats.

As I said, all of these very smart candidates appeared to know nothing of Baker-Shultz before we talked but quickly grasped the political power of what was being suggested. The argument is particularly powerful for O’Rourke. James Baker is one of the most revered Republican figures in the state of Texas. If O’Rourke supports the Baker-named carbon tax proposal, it makes it extraordinarily difficult for Baker to push for Senator Cruz, who almost certainly will not. Our argument is that managing CO2 and warming is too important for partisanship. It very likely James Baker feels that way too.

Conversations with a lot of rank-and-file Democrats about this concept over the past few months, lobbying for it in my club and elsewhere, reveal that almost everybody in any meeting of Democrats sees the merit in this approach. So why wasn’t it on the radar of any of these candidates, all of them running in less-than-overwhelmingly Democratic constituencies?

The answer to this riddle is in an understanding of how things really work in the political world.

The principal responsibility of a candidate is not to be the campaign’s expert on the nuances of every issue. The candidates’s job is to be a great candidate, and that means having a staff which has deep expertise on the issues and makes sure the candidate knows what s/he needs to know to perform in front of each audience faced during the campaign.

And the staff member assigned to know about an issue will consult with the most powerful individual and institutional voices among their candidates’ supporters and influential lobbyists to develop the candidate’s positions. And on energy and environment issues, for most Democrats, those voices would be liberal, environmentally-conscious voices.

And the most liberal, environmentally-conscious organizations generally hate the dividend approach. They want carbon taxes used to support worthy things they believe in: addressing environmental justice issues and developing green energy alternatives being highest on the list. Simply giving money back to people to spend as they wish, in the view of many environmental activists, is wasteful of important resources that should be employed for underfunded needs.

This is a sound moral and ethical position (even if it has a self-serving component) that, at the moment, is very bad politics. That is highlighted when one contemplates another distinction between the CCL and CLC proposals, which is how they envision adjusting the carbon tax/fee over time.

CCL proposes raising it $10 a ton forever (although they only start at $15). CLC barely allows raising it at all, planning only to adjust for inflation. But these proposals for out years are really of secondary importance. Once either proposal is in place, more than two-thirds of the people — those who get more in a dividend than the tax costs them — will be rewarded if the price goes up. If a higher carbon tax is needed, and it probably is, the dividend technique builds the political capability to accomplish that. Giving all the proceeds away for even the best causes does not!

No staff member for a potential Democratic legislator is going to recommend a “dividend” approach to carbon taxing if they adhere to the normal process of getting their information and their perspective from the experts they usually trust on this subject.

But what they’re missing is that no staff member for a Republican legislator is going to favor support for any carbon tax at all! The Republicans conscious of climate change (like at are all for spending government money to pursue carbon capture technology, but they’ll be damned if they support disadvantaging carbon fuels by taxing them!

But, of course, that’s why the suggestion that Democrats endorse Baker-Shultz has such power. The thoughtful policy-conscious and public-spirited Republicans of yore — Baker and Schultz and the Bushes and Romney and McCain and even Boehner and McConnell (although probably not Ryan) — are still part of the Republican brand even if the current and emerging party leadership is more Trump- and Tea Party-esque. This issue can highlight the division in their ranks, if Democrats push it to the fore.

If Democrats will recognize and highlight Baker-Shultz as a reasonable idea from Republicans that evokes bipartisanship, it will force Republicans to take a position on it. Most of them, beholden to Koch Brothers money, won’t support it. But if Democrats make it part of the ongoing conversation, more and more of the Republican “establishment” will be forced into the open on this question.

So I hope other local clubs and rank-and-file Democrats will join the effort to attack our most pernicious problem — global warming — in the most direct way possible, even if the environmental organizations they give to and revere don’t lead this fight.

One coda to all this. While the four candidates above — all of whom are impressive and all of whom I hope win — did not seem to know about Baker-Shultz, one elected politician familiar to all of us did.

I had less than a minute 1-on-1 with Nancy Pelosi at a meeting to plan a DCCC Conference and Luncheon in New York about the “Women’s Political Agenda”, a conclave in New York City in April that Pelosi will chair.

All I had time to say was “Leader Pelosi, I got my local Democratic club to endorse Baker-Shultz as a legitimate starting point for bipartisan climate tax negotiations.” She lit up from ear to ear and said “that’s fantastic!” Then, later during the meeting around a massive law firm conference table which she chaired from across the table and five people down from me, she nodded in my direction when it came time for her to mention “climate change” as one of the issues of concern.

This demonstrated (again) that she’s the Leader for a reason. She does know the issues. And she’s also really savvy. She knows what a weapon it would be if more Democrats supported this idea, even if it is not her place to advocate for it right now. And it further encourages me to keep pushing this idea.