Memo to Obama: Make Carbon Cap Simple and Unsinkable

In 1934, President Franklin Roosevelt asked his labor secretary, Frances Perkins, to draft a plan to sustain Americans in old age. “Keep it simple,” he told her, “so simple everybody will understand it.” The Social Security Act adopted a year later created a brilliant old age pension system that has kept millions out of poverty and, because of its simplicity, fairness and universality, withstood every attempt to scuttle it.

In 2009, you must do the same for climate change. You must create a simple, transformative and unsinkable climate protection system that, over 30 to 40 years, squeezes carbon out of our economy and replaces it with clean alternatives.

The essence of such a system isn’t complicated. In your campaign, you pledged to install a descending cap on carbon emissions with a goal of 80 percent reductions by 2050. Unlike John McCain, you insisted that polluters pay for all the permits they’ll be required to obtain. And you said that most of the money polluters pay should be returned to families to offset the inevitable increase in energy prices.

Those are exactly the right core principles: cap carbon, make polluters pay, and return the money to the people. But here are the fine points that will en-sure your climate system is as effective, popular and enduring as Social Security:

• Cap carbon upstream as it enters the economy, not downstream as it escapes from millions of pipes. This will assure that the cap actually works.
• Return all the polluters’ payments equally and automatically to everyone. That way, the system will be transparent and special interests won’t game it.
• Return the polluters’ money monthly, not annually, because people have monthly bills to pay. To keep administrative costs down, wire these ‘climate dividends’ electronically to people’s bank accounts or debit cards.
• Tax the monthly dividends at ordinary rates, just as Social Security benefits are taxed. Rich folks will pay at the highest rate, while poor folks won’t pay at all. The government will then get a share of the polluters’ money that it can use for clean energy programs. But the people will get their share first.

Yes, Americans will scream when energy prices go up, and there will be frenzied cries of ‘Drill, baby, drill!’ But by returning polluters’ money equally to everyone, your carbon capping system will retain public support for its duration.

In addition to solving the climate crisis, a cap and dividend system will protect household buying power during (and beyond) the recession, as well as rebut any charges that you’re raising taxes on the middle class. More importantly, it fits your vision of how government should work. It’s simple and market-friendly, yet favors no special interests. And by treating all Americans as co-owners of the air, it unites us for the common good.

A cap and dividend system is good politics, good economics and essential for healing the planet. If you enact it, it will be a signature achievement and remain as memorably linked to you as Social Security is to Roosevelt.

(Reprinted with permission from www.capanddividend.org)