US Congressman Jim McDermott (D-WA)
- 06 February 2013
In August 2012, Congressman Jim McDermott (D-WA), a senior member of the House Ways and Means Committee, introduced carbon tax legislation (i.e. Managed Carbon Price Act of 2012) in the US House of Representatives. He recently sat down with The Climate Group’s Head of US Policy, Evan Juska, to discuss the chances for a carbon tax to be enacted as part of a broad tax reform package.
- What was your motivation for introducing carbon tax legislation?
I introduced the carbon tax bill to restart the discussion on climate change. After our cap and trade experience, we stopped talking about climate change here in D.C., but the effects of climate change have only gotten worse, as witnessed by Hurricane Sandy and of other extreme weather events in the US and around the globe.
I introduced it early because I think this Congress will be looking at the issue of tax reform, and I want a carbon tax to be part of the discussion from the very start. We need to start thinking about this now, so that when the time comes, a good solution is sitting there on the table.
- How do you see the debate unfolding this year?
If we do address tax reform, we’ll want to start early, and it will likely be at least a six-month process.
If a carbon tax is part of that discussion, I expect the debate to focus on how the revenues would be spent. I think a significant amount needs to be returned to the public to offset whatever higher energy costs are caused by the tax. And I think some of it should go to deficit reduction. That’s my thinking. Congress will debate it and we’ll see what happens.
- How does the need for new revenues create an opportunity for a carbon tax?
As of now, we’ve made serious cuts to important programs in our budget – critical programs like National Institutes of Health - research that has traditionally had bipartisan support. While it’s important that we deal with our deficits and stabilize our debt, it must be done with a balanced mix of revenue and spending cuts. If we move forward with the automatic budget cuts under the Budget Control Act, we will have cut $5 in spending to every $1 in revenue raised. While many people think we can cut our way out of the deficit, the truth is we’ve already made a lot of cuts.
If the President and Congress are to achieve a balance of revenue and spending cuts, they will need to look at broad policies like a carbon tax, which would raise significant revenue, while still promoting solid tax policies. But, keep in mind that while a carbon tax raises revenue, the main purpose of a carbon tax is to reduce pollution while keeping our economy strong and protecting public health and the environment.
- Can you explain how the package nature of tax reform affects the politics of a carbon tax?
A major piece of legislation, like tax reform, is by its very nature a compromise – something we haven’t seen a lot of recently. The last major piece of legislation that was conferenced and passed was the Dodd-Frank financial regulation bill. When Dodd-Frank first passed the House, it had no Republican votes. After it was conferenced and negotiated, it passed both the House and Senate on a bipartisan basis. That type of compromise will be necessary in tax reform.
There are some that would never vote for a carbon tax regardless of the package it’s in. But there are enough Members and Senators that could vote for it if it is packaged with other policies they support. That’s why I believe tax reform would be the best vehicle to pass a carbon tax. Given the current political climate, I think it would be difficult to pass a carbon tax as a stand-alone piece of legislation.
- At the moment, most people, even the supporters of a carbon tax, refer to it as a long shot. What would need to happen to change that?
Issues like this tend to develop for a while, and then, in response to some event, explode into the mainstream. I don’t know what that event will be, or when it will be, but there are a number of things that could vault this issue towards the top of the agenda, not least of them being extreme weather.
A lot of people’s minds changed after Hurricane Sandy. People in and out of the affected areas started saying, “Maybe we need to start paying attention to this climate change issue.”
My personal belief is that we’re close to a turning point where a majority of the public thinks that we have to do something.
- For a carbon tax to be adopted, what kind of support will be needed from the business community?
There are a lot of good reasons why we should have a carbon tax. It’s good for the environment. It’s good for public health. But in today’s fiscal climate, it’s the economic arguments that are being heard the most.
Dealing with climate change is good business and good for jobs. Businesses know the costs that climate change imposes on their customers and on their bottom line. If we are going to pass any kind of climate change legislation, businesses will be very important in showing the impact that climate change has on our economy.
It’s going to take a number of companies, in an organized way, going in and talking to Members. Congress is a reactive body. We very seldom go out and do something that somebody isn’t asking for. So companies need to come in and say “Hey look. There’s a problem and here’s a reasonable way of dealing with it. Dealing with climate change gives us a competitive advantage.”
- If Congress passes tax reform without a carbon tax, will the policy have missed its window of opportunity, or is it something that could be taken up again down the road?
I don’t believe tax reform is the only opportunity to pass a carbon tax. As I mentioned, these good policy ideas have a way of bubbling along until they reach a tipping point and people take action.
I’ve been in Congress for over 20 years, and prior to that I served in the Washington State Legislature and I’ve learned that there is no perfect recipe for getting legislation passed. Big ideas take time to become law. Tax reform is an opportunity that could help get a carbon tax across the finish line, but there will be other opportunities in the future.
Given the massive increase in severe weather events and the negative impact these events have on our economy, there is no question that we should pass a carbon tax as soon as possible. People are seeing that climate change is hurting the economy, jobs, the environment and peoples’ health. The President spoke of addressing climate change in his inaugural address. He’s leading and it’s part of his agenda, so I think that it’s only a matter of time before we take action and pass comprehensive climate change legislation. And when we do I want a carbon tax at the top of list of forward-thinking steps we take.
Congressman Jim McDermott is serving his 13th term in the U.S. House of Representatives, where he proudly represents the City of Seattle and surrounding neighborhoods. He is a senior member of the House Ways and Means Committee, Congress’s preeminent tax writing committee, where he currently serves as the top ranking Democrat on the Health Subcommittee. In the 112th Congress, Congressman McDermott served as the ranking member of the Trade Subcommittee.
Prior to his service in the House, Congressman McDermott served in the Washington State legislature where he was Chairman of the Ways and Means committee. Over the course of his career, the Congressman has been actively involved in tax, energy, environmental, health care, social welfare and trade issues.