CLIMATE THOUGHTS PART II

Freshman Senator Ben Sasse (R) of Nebraska made a notable inaugural speech in the Senate on November 3, almost a year after he took office. It was the first time he took the floor in the Senate Chamber and it deserved a much larger audience than he got. He held out a mirror in front of the members of the Senate and told them that “the public is right that we as a Congress are not shepherding the country through the serious debates we must have about the future of this great nation.” And he added: “The Senate isn’t tackling the great national problems that worry those we work for.”

One of those great national problems (although not mentioned by name by Senator Sasso) is the issue of climate change that is now the subject of discussion at the United Nations conference in Paris, France.

Senator Sasse is right in putting his finger on the degeneration of the American political system that is at the root of the delinquency on the part of Congress. It is not just the Senate that is falling down on its job. The whole system has been corrupted by the money influence of the special interests and by the polarization in two irreconcilable camps. The resulting dysfunction risks making what once was the model of good governance into the laughing stock for the whole world to see.

What the country needs—in addition to a redress of how our political institutions work at the federal level—is a national strategy that defines the challenges the nation faces and sets priorities in dealing with each of them. For sure the climate challenge should appear somewhere in such prioritization. The debate should be not on whether it requires intervention by the governments of the major economic world powers but on how such intervention can best produce results.

In Part I of my Climate Thoughts, I referenced Bill Gates who addressed this question in an interview with The Atlantic and called for a tripling of government spending on energy R&D.  Gates stated that ‘We Need an Energy Miracle” and he is committing to invest $2 billion of his own money in clean energy start-ups that should come out of vastly increased government R&D spending. Gates points out that at $6 billion US government R&D in the energy sector pales in comparison with the $30 billion spent in medical research. The richest country on earth should be able to adequately fund basic research in several areas of need at the same time. To the predictable congressional push-back against such spending increase Gates retorts that the case for American innovation, American jobs and American leadership resulting from such R&D investment is just too compelling to fail in the end. Gates underscores his optimism by his willingness to put his own money at risk.

He may be too optimistic though on Washington DC’s readiness and willingness to expand the government’s reach into the energy field and pay for it. All the momentum is the other way, particularly on the Republican side that is currently in charge of Congress. Just listen to the GOP’s candidates for the 2016 presidential election.

I am largely sympathetic to the conservative point of view that we should not be spending money that we don’t have. We are already more than $18 trillion in debt and we have a slew of unmet needs, like the funding of our entitlement programs for the future, the upgrade of our infrastructure and the readying of the population for the rapidly changing job environment. I too am an advocate for a smaller, more nimble government, but one that has the courage to face the major challenges of our era and provide solutions, real results for the people who are footing the bill.

There are at least two things wrong with the current structure of the public sector. First it is large, bureaucratic and misdirected. It should be small, efficient, competent and focused on enabling the private sector to propel the country forward through innovation. Second it is permanently under- funded. This may solely be because it is spending on activities that should not be done at all or should not be done by the public sector. In principle, a smaller, more nimble government focused on enabling citizens (people, companies and organizations) to grow the economy and propel the nation forward should be able to function on less tax revenue than it currently collects. But chances are that under-funding will not be resolved without a complete reorganization of our public financing system. Our current tax code and the de facto blocking of revision and simplification of the IRS code in Congress are formidable impediments to progress. As it is we are not taxing the right entities, activities and sources of revenue. We should have a legitimate discussion about the merits of taxing consumption more than income. A shift from tax on income to a tax on consumption in itself should help the environment, particularly if consumption taxes take into consideration the burdens that specific consumptive activities place on the environment and the wellness of the population. But, as Senator Sasse points out in his maiden speech to his colleagues: “No one in this body thinks the Senate is laser-focused on the most pressing issues facing the nation.”

Unfortunately, Congressional debate and action is caught up in the two year election cycle, which makes planning over a long term time horizon nearly impossible and translates talk of new taxes by politicians into virtual suicide. Politicians may be devious or dumb in our eyes, but they are not that dumb that they shoot themselves in the foot when it comes to advancing their careers.

In a final segment of this three part column I will present some thoughts on what the US government should and should not do to address the climate change challenge.