Super committee can avoid harmful cuts by protecting the environment

Super committee can avoid harmful cuts by protecting the environment

September 8, 2011

TO:         Interested Parties

FROM:    Michelle Chan, economic policy director, Friends of the Earth
             Ben Schreiber, climate and energy tax analyst, Friends of the Earth

SUBJ:    Super committee can avoid harmful cuts by protecting the environment

As a result of this summer’s debt ceiling agreement discretionary spending will be slashed by $900 billion over the next ten years. A congressional super committee has been charged with reducing the deficit by an additional $1.5 trillion over ten years; if the committee fails to reach agreement, a trigger will cause an additional $1.2 trillion in cuts to set in. Such cuts could weaken our economy, harm low-income and middle class Americans, and undermine enforcement of bedrock environmental laws that protect clean air and clean water.

Last week House Majority Leader Eric Cantor (R-Va.), released his “jobs memo,” which once again signaled that the environment is squarely in the crosshairs in the Republican House. Seven of ten regulatory reforms he proposed are transparent attacks on the environment and public health.

Our country is not broke, and we can afford to protect our environment. The super committee has far better options. By ending subsidies to polluting corporations and making them pay for the costs created by their pollution, we can protect the environment and public health, and generate revenue to stave off cuts to programs like Medicare, Medicaid and Social Security.

Saving up to $380 billion over five years by bringing “Green Scissors” to the budget

In August, Friends of the Earth, as part of an unusual left-right coalition that includes free-market think tank The Heartland Institute, budget watchdog Taxpayers for Common Sense and consumer advocate Public Citizen, released Green Scissors 2011, a report that identifies up to $380 billion in environmentally harmful spending over the next five years. That’s one fourth of the savings the super committee has been tasked with obtain, in half the time.

One example: even though the top six oil companies reported $38 billion in profits in the first quarter of 2011, the oil and gas industry is subsidized by taxpayers to the tune of more than $10 billion each year. And oil and gas subsidies are only a small portion of the wasteful government spending that harms the environment.

The coal, nuclear and biofuels industries likewise receive billions in giveaways, while taxpayer dollars and tax expenditures subsidize a host of other activities, including destructive Army Corps of Engineers projects and logging in our national forests. (Please see the Green Scissors report for a full list of the programs and their costs.) Such harmful spending is the first place the super committee should look for savings.

Reducing climate pollution can generate new revenue

It is long past time for polluting corporations to pay for the damage that their pollution does to the American people. The money raised from putting a price on pollution, combined with money saved by closing tax loopholes and eliminating harmful subsidies, could balance the budget.

The obvious place to start generating such revenue is through a carbon tax, a fee imposed on large-scale emissions of carbon dioxide (this fee could also be applied to emissions of other heat-trapping gases that contribute to global warming). Even a modest tax on carbon, like that proposed by Representative Pete Stark (D-Calif.) in 2009, has the potential to generate substantial revenue: His tax could have yielded $80 billion in the first year alone, and $600 billion over 10 years.

While opponents question the political viability of carbon taxes, that’s not necessarily because of public opinion. A July 2011 Public Policy Institute of California poll found that a carbon tax had 60 percent support among the state’s voters, with only 32 percent opposed. We are not aware of recent national polling on this question.

A carbon tax also makes policy sense because it would yield a “double dividend” as private firms reduce their climate pollution. The impacts of climate change, such as more frequent and severe droughts, heat waves and storms, create costs that taxpayers often bear. The Stockholm Environment Institute recently estimated the total cost of carbon pollution in monetary terms: Every ton of carbon dioxide released into the atmosphere causes up to $893 in economic damage.

Other options include taxing acid rain-producing sulfur dioxide and nitrous oxide emissions. Some of these emissions sources are already regulated, but the Congressional Budget Office estimates that taxing this pollution could generate $27 billion over five years.  Friends of the Earth also supports a currency transaction levy; nearly $1.5 trillion changes hands on international currency exchange markets each day, almost all of it through untaxed transactions made by wealthy speculators. Imposing a microtax on large currency trades could raise $5 billion each year for important social and environmental priorities.

Poor super committee choices will endanger the environment

It should be clear that we cannot balance the budget through spending cuts alone without causing severe damage to our social infrastructure and the economy.

We are particularly concerned that federal agencies’ ability to enforce crucial laws protecting the environment is at risk. Already, the debt ceiling deal will likely result in deep budget cuts for the Environmental Protection Agency and the Department of the Interior, jeopardizing the abilities of those agencies to enforce key environmental laws. Crucial tax credits for emerging clean energy industries — industries that merit financial support and will likely not succeed without it — are also at risk. Such cuts would be a disaster for our country. Fortunately, by making wise choices like those proposed above, the super committee can avoid them.

Friends of the Earth opposed the debt ceiling agreement because it endangered the environment and failed to fairly distribute the costs of deficit reduction. But now that it has passed and the 12-member super committee has been established, it is crucial that the committee be pressed to act wisely. We hope you will urge it to embrace common sense spending cuts and revenue increases that fairly and equitably reduce the deficit while protecting the environment.



Please contact us to discuss these proposals further or if you would like more information.

Michelle Chan, economic policy director, at 415-544-0790 ext. 214 or [email protected]

Ben Schreiber, climate and energy tax analyst, at 202-222-0752 or [email protected]


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