Robert Nickelsberg/Getty ImagesA power plant in Shippingport, Pa., has been a source of pollution in the town. A carbon tax could help effectively drive clean-tech innovation. UNTIL we fully understand what turned two brothers who allegedly perpetrated the Boston Marathon bombings into murderers, it is hard to make any policy recommendation other than this: We need to redouble our efforts to make America stronger and healthier so it remains a vibrant counterexample to whatever bigoted ideology may have gripped these young men. With all our warts, we have built a unique society — a country where a black man, whose middle name is Hussein, whose grandfather was a Muslim, can run for president and first defeat a woman in his own party and then four years later a Mormon from the opposition, and no one thinks twice about it. With so many societies around the world being torn apart, especially in the Middle East, it is vital that America survives and flourishes as a beacon of pluralism.
Thomas L. Friedman Rebuilding our strength has to start with healing our economy. In that regard, it feels as if our budget drama has dragged on for so long that it has not only been drained of all emotional energy but nobody even remembers the plot anymore. It’s worth recalling: What are we trying to do? We’re trying to put America back on a sustainable growth track that will expand employment, strengthen our fiscal balance sheet to withstand future crises and generate resources to sustain the most needy and propel the next generation. That requires three things: We need to keep investing in the engines of our growth — infrastructure, government-financed research, education, immigration and regulations that incentivize risk-taking but prevent recklessness. We need to reform Social Security and Medicare so they can support all the baby boomers about to retire. And we need to raise more revenues, in the least painful way possible, because we can’t just cut everything. As I’ve said, you can lose weight quickly by cutting off both thumbs, but that will be a problem at work. It was good to see President Obama put out a budget proposal that addressed all three needs. The attacks on him from the left are unfair because, ultimately, we will need to do all three even more. As Bloomberg News reported on Monday: “Typical wage-earners retiring in 2010 will receive at least $3 for every $1 they contributed to the Medicare health-insurance program, according to an Urban Institute study.” That’s unsustainable. The Republican budget plan, though, would cut so much so fast — including taxes — that it would leave virtually nothing for investing in our growth engines. That’s irresponsible. So what to do? We need a more “radical center” — one much more willing to suggest radically new ideas to raise revenues, not the “split-the-difference-between-the-same-old-options center.” And the best place to start is with a carbon tax. A phased-in carbon tax of $20 to $25 a ton could raise around $1 trillion over 10 years, as we each pay a few more dimes and quarters for every gallon of gasoline or hour of electricity. With that new revenue stream, we’d have so many more options. One, preferred by Republicans like the statesman George Shultz and the Nobel laureate Gary Becker, is to make the carbon tax “revenue neutral.” It could be offset entirely by a rebate or by cutting tax rates for every U.S. citizen and corporation, which would increase spending. Another option, the one I’d prefer, would devote half the carbon-tax revenues to individual and corporate tax cuts, use a quarter for new investments in infrastructure, preschool education, community colleges and research — which would create jobs now and tomorrow — and then use a quarter on deficit reduction. In short, if you added such a carbon tax to Obama’s budget, you’d have the makings of a radical grand bargain: Republicans would have the income tax cuts they want; Democrats would get the additional infrastructure stimulus they want, plus a new revenue stream to start gradually addressing the deficit, while reducing the amount that we’d have to bite from entitlements now; and the country would have a vehicle to address climate change, to drive clean-tech innovation (and to take money away from people who fund jihadist hate sites on the Internet).
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