On Wednesday, at a Budget Committee hearing titled, “Climate-Related Economic Risks and Their Costs to the Federal Budget and the Global Economy,” U.S. Senator Mitt Romney (R-UT) urged the need for the U.S. to prioritize investments in innovation and technology to combat the effects of climate change, as opposed to feel-good efforts by Washington Democrats that don’t put a dent in lowering global emissions. Romney also stressed that the U.S. must get a handle on its debt and rescue its federal trust funds before they become insolvent. His bipartisan and bicameral TRUST Act would create a process to do this.
A transcript of Romney’s exchange with the witnesses can be found below, and video can be found here.
Senator Romney: I have no question about the impact of climate change. It’s going to be significant—devastating in some areas more than others. The question is whether we’re doing things that will actually make a difference and will lead to a different result. What I’m concerned about is that most of what we do here in the United States is—I’ll call it virtue signaling. That term has been used recently, but we do a lot of things that make us feel good about ourselves but will have almost no impact on global emissions. If we want to do something serious about global emissions, we need to put a price on carbon.
And our Democrat friends had the chance to do that doing reconciliation. They didn’t. So we can talk about all these other things we’re doing and getting more batteries for cars and so forth. But the reason these things don’t make a big difference is because the U.S. is not the big contributor to emissions in the world. China is, and Brazil, and India, and Indonesia—and all the growth is going to come from them.
China’s emissions are greater than the U.S., the EU, and Japan combined. So we do things here that are very expensive and disruptive to our economy, they don’t change what’s happening globally. We have to do things that have global impact. So research and technology, and a price on carbon, are the are the things that would make a difference. So it’s frustrating to talk about this as a huge challenge to our budget and to our economy when it’s out of our control, unless we deal with it in the way I’ve just described.
And yet there’s something that is in our control, but both parties are saying we won’t touch that. And what is in our control is the level of debt we have, the amount of debt we have. I just heard Professor Holtz-Eakin just indicate that the impact on the economy of the amount of debt we’re adding up is ten times the impact of climate change. Ten times! And yet we’re not willing to look at our entitlement programs to see if we can balance them somehow. I’m not talking about cutting them or taxing them. I’m just saying let’s at least come together and work on it. But the parties are afraid to even come together and have a discussion about how can we balance these things.
It strikes me as one of the most outrageous things my generation has done to the coming generations is to say, “We’re going to spend all this money on ourselves. We’re not going to tax ourselves to compensate for all that we’re getting to ourselves. We’re going to take all this money, and we’re going to pass on to you for all of your lives.” Slower growth, a more challenged economy, and higher interest payments. It’s unbelievable. It’s almost immoral. So I look at this challenge, Professor Holtz-Eakin, if I’m reading this right, that the challenge of the debt and our unwillingness to balance what we spend with what we tax, that that unwillingness is having a huge impact on economic growth over the future and on the lives of our grandchildren and theirs.
Dr. Douglas Holtz-Eakin: I think it’s well said. I’d just amend it in two ways: I would take out “almost” from in front of immoral. And I would say that it’s a disservice to the beneficiaries in Social Security and Medicare to pretend that somehow, they can survive in their current form. They cannot. Trust funds will exhaust in under a decade—Social Security trust fund in a decade. It is an enormous irony that something like the Social Security program, which was meant to eliminate income uncertainty in retirement and in old age, is now the greatest source of income uncertainty in retirement in old age because we have no idea what that program will look like as the years roll forward. So I personally am enormously disappointed at a public debate that suggests we can’t touch Social Security or Medicaid. They are the only things we should touch! They are the most important things to touch. And I encourage this committee to put that on their list.
Romney: Thank you, Dr. Litterman. You know, I described what I thought were the major levers that would have an impact on emissions and climate, and that came from a model that was presented by a professor at MIT. They built this huge model there that shows all the things you can do and the impact they have. What was shocking is that almost everything we talk about, that we get excited about, has no real impact globally except a price on carbon. And of course, investments in new technology and innovation. Some of that is on the table, but the price on carbon never has. Am I wrong in that or is that a fair assessment?
Dr. Robert Litterman: No, you’re absolutely right. In fact, I would go further because when we talk about the budget deficit, as Professor Holtz-Eakin knows, a carbon tax is a great way to raise revenues. You know, polluters pay and that reduces the deficit. So of course, that’s the right way to do it.
And the other thing I would say is that you’re absolutely right about the global perspective. This is not a U.S. problem. This is a global problem. And the U.S. has to join the global community in creating harmonized incentives to reduce emissions globally. And, you know, right now, those incentives vary across the board. The U.S. is kind of in the middle with very little incentives. Our strongest incentive to reduce emissions comes from a gasoline tax. If I drive an electric vehicle, I don’t pay it. But that’s not a strong incentive. In Europe, the incentives to reduce emissions are over $100/ton. In many Middle East countries, Russia, and Venezuela there are there are strong subsidies to increase pollution because they have fixed prices on fossil fuels, which are below the market. So we’ve got to move diplomatically. And I would say what we have to do in the U.S. is provide our State Department with the tools that they can go and negotiate globally to get these harmonized incentives to reduce emissions.