An all-star lineup of economists, from Alan Greenspan to Paul Volcker, are endorsing a plan to combat climate change by slapping a tax on greenhouse gas emissions and then distributing the revenue to American households.

All living former Federal Reserve chairs, several Nobel Prize winners and previous leaders of the President’s Council of Economic Advisers have signed on to a statement asserting that a robust, gradually rising carbon tax is “the most cost-effective lever to reduce carbon emissions at the scale and speed that is necessary.”

Single voice

“A carbon tax will send a powerful price signal that harnesses the invisible hand of the marketplace to steer economic actors towards a low-carbon future,” the 45 economists say in the opinion piece, published by the Wall Street Journal.

The missive is a rare case of the economic establishment speaking with a single voice on a pressing social issue, albeit one that faces political challenges from conservatives, Republicans and the current White House. The signatories include economists who have served every President going back to Jimmy Carter.

Mounting pressure

“This is one of the few ideas of economic policy that commands broad, bipartisan support,” said Larry Summers, former Harvard University President and US Treasury Secretary. “Nowadays on economic policy, we don’t see much of that.”

Other signatories include former Fed Chairmen Janet Yellen and Ben Bernanke as well as former White House economic advisers Austan Goolsbee and Christina Romer. The economists’ endorsement could deliver momentum to a carbon tax-and-dividend plan devised by two former Secretaries of State — James Baker and George P Shultz.

Pressure is already mounting in Congress to take aim at climate change, following dire warnings about the growing consequences from a United Nations panel and the US government.

House Speaker Nancy Pelosi, a Democrat from California, has promised that the chamber will take up climate legislation. And some Democrats, led by freshman Representative Alexandria Ocasio-Cortez of New York, are advancing a so-called Green New Deal that calls for phasing out fossil fuels by 2030. That effort may not get far in the current political dynamic, with Republicans controlling the Senate and the White House.

President Donald Trump said he opposed taxing greenhouse gas emissions while campaigning for the White House. And House Republicans voted in July to condemn the very idea of a carbon tax as detrimental to the U.S. economy, with only six Republicans breaking ranks to vote against the measure.

Clean-energy alternatives

Advocates of the proposal say they are trying to build momentum for action two years from now.

The economists’ statement includes proclamations that could have broad appeal to Republicans. For instance, the group highlights the importance of keeping the tax revenue neutral by giving rebates to all Americans, a tactic the economists say will avoid debates over the size of government.

They also tout the promise that by replacing inefficient cumbersome regulations with a carbon tax, the government can promote economic growth and provide the regulatory certainty companies need for long-term investment in clean-energy alternatives.

This is a turning point in Republican climate policy, where the GOP economic brain trust unites behind the Baker-Shultz carbon dividends plan, said Republican Trent Lott, the former Senate majority leader helping push the proposal.

Many economists have favoured a carbon tax as the most effective strategy for discouraging greenhouse gas emissions and combating climate change.

But the economists now are going further by stressing that the revenue should be rebated to citizens, instead of being used to reduce the deficit, fund government or pare income taxes.