Over the past week we’ve seen some possible breakthrough steps toward a basic income. Did you miss that news? Not surprising, because it’s been buried in news reports about the Copenhagen Climate talks.

Sen. Maria Cantwell from Washington is introducing a bill calling for “cap and dividend” — a cap on emissions, with permits being auctioned off and the revenue distributed to American citizens. Here’s a quote from a McLatchy News story:

Under her bill, the federal government would auction off carbon shares to the nation’s 2,000 or so fuel producers like coal and oil companies. Every two years, the shares would expire and, over the years, the U.S. government would offer fewer and fewer shares for sale as a way to reduce carbon consumption.

Seventy-five percent of the money raised would be rebated directly to U.S. citizens. Cantwell’s office estimated that an average family of four would receive a total of about $1,100 a year in the form of tax-free monthly checks.

An important point is that the proposal seems to have some bipartisan support in the Senate, and even support from oil companies. The complete story, with the title “New Proposal Would Pay Americans a Percent of Carbon Permits” is here.

An even stronger version of this idea was in the New York Times a few days earlier. James Hansen, one of the world’s leading climate scientists, had a an op-ed denouncing the Democratic party’ “cap and trade” plan, and calling instead for “fee and dividend.” It’s an idea Hansen has advocated for some time, and that I’ve written about before.

Here’s an excerpt from Hansen’s op-ed:

Under this approach, a gradually rising carbon fee would be collected at the mine or port of entry for each fossil fuel (coal, oil and gas). The fee would be uniform, a certain number of dollars per ton of carbon dioxide in the fuel. The public would not directly pay any fee, but the price of goods would rise in proportion to how much carbon-emitting fuel is used in their production.All of the collected fees would then be distributed to the public. Prudent people would use their dividend wisely, adjusting their lifestyle, choice of vehicle and so on. Those who do better than average in choosing less-polluting goods would receive more in the dividend than they pay in added costs.

For example, when the fee reached $115 per ton of carbon dioxide it would add $1 per gallon to the price of gasoline and 5 to 6 cents per kilowatt-hour to the price of electricity. Given the amount of oil, gas and coal used in the United States in 2007, that carbon fee would yield about $600 billion per year. The resulting dividend for each adult American would be as much as $3,000 per year.

The complete piece, with the title “Cap and Fade” is here.

Fee and dividend, cap and dividend, tax and dividend — whatever you call it, and whatever the size of the dividends — this is the most direct and politically-feasible way to move toward a basic income in the United States.

The idea is so simple and powerful.  Tax fossil fuel consumption and redistribute the revenues on a per capita basis. The net effects would reduce consumption and pollution and climate change overall, while promoting social justice and a stronger democracy.  I discuss this in more detail in my book, Peaceful, Positive Revolution: Economic Security for Every American.

Steven Shafarman

There have been lots of news stories over the past two days about the Obama administration setting stricter fuel efficiency standards. Opponents insist that the new standards will raise car prices and hurt consumers, without much impact on climate change.

The continuing conflicts and complexities are clearly considered in a Wall Street Journal story. The first few paragraphs follow, and the complete article is here:

Obama Would Support Auto Incentives for Consumers

WASHINGTON — The Obama administration would support the idea of giving consumers additional incentives to buy fuel-efficient vehicles, a White House official said Tuesday.

The White House would likely favor tax credits for vehicle purchases over any proposal to raise the 18.4 cents-a-gallon federal gas tax, as many industry officials and transportation experts have recommended.

“We fought for the $7,500 tax credit for the purchase of advanced technology vehicles in the Recovery Act,” the official said, and “our administration remains committed to policies to help bring the costs down” for consumers.

Industry officials in recent days have expressed concern that consumers might balk at paying a premium for costlier, more fuel-efficient cars and trucks if gas prices don’t rise to $4 per gallon or more in the years ahead.

The administration estimates fuel-economy regulations will add $1,300 on average to the price of new cars by 2016.

Suppose we start with income security for all, and every adult citizen is getting, say, $1,000 a month in addition to what we earn or get from other sources. Suppose, as well, that we pay for that, in part, through higher carbon taxes.

Everyone could afford to pay the higher gas taxes, higher costs for new efficient cars, higher costs for electricity, and so on. Everyone would have strong incentives to reduce fuel consumption, in order to save the money for other purposes.

Moreover, pairing the guaranteed income, Citizen Dividends, with the carbon tax is a way to make the carbon tax politically acceptable.

Among the most interesting aspects of the recent debates is the number of people who are saying that auto companies will make fuel-efficient vehicles when there’s a demand for them. As we saw last year, when fuel costs were so high, people were turning in their SUVs and buying much smaller cars. That was without any government mandates for vehicle fuel efficiency. That recent history is good evidence for this proposal to combine guaranteed income with carbon taxes.

(This idea, combining a guaranteed income and higher natural resource taxes, actually goes back to Thomas Paine and his 1793 pamphlet Agrarian Justice.)

The auto companies ought to be leading the campaign to enact this, because this would create huge demand for more efficient cars while providing people with the money to pay for them. Until now, auto companies have been saying that there’s not enough demand for more efficient cars. Higher fuel prices will create that demand, particularly if consumers know that prices will remain high. That certainty will come with a gas tax.

A more modest version of this is getting some public attention. It’s called “tax and dividend.” Most versions, however, would distribute the dividend as a cut in payroll taxes. That would leave out people who don’t work and earn, including the very poor and retired. A true guaranteed income would help everyone equally.

Guaranteed income was a mainstream, moderate idea in the 1960s. Martin Luther King called for it in his last book, and a plan to provide it passed the House of Representatives by two-to-one, but was blocked in the Senate. Proponents including leading economists from the left and the right.

The complete guaranteed income plan, the idea, the benefits, and how we can make it happen – including a discussion of carbon taxes – is in Peaceful, Positive Revolution,.

Additional information is on the home page and elsewhere on this web site.

I hope you’ll comment on this blog. And please help spread the word.

Steven Shafarman

Take every penny collected at the pump and put it right back into the pockets of consumers. …

The government could regularly send a check to everyone over 18. I am prepared to work with the Obama administration and colleagues in Congress to devise the most efficient way to return the revenue to the American people.

Lugar has enormous political credibility as a member of the Foreign Relations Committee, and reportedly has very good relations with President Obama.

Plus, Lugar discusses in some detail a similar proposal from conservative columnist Charles Krauthammer, who wants a “net-zero gas tax” offset with a decrease in the payroll tax. Here’s his Weekly Standard piece from January 5.

Another supporter of higher fuel taxes who Lugar mentions is Thomas Friedman. Here’s a New York Times piece where he calls for higher gas taxes as a way to facilitate many necessary reforms.

Lugar concludes:

A net-zero gas tax is the type of transformational policy that we could implement quickly and that would have immediate impact.

One of the simplest and most effective means available for strengthening U.S. national security is to dramatically reduce our oil dependence. A gas tax that returns money to Americans would take us a long way toward that goal.

It would also — if large enough, like a basic income — take us a long way toward ending hunger, homelessness, and debilitating poverty, and toward real progress on many other goals. Higher gas taxes and a basic income are a great fit — and the Alaska Permanent Fund Dividend is good evidence for that.