By: Ian Connor Linnabary, Gen Z GOP Blog Contributor
When thinking of lives of consequence, it’s hard to find someone who has been a more exemplary public servant than the late George Shultz. A Secretary of State under President Reagan and Secretary of both Treasury and Labor for President Nixon, Shultz passed away on February 6th, 2021 at the age of 100 years, having lived through and been a part of shaping some of the most important political events of the 20th century. Often regarded as the steady hand that guided foreign policy in the Reagan Administration, in his time as Secretary of State, Shultz presided over the end of the Cold War. He also was one of the few high-level officials to make it out of Nixon’s Watergate scandal without committing any wrongdoing. In remembering his legacy, we know Shultz to be a statesman and patriot who shaped much of the foreign and domestic policy that long characterized the GOP. However, despite his lasting influence on the Republican policy agenda, one of his proposals stands out as having never quite made it to the mainstream: carbon dividends.
For many, when they hear the name of a Reagan-Nixon cabinet official, their minds don’t go straight to “climate advocate.” However, following his distinguished career in public service, George Shultz became one of the founding members of The Climate Leadership Council, where he wrote, along with James Baker, his carbon dividend plan. This plan, known today as the Baker-Shultz Carbon Dividend Plan, has the potential to cut U.S. CO2 emissions in half by 2035 (as compared to 2005, as written in the original plan). The plan calls for an immediate, economy-wide fee on CO2 emissions starting at $40/ton and increasing every year at 5% above inflation. The revenue from this fee would return to citizens in the form of a direct payment, or dividend (hence the plan’s name). Under the plan, a family of four, for example, would receive approximately $2,000 in carbon dividend payments in the first year of the plan’s implementation. The dividend amount would also grow as the carbon fee increases. On top of its function of putting more money in the hands of the American worker, a key component of this plan is its deregulatory potential. As the enactment of a rising carbon fee would render many regulations unnecessary, regulators would be able to streamline and eliminate many unnecessary, restrictive guidelines and policies. In cases in which the carbon fee offers a more cost-effective solution, the fee would effectively replace regulations.
In recent years, Shultz and Baker’s plan has been endorsed by conservative and liberal economists and policymakers, but perhaps more importantly, the plan has garnered support from many major corporations, such as ExxonMobil and ConocoPhillips. The myth that the majority of the world’s major corporations are opposed to lowering our CO2 emission is dispelled by this endorsement. Ultimately, what corporations crave is predictability, and with the constant change in regulation caused by shifts of power in Washington, long term predictability is hard to come by. What the Baker-Shultz plan offers is a much-needed reduction in overhead regulations, which creates predictability, and with the implementation of the carbon fee, the cost of polluting the environment will rise. This will ultimately allow the free market to self-adjust to a greener future, with both speed and predictability.
Secretary George Shultz, the great statesman, patriot, and public servant, completed much in his time on earth. He guided the U.S. through major changes in policy, both foreign and domestic, but one thing he was never able to see to fruition was his Carbon Dividend Plan. Climate change is real, and it has real consequences. As a party majorly concerned with increasing opportunity for future generations, it is well past time for us to rise to the challenge of fighting climate change. In looking to address climate change, the Baker-Shultz Plan is a conservative path forward. In the new Congress and coming years, it is critical that the Republican Party take steps to embrace the free market and innovation while making major investments in opportunity for the next generation.
