A Carbon Tax Would Cut the Deficit by $1 Trillion

A carbon tax of $25 per ton of emissions would cut the deficit by $1 trillion over a decade, according to the Congressional Budget Office (CBO).

The finding was part of a report CBO just put out detailing 103 different ways — in terms of both cutting spending and raising revenue — the U.S. government could reduce its deficit.  At a total haul of $1.06 trillion by 2021, the carbon tax was far and away the biggest deficit reducer of any option listed.

It’s a policy that enjoys widespread support amongst politicians, industry spokespersons, economists, and polling of the general public.  But it’s also on the legislative back-burner — save for efforts by Rep. Henry Waxman (R-CA) and a handful of other concerned legislators — while the Obama Administration attempts to cut carbon emissions through the regulatory authority of the Environmental Protection Agency.

But a carbon tax would be conceptually simpler, would leave businesses free to figure out how they want to reduce their emissions, and would incentivize them to find the most cost-effective way to get those cuts.

A Carbon Tax Would Cut the Deficit by $1 Trillion