By Donella Meadows
–June 17, 1993–
Here’s a speech I dream of hearing from President Bill Clinton, given on the day he discovers his backbone and starts to fight for his ideas….
My fellow Americans,
I have just informed the leaders of the Congress that I will veto the budget bill we all have worked so hard to shape. I must do that, because the most essential piece of the package has been mangled — the energy tax. Because of special interests — the oil and gas lobby, the aluminum and steel lobbies, airlines, electric utilities, farmers, exporters — the energy tax now presented to me is a tattered remnant of the one I proposed. I find it unacceptable. I will not sign it.
Instead I will submit to Congress a new energy tax, similar to the one I proposed but with two changes. It will be simpler. And it will be higher.
Yes, I said higher, though I know no one wants higher taxes. I am proposing this one, because my job is not to be popular; it is to do what I think best for this nation. Next to health care reform, a stiff energy tax, one from which no one and nothing is exempt, is the best legacy my presidency can leave you. It will bring three benefits, all sorely needed. First it will eliminate the deficit. Second it will stimulate technologies and investments that will make our economy a leader in the 21st century — only seven years away. Third it will improve the environment.
Let’s look at those benefits one by one. First the deficit. I have been criticized rightly because my original budget proposal would reduce the deficit only slowly, and only for a few years. I still believe the slow reduction is necessary. Our current economy, in weak recovery, is in no shape to correct all at once the irresponsible deficit spending of the last 12 years. Therefore I propose that the energy tax be set to reach 25 cents per million Btu over the next three years, as I originally suggested, but then GO ON RISING until it reaches $2 per million Btu ten years from now.
No one can forecast economies that far in the future, so we can’t know whether that that rate will eliminate the deficit or even, as I hope, generate a healthy surplus. If a surplus, it could be used to reduce the national debt or to eliminate other taxes. That will be an enviable decision for some future president to make. Whatever its revenues are used for, the energy tax will go on producing its economic and environmental benefits.
Can a higher tax bring economic benefits? Yes, this one can, because of a basic economic principle. If you tax something good, like income or sales or capital gains, you depress it. If you tax something bad, like energy waste and pollution, you depress it. So tax what you don’t like, not what you like.
Our nation uses twice as much energy to produce a dollar of GNP as do our competitors in Europe and Japan. That means at least half of our energy consumption is wasteful. That waste costs us hundreds of billions of dollars every year, it makes us dependent on foreign suppliers, and it pollutes. We have a wasteful energy system because our energy prices are low. In the last decade they have gone DOWN 30 percent in real terms.
So it doesn’t pay for us to build houses as tight as the ones in Sweden, or drive cars as efficient as the ones in Germany, or make steel with the energy-efficient technologies used in Japan. It won’t pay until energy prices go up. If we know they’re going up, the market will naturally, rationally, without government interference, reward energy-saving technologies. The tax I propose, working in the market, will move us from being one of the most energy-wasteful industrial nations to being the most efficient.
You can imagine the effect that will have on our environment. It is possible, the experts say, to light our lights, warm and cool our houses, produce our products, and drive our vehicles using one-half, one-fourth, maybe even one-eighth as much energy. That means huge reductions in air pollution, acid rain, greenhouse gases, strip-mining, oil spills, and generation of radioactive wastes. Those environmental insults are real costs to us, but costs that don’t show up in the price of energy. The energy tax will put environmental costs where we can see them, in the upfront price. If we know the full costs of energy, we will use energy more wisely.
Changing our economy to a more energy-efficient one would create three times more jobs than it destroys. It would be equivalent to finding a huge new oil well, right on our own territory. And it would save us enormous costs that we are already paying to clean up our environment.
That’s why we need a strong, simple energy tax, one with no exemptions. None, because every exemption stops an industry from adopting better technologies. We need to apply that tax at the point of extraction — the mine, the wellhead, the hydro dam — because that will be easy to administer, and it will ensure greater efficiency at every step of the chain from producer to consumer. We need to bring on the tax gently, but raise it inexorably, so we can stop piling up debt for our children, pioneer the technologies of the future, and make our environment better.
If you want those results, support me on this tax. Talk about it on the streets and the talk shows. Let your representatives in Congress know what you think. This important issue should be decided by the will of the people, not the will of those who can pay the most for fancy ads and Washington lobbyists.
God bless you, God bless America. Thank you, and good night.
Copyright Sustainability Institute 1993