In the last two years, severe extreme weather events — including drought and hurricanes — have cost the American economy $188 billion. Unfortunately, this situation will worsen if we continue to burn fossil fuels that release carbon pollution into the atmosphere. In fact, just yesterday, scientists in Hawaii found that the amount of carbon dioxide in the atmosphere jumped dramatically to a new record high in 2013. Clearly, we’re on the wrong path.

The good news, though, is that we can solve this problem and avoid the most catastrophic effects of climate change by putting less pollution in the air. That’s why more of our elected officials are getting serious about putting a price on carbon dioxide pollution.

In last month’s State of the Union address, President Obama said

“I urge this Congress to pursue a bipartisan, market-based solution to climate change, like the one John McCain and Joe Lieberman worked on together a few years ago. But if Congress won’t act soon to protect future generations, I will.”

Today, legislators from the House and Senate responded to the President’s call. Representative Henry Waxman (D-CA), Senator Sheldon Whitehouse (D-RI), Representative Earl Blumenauer (D-OR) and Senator Brian Schatz (D-HI) released a discussion draft of a bill that would charge polluters for the carbon pollution they release into the air, reducing the pollution responsible for fight climate change.

In December 2012, CAP established five principles for a progressive carbon fee. This fee should:

• Be sufficiently robust that it leads to meaningful reductions in greenhouse gas pollution, getting us on a path that helps us avoid the most catastrophic effects of climate change. In addition to being high enough to affect pollution rates, the tax should also increase over time and be applicable to non-carbon-dioxide greenhouse gases such as methane. This would both ensure a continuing reduction in the release of carbon dioxide and also encourage companies to move toward cleaner energies instead of different dirty ones.
• Encourage businesses to make new investments in energy efficiency and renewable energy to reduce greenhouse gas emissions. This will stimulate the economy and put people back to work in the burgeoning clean-tech and green-jobs sectors.
• Reduce—not increase—economic vulnerability of low-income households by ensuring that they are fairly compensated for any increase in energy prices.
• Have appropriate mechanisms to protect existing American businesses and prevent so-called pollution leakage to countries without similar systems in place. Leakage occurs if highly polluting industries simply move to other countries that don’t have a comparable limit on pollution; in this way, they can continue business as usual without stricter environmental regulations. Leakage can also happen if domestic industries shut down, causing us to import goods from other countries.
• Reduce the budget deficit to prevent draconian cuts in vital domestic programs by raising revenue from the tax.

The draft bill from Waxman, Whitehouse, Blumenauer, and Schatz meets these principles. It suggests a price of $15-30 per ton of carbon dioxide, which is sufficient to significantly reduce pollution. The bill collects the fee from midstream entities that already report greenhouse gas pollution data to the government, so it creates no large new bureaucracy. The draft also seeks comment on the best ways to spend the revenue, including consumer protection and deficit reduction.

This draft bill is part of an ongoing effort by Waxman and Whitehouse to continue to educate lawmakers and the media about the tremendous health and economic threats posed by climate change, as co-chairs of the Bicameral Task Force on Climate Change. They have solicited policy ideas from large businesses and environmental groups. They also sent a letter to the President recommending executive actions he could take to reduce carbon pollution under existing laws.

The authors of the draft bill are soliciting comments until April 12, and plan to formally introduce a new version of the bill in the coming months. With the leaders of the House majority denying the fundamental science of climate change, its prospects for passage are admittedly dim. This time, however, is Congress’s chance to act. Unless this bill or something very similar gets passed, Congress can look forward to the Environmental Protection Agency using its authority under the Clean Air Act to put limits on greenhouse gas pollution from the largest polluters.

Richard W. Caperton is Director of Clean Energy Investment at the Center for American Progress.

American families have been plagued by higher oil and gasoline prices over the past several years despite a significant increase in domestic oil production and a decline in consumption. But while high gas prices threaten the economy and family budgets, they enrich oil companies with huge profits. Apparently that doesn’t bother House Budget Committee Chairman Paul Ryan (R-WI), since his proposed fiscal year 2014 budget resolution appears to again keep a decade’s worth of oil tax breaks worth $40 billion for the oil-and-gas industry. Even more astounding, the budget would give the five biggest oil companies an additional multibillion-dollar tax cut by slashing the corporate income tax rate.

Rep. Ryan’s latest budget is a retread of the budget, complete with oil giveaways, that he and Republican presidential nominee and former Massachusetts Gov. Mitt Romney ran on in 2012 — and which was soundly rejected by voters in November. Hasn’t Rep. Ryan learned anything?

Big Oil companies continue to rake in the profits, while gasoline prices have risen by 38 cents since January 1 of this year — an 11 percent increase. What’s more, the Energy Information Administration reported that U.S. households spent an average of $2,912 on gasoline in 2012. This is the highest level in four years, equivalent to nearly 4 percent of the average household income before taxes. Last year the average gasoline price was $3.66 — a dime more than the previous record set in 2011. Time magazine reported in December that “2012 will go down as the most expensive year ever for gas.”

While higher gasoline prices cause families pain at the pump, they are a boon to the world’s largest oil companies. The big five oil companies — BP, Chevron, ConocoPhillips, ExxonMobil, and Shell — made a combined record profit of $118 billion in 2012 on top of a record profit of $137 billion in 2011. These companies also have a total of nearly $72 billion in cash reserves. Yet under the Ryan budget, it seems that the big five oil companies would continue to benefit from their $2.4 billion share of the $4 billion in annual tax breaks for all large oil and gas companies.

In addition to the apparent retention of these existing special tax breaks, Rep. Ryan’s FY 2014 budget explicitly includes the Romney presidential campaign’s economic plan proposal to cut the corporate income tax rate from 35 percent to 25 percent — nearly a one-third reduction. That could provide an additional combined tax cut of at least $2.3 billion annually to the big five oil companies, according to an analysis of their 2011 public financial statements. That includes $1.5 billion for the three domestic oil companies and $800 million for the two foreign-owned companies. Since it is of course impossible to predict their future profits, this estimate is based on their 2011 financial data, including their U.S. federal income tax expense.

Of course Big Oil and the American Petroleum Institute, their wealthy lobbying organization, trot out a number of specious arguments to keep existing tax breaks in place, such as:

Read more