Time to Wake Up: Will the new Treasury Secretary show common sense on climate change?
Mr. President, I, too, will be voting no on the candidacy of Mr. Mnuchin to become Secretary of the Treasury.
Rhode Island got hit so hard by the mortgage meltdown that Wall Street created. Frankly, I can never forget the Rhode Islanders who lost their homes in the course of that debacle. We were able to help some of them in my office.
As the Presiding Officer knows, when you come to the Senate, you put together a constituent office, and your constituent people work on usual constituent business. In the ordinary course, constituent business is dealing with Federal agencies. It is making sure Social Security is fine, getting people replacement passports that they put into the laundry by accident, dealing with veterans issues and getting veterans their benefits, helping people with Medicare and Medicaid confusion. It is all generally involving people who have gotten somehow fouled up in the Federal programs of which they are beneficiaries.
In our case, we had to open a constituent wing for dealing with the big banks because they were foreclosing so recklessly and in such a mercenary fashion on Rhode Islanders. It was such torture for Rhode Islanders, once the foreclosure process began, because they could never get the same person twice on the phone; there was always a mismatch between what they were being told on the phone and being told on paper. It was a nightmare of bad information and bad practice by these big banks.
What we would often be able to do is to say: Look, at least give this person one person they can deal with, that they can call every time so it is not “Hi, I am John” on one phone call and “Hi, I am Mary” on the next phone call and “Hi, I am Joseph” on the third phone call and nobody ever remembers the other phone calls, nobody ever knew where they were in the process. You can't move the process forward if the person on the other end of the line can't keep track of the conversation. So we were able to get that done, and that actually was able to help Rhode Islanders come to a deal with these big banks and save their homes. But for all the ones we were able to help, there were many, many we were not.
I simply cannot forgive somebody who took a look at that banking crisis, who took a look at the pain Wall Street sent in a wave across all of America, and thought: Oh, here is a great new way to make money--foreclosing on people.
Done. I am out. Sorry, I can't vote for somebody like that.
What I hope, though, is that he will at least show some common sense and some decency when it comes to other issues, and one of them is climate change.
If you go to the financial sector, they are taking climate change pretty seriously. Frankly, the financial sector is probably about as big as the fossil fuel industry, so when the fossil fuel industry comes around bullying and shoving and lying and going through all of its usual climate denial nonsense, the financial guys really don't care. They just do their thing. You are not going to intimidate Goldman. You are not going to intimidate BlackRock. You are not going to intimidate Bank of America. It just doesn't make any sense. So when you look at what these guys are saying, they are being pretty straight up about it.
As long ago as 2013, Goldman Sachs issued a report that said: “The window for thermal coal investment is closing.” That is the caption of the report. “Thermal coal's current position atop the fuel mix for global power generation will be gradually eroded,” it said. And sure enough, it has been. There was no grief for coal in there; they were just trying to predict the market. In 2015, Goldman Sachs did another report about the low-carbon economy. It was “Goldman Sachs equity investor's guide to a low carbon world, 2015-25.” So unless somebody is going to say that Goldman Sachs is in on the hoax, they are taking this pretty seriously. From 2015 to 2025, they expect a low-carbon world.
And it is coming on fast and furious now. Just recently, a global task force was set up by the G20 companies--the 20 biggest economies in the world. They have a group called the Task Force on Climate-related Financial Disclosures. They have asked that companies begin to come clean on the climate risk they face.
The news report about this says: concerns among the financial community are growing that assets are being mispriced because the full extent of climate risk is not being factored in, threatening market stability.
The story continues:
According to Barclays--Barclays is a significant international banking institution--the fossil fuel industry could lose $34 trillion in revenues by 2040 as a global deal to limit temperature rise to well below 2 degrees Celsius reduces demand for oil, coal, and gas, returning reserves into stranded assets.
If, in fact, this is an industry that could lose $34 trillion in revenues by 2040, that explains a lot of their misbehavior around Congress. Obviously, for that kind of money, there is very little mischief these folks wouldn't get up to, and sure enough, they are getting up to all of that mischief, and more, around here. But the financial industry itself is pretty big, and it doesn't care. It is not going to be pushed around and bullied.
This Task Force on Climate-related Financial Disclosure is described as having 32 members from large banks, insurance companies, asset management companies, pension funds, credit rating agencies, and accounting and consulting firms--32 members representing the 20 biggest economies in the world, and they are saying: Here it comes. Let's get ready.
So I hope colleagues will begin to listen to these folks in the financial services industry and these major market economies about what is going on and stop listening to the self-serving nonsense that the fossil fuel industry insists on trying to jam into our ears around here. It just is bogus. Bottom line: It is bogus.
Most recently, at the end of last year, September 2016, BlackRock, which is one of the most significant investment firms in the world--I think it has more than $1 trillion in assets under management--issued this new report: “Adapting Portfolios to Climate Change.” OK. So BlackRock, one of the smartest and biggest companies in the world, is now talking about how we have to adapt to climate change and helping investors plan for it. In this building, can we have a sensible conversation about climate change? No, of course not, because the fossil fuel industry won't even let some of us mention the words, but in the real world, where real money and real decisions are being made by very smart people, they are all over this. Here is BlackRock: “Adapting Portfolios to Climate Change.”
Sentence number one in the report: “Investors can no longer ignore climate change.”
Investors can no longer ignore climate change. No, it takes Congress to do that. Investors can no longer ignore climate change, but don't worry, we will, as long as we are following the lead of our fossil fuel industry friends, right over the climate cliff.
The report continues that we can expect more frequent and severe weather events over the long term--something that actually we are seeing already, not only in the United States but around the world. They say that there is a market failure in this area--a market failure--as current fossil fuel prices arguably do not reflect the true costs of their extraction and use.
That is what we are fighting about here. The fossil fuel industry has the best racket going in the world. They are able to pollute like crazy, do immense damage in the world--damage that coastal homeowners in Rhode Island, fishermen in Rhode Island, people who have breathing difficulties and are trying to breathe on a hot summer day in Rhode Island--they all have to pay the price.
Under real market theory, the harm of the product has to be in the price of the product for the market to work. That is market 101. Well, they don't want to play by those rules. They want to have everybody else cover the harm in their product, and they just get to shove it out into the marketplace with the biggest subsidy in creation.
The International Monetary Fund is not a bunch of stupid people, and the International Monetary Fund, as far as I can tell, has no conflict of interest with respect to fossil fuel, unlike the fossil fuel companies, which are one massive example of a conflict of interest. The International Monetary Fund says that the subsidy to the fossil fuel industry every year--just in the United States of America--is $700 billion--billion with a “b.” Like I said, how much mischief would they get up to for $700 billion? Oh, about $700 billion worth.
Is there a fix to this? Yes, continues the BlackRock report. “The most cost-effective way for governments to meet emissions reduction targets: Policy frameworks that result in realistic carbon pricing.” Market 101. Of course, they don't want market 101, they want fossil fuels subsidies 101, and we go along with it because of the mischievous way they behave in politics. But we should not go along with it. It is not proper economics. It is not conservative. It is nothing except traditional, old-fashioned, special interests, special pleading. It is no different from any other polluter who wants to be able to dump their waste into the river or onto their neighbor's yard or wherever it is rather than having to pay for cleaning up the mess they made.
We go on through the report: “The world is rapidly using up its carbon budget,” says BlackRock. “The damage from climate change could shave 5 to 20 percent off global GDP annually by 2100.” Up to a fifth of global GDP gone. That is a massive economic correction. That is massive economic pain.
“The economic impacts,” it goes on to say, “are not just in the distant future. More frequent and more intense extreme weather events, such as hurricanes, flooding, and droughts, are already affecting assets and economies.”
For anybody just tuning in, this is not me making this stuff up, this is BlackRock investments.
They talk about global fossil fuel subsidies--four times as large, they say, as renewable energy support.
Here is an interesting thing: “Scrapping energy subsidies could save governments some $3 trillion a year, more than they collect from corporate taxes,” according to BlackRock.
So here we have the fossil fuel industry over there, and they are getting the biggest subsidy in the world--by IMF calculations, $700 billion a year--and the party that says it wants a more efficient government and that ordinarily would like to reduce corporate taxes is defending that subsidy, even though that is taking money out of government more than corporate taxes.
It is quite astonishing. The BlackRock report gives such a window into Congress by comparison, frankly. They conclude here by giving some pretty dire warnings about where this goes if people aren't preparing for climate change. They say:
Risk for the long-term investor..... could lead to a permanent loss of capital. The effects of climate change need to be part of that equation, we believe.
Yet even short-term investors would do well to integrate climate factors into their portfolio.
So from Goldman Sachs on to BlackRock, some of the most powerful and intelligent financial firms in the world are telling their investors: Get ready for climate change.
The last page of the BlackRock report says:
[C]urrent market prices arguably do not yet reflect the social costs of burning fossil fuels. ..... This externality is at the core of the climate challenge.
The externality, of course, being that you take the harm that you cause and instead of putting it in the price of your product, you make everybody else around you pay for it by being a polluter.
Then they asked the question:
What is the correct price of carbon? It is hard to say. A 2015 U.S. government study estimated $36 of economic damages for each metric ton of carbon emitted. Yet estimates are rising: A 2015 Stanford University study points to $220 per metric ton.
I believe that our U.S. social cost of carbon is running at about $45 per metric ton right now. And, by the way, it has been upheld twice--at least twice--by Federal courts. In fact, one court rather insisted that the social cost of carbon had to be baked into the underlying rule; otherwise, the underlying rule couldn't pass the test of being logical and fair and not arbitrary and capricious.
So there is the case from some of our leading financial institutions about climate change. They have real money at stake. They have real clients. They can't engage in the kind of nonsense that we engage in around here about climate change not being real or not being important or being something that there is still debate about or being something that if we try to fix it, it is going to cost too much money. All of that is total bunkum processed through all sorts of advertising-type public relations firms by the fossil fuel industry and sold to a gullible public as if it were true.
A few folks who aren't so gullible--all Republicans--have just come out with a very interesting report. Three of them were Treasury Secretaries. Republican Presidents trusted these folks with the conduct of the U.S. economy: Jim Baker, Secretary of the Treasury under President Reagan; Hank Paulson, Secretary of the Treasury under President Bush; and George Shultz, Secretary of the Treasury under President Nixon. These men have some pretty impressive credentials. Not only was he Secretary of the Treasury, but James Baker was also the Secretary of State. And not only was George Shultz Secretary of the Treasury and Secretary of State, he was also Secretary of Labor.
These three former Treasury Secretaries have led a group of other investors, including the former chairman of the board of Walmart, the world's largest retailer and employer; Tom Stephenson, a Republican who is a partner at Sequoia Capital, a very successful venture capital firm out in Silicon Valley; and Greg Mankiw, who was Chairman of George W. Bush's Council of Economic Advisers, so this is a very Republican group. They have a lot of experience. None of them holds elective office now, so they don't have to worry about the fossil fuel industry threatening to crush them in a primary or spend millions of dollars through phony-baloney front groups against them or any of the usual stuff that politicians have to put up with from the fossil fuel industry as it fights to protect that massive subsidy that we have talked about already.
Let's go through this report by these very senior Republican officials. The first sentence: Mounting evidence of climate change is growing too strong to ignore. ..... For too long, many Republicans have looked the other way.
Indeed. They go on to propose a conservative climate solution--what they call a carbon dividends plan--which aligns actually fairly well with my American Opportunity Carbon Fee Act, which I have put forward in the past and am going to put forward in this Congress as well. I hope, given its alignment with this Republican leadership on climate, that we might actually begin to get some conversations going here. We may have to go hide out of State someplace so the fossil fuel folks don't find who is participating in the conversation and start punishing them for doing so, but we will see how that goes.
The recommendation basically is for a carbon tax that collects revenue to offset the cost of pollution that is not in the price of the product and then return it all to the American people through a big dividend.
The report says: “A carbon tax would send a powerful market signal that encourages technological innovation and largescale substitution of existing energy and transportation infrastructures, thereby stimulating new investment.”
Furthermore, a well-designed carbon dividends plan, the second half, the tax, would stimulate new investment and “a well-designed carbon dividends plan would further contribute to economic growth through its dynamic effects on consumption and investment.”
They definitely want to protect that one-to-one relationship so that all the money that comes in goes back out. That is the principle of my bill, as well, and I am more than willing to live with it. But the problems of failing to act also need attention.
Since two of these gentlemen were Secretaries of State, we should take some interest when they say: “Our reliance on fossil fuels contributes to a less stable world, empowers rogue petro-states and makes us vulnerable to a volatile world oil market.”
We have to address this issue for a lot of reasons, and I couldn't be more satisfied that these two Republican Secretaries of State have actually made the connection that Thomas Friedman has made and that the Department of Defense has repeatedly made in its “Quadrennial Defense Review” between our overreliance on carbon and between the harms of climate change and a less stable world--a world in which climate change is what the Defense Department has so often called a catalyst for conflict.
They then reflect a little bit on what is going on with their party: “The opposition of many Republicans to meaningfully address climate change reflects poor science and poor economics, and is at odds with the party's own noble tradition of stewardship.”
You would never know it nowadays, but the Republican Party was once the party of Teddy Roosevelt. They point out that “64% of Americans worry a great deal or a fair amount about climate change, while a clear majority of Republicans acknowledge that climate change is occurring.”
They go on to point out “that 67 percent of Americans”--two thirds of Americans--”support a carbon tax with proceeds returned directly to them.”
Two thirds “of Americans support a carbon tax with proceeds returned directly to them, including 54% of conservative Republicans.”
So let's not pretend that this is a partisan issue. It is not a partisan issue. It is an issue in which a big special interest has thrown incredible weight around to try to crush one side of the debate. But clearly, if 67 percent of Americans supported anything and 54 percent of conservative Republicans supported that, we would probably be having a sensible conversation in the Senate about whatever that thing was. We just can't do it when that thing happens to be climate change because we have the fossil fuel industry out there--powered up by Citizens United, spending all that money--trying to protect that huge, huge subsidy that they enjoy.
Finally, the report points out--and I see the pages lined up here along the side of the podium: “Increasingly, climate change is becoming a defining issue for this next generation of Americans, which the GOP ignores at its own peril.”
If this party wants to write off the young generation as they follow the fossil fuel industry off the climate cliff, there will be a very grave price to be paid.
The report concludes: “With the privilege of controlling all branches of the government comes a responsibility to exercise wise leadership on the defining challenges of our era, including global climate change.”
I don't know where Mr. Mnuchin will lead on climate change at the Treasury Department. There are a number of ways in which the Treasury Department can be influential in this area. To my knowledge, he has never said anything about it yet.
It was not too long ago--2009--that a full-page advertisement ran in the New York Times, a full page advertisement that pointed out that the science of climate change was already, by then, to use the word in the advertisement, “irrefutable.” The science of climate change was “irrefutable,” the advertisement said.
Then the advertisement went on to say that the consequences of climate change would be “catastrophic and irreversible.” That is another quote from the advertisement: The consequences of climate change were to be “catastrophic and irreversible.”
On the one hand, you have science that is irrefutable; on the other hand, you have consequences of ignoring it that are catastrophic and irreversible. Who signed that advertisement? None other than Donald J. Trump--not only he, but his children, Donald Trump, Eric Trump, and Ivanka Trump, also all signed it.
The year 2009 was not that long ago. It is possible that the Trump family could refer to what they knew in 2009 and perhaps take advice from a Treasury Secretary. I hope they take advice from three Treasury Secretaries, but we will see how that goes.
Perhaps Mr. Mnuchin can be a voice to try to get the GOP out of the fossil fuel hole it is in, aligned with the 67 percent of American voters who want to see a revenue-neutral carbon tax, aligned with the majority of Republican conservative voters who would support that, and aligned with the irrefutable nature of the science, and addressing the catastrophic and irreversible consequences in this strange new administration in which the new normal is abnormal. It is perhaps hard to expect much good to come, but let's hope and let's hope Mr. Mnuchin makes himself a part of the solution rather than just a part of the climate-denial problem that so infects us, particularly here in Congress.
I yield the floor.
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