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U.S. Environmental Policy and Economic Growth: How Do We Fare?

A monograph published March 1992 by the ACCF Center for Policy Research.

Introduction

U.S. Environmental Policy and Economic Growth: How Do We Fare? is the fifth volume the ACCF Center for Policy Research has published in the series on "Tax and Environmental Policies & U.S. Economic Growth." Like the earlier volumes, this book reports on a day-long symposium. The Center's well-attended September 12, 1991, symposium focused on U.S. environmental policy-where it is heading, how it is affecting the cost of capital for U.S. business, and how it stacks up against the environmental policies of our major international competitors.

This book contains the two studies that were presented at that symposium along with edited versions of the remarks of the tax policy experts, corporate tax and environmental managers, and congressional staffers who served as discussants. These two studies-one by Dr. Dale W. Jorgenson of Harvard University and Dr. Peter Wilcoxen of the University of Texas and the other by Stephen F. Clarke, a senior legal specialist at the Law Library of Congress-support the view that the effects of U.S. environmental policies on economic growth and competitiveness deserve greater consideration. Improved tax treatment for pollution prevention and control investments is also sorely needed.

In their study, Dr. Jorgenson and Dr. Wilcoxen report that the Clean Air Act and previous U.S. environmental regulations affecting water and solid waste impose, and in the future will continue to impose, substantial costs on the U.S. economy.

Mr. Clarke points out in his study that most other industrialized nations provide better tax treatment for pollution-control investment than does the United States. The corporate alternative minimum tax, in particular, is handicapping U.S. companies in their efforts to compete in the international marketplace, since their foreign counterparts are not similarly disadvantaged.

Also presented in this volume are the keynote addresses delivered by Senator Pete V. Domenici (R-N. Mex.) and the Hon. F. Henry Habicht, II, deputy administrator of the U.S. Environmental Protection Agency. In their remarks, Senator Domenici and Mr. Habicht express similar concerns about the need for greater consideration of the effect of environmental policies on U.S. economic growth and competitiveness.

We are deeply grateful to Senator Domenici, EPA Deputy Administrator Habicht, Dr. Jorgenson, Mr. Clarke, and the others whose contributions are included here. Our sincere thanks also goes to the groups that helped underwrite this book and the September symposium: Air Products and Chemicals, Inc.; American Business Conference; American Petroleum Institute; Baltimore Gas and Electric Company; Cahners Publishing Company; Chemical Manufacturers Association; Dow Chemical Company; Dresser Foundation, Inc.; Exxon Company, USA; IBM Corporation; Illinois Power Company; Inland Steel Industries, Inc.; LTV Steel Company; Manufacturers' Alliance for Productivity and Innovation; Mitchell Energy & Development Corporation; Monsanto Company; National Venture Capital Association; Pennsylvania Power & Light Company; Potomac Electric Power Company; Shell Oil Company; Texaco Philanthropic Foundation, Inc.; Thermo Electron Corporation; and Weyerhaeuser Company.

The Center's focus on tax and environmental policies and U.S. economic growth will continue through 1992. We look forward to sharing new insights on this important subject and welcome inquiries about this, and all other, ACCF Center for Policy Research programs.

Charls E. Walker, Chairman
Mark Bloomfield, President
Margo Thorning, Director of Research