prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 1.

Report 1: U S  agencies perform a wide variety of activities that contribute to export promotion, and responsibility for these activities is widely dispersed  Some of the services these agencies provide are intended, at least in part, to assist U S  companies in entering foreign markets or expanding their presence abroad  For example, the U S  government distributes trade-related information to exporters, conducts foreign country market research, and provides counseling to U S  companies throughout the export process  U S  agencies may also use diplomatic tools to advocate on behalf of U S  companies to help ensure they can compete on a level playing field in export markets  Three of these agencies—State, Commerce, and USDA—receive appropriations that are restricted from being used to promote the sale or export of U S  tobacco or tobacco products  These agencies promote the growth of other U S  exports through various activities, as discussed in table 1  Congress has restricted the use of funds that are generally appropriated for State, Commerce, and USDA from being used to promote the sale or export of U S  tobacco and tobacco products since the 1990s  In 1990, we reported that U S  policy and programs for assisting the export of tobacco and tobacco products worked at cross purposes to U S  health policy and initiatives, both domestically and internationally  Congress later restricted the use of funds that are generally appropriated to State, Commerce, and USDA from being used to promote the sale or export of U S  tobacco and tobacco products  During fiscal years 1994 through 2003, Congress prohibited funds generally appropriated for USDA through annual appropriations acts from being used to promote the sale or export of tobacco or tobacco products  In fiscal year 2004, Congress permanently prohibited funds appropriated for USDA from being used to promote the sale or export of tobacco or tobacco products  According to USDA officials, USDA stopped its efforts to gather and disseminate tobacco-related production and consumption information overseas in the early 2000s  Congress restricted the use of certain appropriated funds, including appropriations for Commerce and State, from being used to promote the sale or export of U S  tobacco and tobacco products from fiscal years 1998 through 2017  Congress passed the Departments of Commerce, Justice, State, the Judiciary and Related Agencies Appropriations Act, 1998, which prohibited the funds provided by the act from being used to promote the sale or export of tobacco or tobacco products  This act also prohibited the funds provided by the act from being used to seek the reduction or removal of foreign country restrictions on the marketing of tobacco or tobacco products  The act provided an exception for the funds to be used to address foreign-country restrictions on tobacco marketing that are not applied equally to all tobacco or tobacco products of the same type  These restrictions have been enacted through annual appropriations acts through fiscal year 2018  In fiscal year 2018, Congress altered the restriction language on tobacco promotion in the act making appropriations for State, which, according to State, makes promotion activities permissive with respect to the use of State appropriations  Congress used the term “should” in the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2018 (2018 State Appropriations Act) instead of the term “shall” as in prior acts making appropriations for State  Specifically, the 2018 State Appropriations Act states that “None of the funds made available by this Act should be available to promote the sale or export of tobacco or tobacco products       ” In contrast, prior acts making appropriations for State stated “None of the funds made available by this Act shall be available to promote the sale or export of tobacco or tobacco products       ” According to State officials, they interpreted the term “shall” in prior appropriations acts as a mandatory action, whereas the use of the term “should” gives the agency more discretion in how it addresses the restrictions  However, State has not changed how it addresses the restrictions and does not plan to promote the sale or export of U S  tobacco, according to State officials  The legislation restricting fiscal year 2018 appropriations provided to Commerce and USDA from being used to promote tobacco retains the mandatory “shall” language  According to Commerce and USDA officials, the change to State’s restriction language does not affect the agencies’ activities because Commerce and USDA are still subject to the mandatory restrictions outlined in their agencies’ appropriations language  State collaborates with Commerce, USDA, and other agencies to develop and periodically issue an interagency guidance cable to implement funding restrictions on promoting tobacco  According to officials, this cable serves as the primary source of guidance for implementing the restrictions on promoting tobacco for their officials at all posts overseas  State collaborates with Commerce, USDA, and other agencies to develop and periodically issue an interagency guidance cable to all posts overseas to facilitate their implementation of funding restrictions on promoting tobacco  State officials draft the updated cable and Commerce, USDA, and other agency officials have the opportunity to review and comment on it before State issues it through its cable system  This cable serves as the primary source of guidance for implementing the restrictions, according to officials at these agencies (see table 2)  State has updated and issued the interagency guidance cable four times since 2013 to address changes in tobacco technology and other emerging issues, according to State officials  We identified two significant changes to the cable over the past 5 years  Addition of information concerning attendance at corporate social responsibility events: In May 2013, State added a provision that post officials should consult with headquarters before attending corporate social responsibility events involving U S  tobacco companies  State officials in headquarters acknowledged that post officials may not link some activities, such as participating in corporate social responsibility events, to the promotion of or selling of products  They noted that this is why it is important to make post officials aware of the actions they should or should not take through the interagency guidance cable  Changes to the scope of tobacco products: In recent updates to the cable, State expanded the description of “tobacco and tobacco products” to address the emergence of new delivery systems for tobacco  Specifically, in 2014 State added the language “tobacco delivering products, such as electronic cigarettes” to provide an example of a tobacco product  In 2016, State changed the description to “electronic nicotine delivery systems such as e-cigarettes ” Then in 2018, State added “non-combustible products such as smokeless tobacco” to the description of tobacco products  In response to the revised funding restriction language in the 2018 State Appropriations Act, State modified the 2018 cable stating that the changes make promotion activities permissive with respect to the use of State appropriations  However, State decided not to change the portion of the cable describing specific actions officials should or should not take in the version it issued in April 2018, because according to State officials, they do not plan to promote tobacco  In addition, Commerce and USDA officials said that the change to State’s restriction language has not changed how they interpret the guidance  Commerce relies on both the interagency guidance cable as well as its client eligibility policy to implement restrictions on promoting tobacco  Commerce’s client eligibility policy applies to all export promotion services that Commerce provides and educates officials on how to effectively manage U S  company requests for commercial assistance  The policy’s section on exceptions and other bases for declining services to companies states that Commerce is prohibited by law from promoting the export of tobacco or tobacco-related products  Commerce issued its updated client eligibility policy in October 2018  USDA relies on the interagency guidance cable to provide direction to its officials overseas, and does not have agency-specific guidance for implementing its permanent funding restrictions on promoting tobacco  USDA officials said that the cable sufficiently addresses the funding restrictions on the agency’s promotion activities and helps to ensure that all officials serving at posts overseas conduct activities in a consistent manner  Most State, Commerce, and USDA officials overseas we interviewed were aware of the restrictions on promoting tobacco  Most officials we interviewed had received some guidance concerning the restrictions, but several officials did not recall receiving the interagency guidance cable  Moreover, two of the agencies’ current training courses do not address the restrictions  Officials in 21 of the 24 offices overseas we interviewed were aware of the restrictions  The three offices that were not aware of the restrictions were from State  Although these officials were not aware of the restrictions, they said they had never provided services to U S  tobacco companies  Commerce and USDA headquarters officials said that it is widely known within their agencies that staff should not promote tobacco  Commerce and USDA officials said the guidance concerning these restrictions has been consistent for many years and that staff in the field and in headquarters are very aware of the restrictions  Most officials overseas had received some guidance concerning the restrictions on promoting tobacco  Officials in 21 of the 24 offices overseas we interviewed had received written or verbal guidance concerning the restrictions on promoting tobacco at some point in their career  For example, officials in 15 offices mentioned receiving the State-issued interagency guidance cable when we asked them what type of tobacco-related guidance they had received  In addition, officials in four of the eight Commerce offices recalled receiving agency-specific guidance  Some officials said that their supervisors had informed them they are not allowed to promote tobacco exports  Some officials did not recall receiving the interagency guidance cable, which agency officials said serves as the primary source of guidance for implementing the restrictions, and some were not aware that State periodically issues the cable  For example, one USDA official stated that he could not recall the last time he received guidance and noted that cables can easily be overlooked  He recommended that USDA improve its efforts to distribute the cable and have supervisors maintain an annual checklist to ensure staff have read and understand it or incorporate it into annual training  A State official told us that he was in Washington, D C  when State issued the prior cable and he did not learn about it until he had been stationed at his next overseas post for several months  A Commerce official noted that some officials new to post may not receive the interagency guidance cable for several months  All officials working overseas can access the interagency guidance cable through the State cable database or access other resources if a tobacco- related issue arises  For example, the Commerce client eligibility policy and the interagency guidance cable are available on an internal Commerce website  USDA officials in headquarters stated that they do not remind officials overseas about the restrictions or available guidance, but that, in response to our audit work, they plan to send an annual reminder  Finally, many post officials we interviewed said that they are aware of the activities their colleagues are undertaking and would have the opportunity to educate their colleagues before they provided any services to a tobacco company  Officials in 15 of the 24 offices overseas we interviewed said they did not receive any training concerning restrictions on promoting tobacco  In the past, State, Commerce, and USDA did not include information about the funding restrictions or related guidance in training materials  State and USDA officials in headquarters confirmed that training materials for officials conducting export promotion activities overseas do not address funding restrictions on promoting tobacco  According to an official at State’s Foreign Service Institute, tobacco products may be discussed in a trade-related course when describing those products officials should not advocate for, or in the 6-month economic studies course when examining the nexus between trade issues and public policy  However, State could not provide documentation of where this is specifically addressed in its curriculum  A USDA official stated that none of the Foreign Agricultural Service training courses explicitly discuss restrictions on promoting tobacco  According to Commerce officials, the training for new trade specialists did not include information about the restrictions on promoting tobacco when Commerce last provided the training in 2014  However, in response to our audit work, Commerce added this information into its training materials for new trade specialists in September 2018  Officials who do not receive training on the restrictions early in their careers may not be aware that they are prohibited from promoting tobacco  For example, one Commerce official told us he did not know about the restrictions while serving at his first post when he attended a meeting that involved representatives from the tobacco industry  He noted that he now questions whether he would have attended the meeting if he had known about the restrictions  Federal internal control standards state that appropriate training, aimed at developing employee knowledge, skills, and abilities, is essential to an organization’s operational success  If agencies do not explicitly include information about the restrictions and related guidance in training materials for officials conducting export promotion activities overseas, officials may work at a post for several months, or longer, before learning about the restrictions  The State, Commerce, and USDA officials we interviewed said they have implemented the funding restrictions on tobacco as outlined in the interagency guidance cable issued by State  For example, post officials said they have not promoted the sale or export of tobacco or tobacco products or attended events solely sponsored by tobacco companies, though many officials said they attended events at which officials from tobacco companies were present  Post officials identified three areas of the guidance that may benefit from additional clarification, according to interviews with agency officials and our review of agency emails  Our interviews with State, Commerce, and USDA officials in 24 offices in nine countries and our review of agency documents, showed that posts have implemented the interagency guidance outlining actions they should not take (see table 3 ) Post officials identified three areas of the guidance that may benefit from additional clarification, according to our interviews with agency officials and our review of agency emails: attendance at events, the types of permitted services, and the description of tobacco products  Officials from all three agencies raised questions about whether and when it is permissible to attend events at which tobacco company representatives are present  The guidance does not specifically address attendance at events also attended by representatives of tobacco companies  State headquarters officials said the vast majority of questions received from posts concern whether personnel at a post may participate in an event when representatives from a company engaged in the tobacco industry are also expected to participate in that event  We also reviewed emails in which Commerce officials asked for additional guidance about attending events or meetings with tobacco companies  For example, one post official asked whether the embassy could invite a tobacco company to participate in an embassy-organized trade mission that would include meetings with the local governor and mayor  In this case, Commerce headquarters officials advised that the tobacco company’s participation could be construed as U S  government support for the company’s commercial activities and recommended against including the tobacco company  A USDA official in headquarters also noted that attending events could, in some cases, be construed as supporting tobacco companies, and noted that this is an area where staff could use more guidance  Representatives from several tobacco control organizations expressed concern that interactions between U S  government officials and representatives from tobacco companies at events organized by business associations created a perception that the U S  government supported tobacco company sales in the country  For example, in 2017 a business association hosted a trade mission to one Southeast Asian country that included representatives from 30 U S  companies, including a U S  tobacco company  In response, two tobacco control organizations wrote to the U S  ambassador in that country voicing their concern that U S  government officials’ attendance at meetings that included the tobacco company representatives violated the spirit of the interagency guidance cable and gave the appearance that the U S  government supports the tobacco company


Report 2:  Subsequently, the Deputy Chief of Mission distributed guidance specific to that post stating that officials were not allowed to attend a trade mission’s events or meetings if representatives from a tobacco company were scheduled to give a presentation  Several post officials said that attending events organized by business associations is a key function of their job  They attend these events to, among other things, exchange information about the local business climate and learn about the concerns of American companies  Commerce and USDA officials identified ambiguities in the guidance concerning the types of services they are allowed to provide to tobacco companies or the tobacco industry  In 14 of the 21 Commerce emails we reviewed, officials at posts asked for additional guidance about the types of services they are permitted to provide to tobacco companies or the types of companies or products they can support  For example, some post officials asked whether they could engage with the host country government to obtain information about pending tobacco-related legislation at the request of a tobacco company  In one case, Commerce headquarters advised post officials that the restrictions did not prohibit them from raising concerns on a legislative proposal that would discriminate against foreign tobacco companies  They further noted that because of the sensitive nature of tobacco-related issues, any policy decision to engage should be weighed carefully  Commerce’s client eligibility policy does not provide a description of the types of actions Commerce officials should and should not take with regards to tobacco companies and products  The interagency guidance cable also does not provide information about some types of services, such as whether officials should engage with host country government officials to learn about pending tobacco-related legislation  According to a USDA official, some officials overseas interpret “promotional” activities differently and did not agree on whether both marketing and trade-related activities, such as enforcing trade agreements, are promotional activities  Commerce officials at post asked for additional guidance about whether they could provide export promotion services to companies exporting certain tobacco-related products in 3 of the 21 emails we reviewed  For example, some Commerce officials asked whether they could provide services to companies selling component parts for electronic nicotine delivery systems, such as e-liquids  Commerce’s prior client eligibility policy, issued in May 2017, did not include a list of tobacco products covered by the policy; whereas, the interagency guidance cable issued in 2014 states that tobacco products include tobacco delivery systems, such as electronic cigarettes, and the updated version issued in 2018 added non-combustible products, such as smokeless tobacco, to this description  However, neither the interagency guidance cable nor Commerce’s updated client eligibility policy specifically states whether the description includes component parts for electronic cigarettes and other tobacco products  GAO previously reported that electronic cigarettes include a wide range of products that share the same basic design and generally consist of three main parts: a power source, a heating element, and a cartridge or tank containing liquid solution, which is often sold separately  According to State officials in headquarters, the guidance on promoting tobacco was written for a broad audience and to make post officials mindful of the restrictions  They said they trust that officials overseas will use their professional judgment and in-country expertise to determine if post’s support for an event or a company will be construed as promotion of a tobacco product  Moreover, State and Commerce officials said that they expect officials overseas to ask headquarters questions to clarify the interagency guidance cable  While federal standards for internal control state that management should clearly document internal controls in policies and guidance to prevent officials from failing to achieve an objective or address a risk, we found that the interagency guidance does not provide examples of the factors post officials should consider when attending business association events  The guidance also lacks sufficient examples of the types of services officials are allowed to provide to tobacco companies and a clear description of tobacco products  More specific guidance would help ensure that State, Commerce, and USDA officials consistently implement their agency-specific funding restrictions on promoting tobacco exports  The United States exported over $2 billion in tobacco and tobacco-related products in 2017  Congress has enacted restrictions on the use of certain appropriated funds to promote the sale or export of U S  tobacco or tobacco products since the 1990s, and State, Commerce, and USDA have developed and updated guidance to implement these restrictions  However, not all officials were aware of the restrictions and more than half had not received training about the restrictions  Including information about the restrictions in training materials would help make officials aware of the restrictions early in their careers and prompt them to seek guidance if a tobacco-related issue arises  If officials conducting export promotion activities are unaware of the funding restrictions on promoting tobacco sales and exports, they may also be unaware of the activities they should and should not undertake  Moreover, some officials said that the guidance is unclear in some areas  Although officials said they need to attend business association events to support all U S  companies conducting business in a country, they were unsure whether they can attend events where representatives from U S  tobacco companies may be present  In addition, some officials also indicated that the current guidance lacks clarity on the types of services officials are allowed to provide to tobacco interests and what constitutes a tobacco product  Although we did not identify any instances in which a State, Commerce, or USDA official directly promoted U S  tobacco products, clearer guidance would help to ensure that officials will consistently implement their agency-specific funding restrictions  We are making three recommendations, including two to State and one to USDA  Specifically: The Secretary of State should work with the Foreign Service Institute to include information about the funding restrictions and relevant guidance on promoting the sale or export of tobacco or tobacco products in its training materials for employees conducting export promotion activities overseas  (Recommendation 1) The Secretary of Agriculture should include information about the funding restrictions and relevant guidance on promoting the sale or export of tobacco or tobacco products in training materials for employees conducting export promotion activities overseas  (Recommendation 2) The Secretary of State, in consultation with the Secretary of Commerce and the Secretary of Agriculture, should assess the interagency guidance cable on promoting tobacco in light of questions raised by officials at posts overseas and update it to address ambiguities, as needed  (Recommendation 3) We provided a draft of this report to State, Commerce, USDA, and USTR for review and comment  In their comments, reproduced in appendix III, State concurred with our recommendations and described planned actions to address them  USDA concurred with the recommendation and told us that they had no comments on the draft report  Commerce and USTR told us that they had no comments on the draft report  As agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date  At that time, we will send copies to the appropriate congressional committees, the Secretary of the Department of State, the Secretary of the Department of Commerce, the Secretary of the U S  Department of Agriculture, the U S  Trade Representative, and other interested parties  In addition, the report will be available at no charge on the GAO website at http://www gao gov  If you or your staff have any questions about this report, please contact me at (202) 512-3149 or gootnickd@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  GAO staff who made key contributions to this report are listed in appendix IV  This report examines (1) the guidance select U S  agencies have issued to implement funding restrictions on promoting tobacco exports overseas, (2) to what extent overseas officials from select U S  agencies were aware of the restrictions and guidance, and (3) to what extent select U S  agencies have implemented this guidance overseas  To address our first objective, we reviewed U S  appropriations laws that prohibited the funds appropriated therein from being used to promote the sale or export of tobacco or tobacco products  We also reviewed guidance issued by the Departments of State (State) and Commerce (Commerce) concerning the promotion of tobacco exports overseas  We also interviewed officials in headquarters from State, Commerce, the U S  Department of Agriculture (USDA), and the Office of the U S  Trade Representative (USTR) about the funding restrictions on promoting tobacco exports overseas and the development and revision of guidance on tobacco promotion  To address our second objective, we interviewed officials in headquarters from State, Commerce, and USDA about any training officials posted overseas receive concerning the funding restrictions on promoting tobacco exports  In addition, we held structured interviews with 35 State, Commerce, and USDA officials overseas conducting export promotion activities and reached out to an additional 10 officials to ask about activities associated with the solicitation of gifts and attendance at corporate social responsibility events  These officials were located across 11 posts and in 9 countries  We interviewed officials in Cambodia, Croatia, Dominican Republic, Honduras, Indonesia, Philippines, South Africa, Thailand, and Vietnam  Because multiple officials from one agency attended a meeting in some cases, we are reporting their combined responses as one “office” response  Thus, we are reporting the results from the 24 offices we interviewed—9 State, 8 Commerce, and 7 USDA offices  We selected this non-generalizable sample of countries based on criteria that included the countries’ large or increasing amounts of U S  tobacco imports, relatively high tobacco smoking prevalence rates, and geographic dispersion  The information obtained from these interviews is neither generalizable nor reflects the experiences of all State, Commerce, and USDA officials serving at posts overseas, but it does provide insights into officials’ experiences at post and illustrative examples across our sample on the topics discussed  To address our third objective, we interviewed officials in headquarters from State, Commerce, and USDA about post officials’ implementation of guidance regarding the promotion of tobacco exports, the types of questions they receive from post officials about the funding restrictions and guidance, and the additional advice they provide to post officials overseas  We asked post officials about the clarity of guidance, whether they attended events sponsored or attended by representatives of U S  tobacco companies, and whether they discussed tobacco-related issues with host country government officials during our structured interviews with the 24 State, Commerce, and USDA offices overseas  We also analyzed a Commerce database, agency emails, and State cables and conducted a literature search  Commerce documents all the fee-based services it provides to companies in a database  We obtained a list of approximately 30,000 fee-based services Commerce provided in fiscal years 2013 through 2017, which included the name of the companies to which Commerce provided these services  We then downloaded a list of 763 U S  tobacco companies from Nexus using criteria such as industry classification codes related to tobacco and tobacco products and the location of company headquarters  We limited the list of U S  tobacco companies to those with revenues greater than $5 million  We then compared the two lists to determine if Commerce provided any fee-based services to U S  tobacco companies  To assess the reliability of the Commerce fee-based services data, we reviewed relevant documentation and interviewed knowledgeable officials about system controls  We determined that Commerce’s fee-based services data were sufficiently reliable for the purposes of our reporting objectives  In addition, we requested State, Commerce, and USDA email communications concerning tobacco-related issues sent between January 2015 and February 2018 from post officials to headquarters  State was only able to provide one such email  USDA provided several emails, but the emails were not from USDA post officials to USDA officials in headquarters  Commerce provided us 21 emails that matched our request and an additional 20 emails from officials working throughout the United States  We analyzed the Commerce email communications to identify commonly asked questions or concerns about the existing guidance and actions the agencies should take to support U S  tobacco companies or the tobacco industry  We also requested State cables from the eight countries in our sample sent between January 2013 and December 2017 that referenced at least 1 of the 10 U S  tobacco companies with the highest revenues  We received and reviewed cables from six of these countries  We also conducted a literature search to identify instances in which U S  government officials may have conducted activities addressed by the interagency tobacco guidance cable  To identify relevant articles, such as trade or industry articles, we searched various databases, including ProQuest and Nexus  From these sources, we identified one article relevant to our research objective  We performed these searches in December 2017 and searched for articles published from January 2013 to December 2017  We also interviewed representatives of the tobacco control community and business associations to obtain their perspectives concerning U S  government support for tobacco exports and U S  government interactions with U S  tobacco companies  Specifically, we interviewed the World Health Organization (WHO), four global or regional tobacco control nongovernmental organizations, and several local nongovernmental organizations in two countries in our scope  In addition, we interviewed officials from the local American Chamber of Commerce and the U S - Association of Southeast Asian Nations Business Council in two countries  The information obtained from these interviews is neither generalizable nor reflects the experiences of all tobacco control organizations or business associations, but it does provide insights into these officials’ experiences  We conducted this performance audit from November 2017 to December 2018 in accordance with generally accepted government auditing standards  Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives  We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives  The United States exported over $2 1 billion in tobacco and tobacco products in 2017  Figure 1 shows how tobacco exports fluctuated from 2007 to 2017  Specifically, total tobacco exports have ranged from a high of approximately $2 4 billion in 2007 to a low of about $1 7 billion in 2012  U S  tobacco exports to Asia have decreased by 68 percent over the past 11 years, whereas exports to North America have increased 10-fold (see fig  2)  Most of the decrease in exports to Asia is attributable to reduced exports to Japan, which fell 95 percent from 2007 to 2017  Most of the increases in exports to North America are attributable to Canada, which accounted for approximately 40 percent of total U S  tobacco exports in 2017  David B  Gootnick, (202) 512-3149 or gootnickd@gao gov  In addition to the contact named above, Cheryl Goodman (Assistant Director), Celia Thomas (Assistant Director), Amanda Bartine, Leah DeWolf, Jewel Conrad, Aldo Salerno, and Neil Doherty made key contributions to this report  Grace Lui, Justin Fisher, and Ming Chen provided technical assistance 

ground_truth: Historically, Egypt has been an important country for U.S. national security interests based on its geography, demography, and diplomatic posture. Egypt controls the Suez Canal, which is one of the world's most well-known maritime chokepoints, linking the Mediterranean and Red Seas. Egypt, with its population of more than 100 million people, is by far the most populous Arabic-speaking country. Although it may not play the same type of leading political or military role in the Arab world as it has in the past, Egypt may retain some "soft power" by virtue of its history, media, and culture. Cairo plays host both to the 22-member Arab League and Al Azhar University, which claims to be the oldest continuously operating university in the world and has symbolic importance as a leading source of Islamic scholarship. Additionally, Egypt's 1979 peace treaty with Israel remains one of the most significant diplomatic achievements for the promotion of Arab-Israeli peace. While people-to-people relations remain cold, the Israeli and Egyptian governments have increased their cooperation against Islamist militants and instability in the Sinai Peninsula and Gaza Strip. Personnel moves and possible amendments to the Egyptian constitution highlight apparent efforts by President Sisi to consolidate power with the help of political allies, including colleagues from Egypt's security establishment. President Sisi has come under repeated international criticism for an ongoing government crackdown against various forms of political dissent and freedom of expression. The Egyptian government has defended its human rights record, asserting that the country is under pressure from terrorist groups seeking to destabilize Arab nation-states. The Trump Administration has tried to normalize ties with the Sisi government that were generally perceived as strained under President Obama. In January 2019, U.S. Secretary of State Michael Pompeo delivered a major policy speech at the American University in Cairo, where he stated, "And as we seek an even stronger partnership with Egypt, we encourage President Sisi to unleash the creative energy of Egypt's people, unfetter the economy, and promote a free and open exchange of ideas." The United States has provided significant military and economic assistance to Egypt since the late 1970s. Successive U.S. Administrations have justified aid to Egypt as an investment in regional stability, built primarily on long-running cooperation with the Egyptian military and on sustaining the 1979 Egyptian-Israeli peace treaty. All U.S. foreign aid to Egypt (or any recipient) is appropriated and authorized by Congress. Since 1946, the United States has provided Egypt with over $83 billion in bilateral foreign aid (calculated in historical dollars—not adjusted for inflation). Annual appropriations legislation includes several conditions governing the release of these funds. All U.S. military aid to Egypt finances the procurement of weapons systems and services from U.S. defense contractors. For FY2019, Congress has appropriated $1.4 billion in total bilateral assistance for Egypt, the same amount it provided in FY2018. For FY2020, the President is requesting a total of $1.382 billion in bilateral assistance for Egypt. Nearly all of the U.S. funds for Egypt come from the FMF account (military aid). In November 2018, the U.S. Defense Department notified Congress of a major $1 billion sale of defense equipment to Egypt, consisting of 10 AH-64E Apache Attack Helicopters, among other things. Beyond the United States, President Sisi has broadened Egypt's international base of support to include several key partners, including the Arab Gulf states, Israel, Russia, and France. In the last five years, as French-Egyptian ties have improved, Egypt has purchased major air and naval defense systems from French defense companies.

prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 2.

Report 1: Since 1952, when a cabal of Egyptian Army officers, known as the Free Officers Movement, ousted the British-backed king, Egypt's military has produced four presidents; Gamal Abdel Nasser (1954-1970), Anwar Sadat (1970-1981), Hosni Mubarak (1981-2011), and Abdel Fattah el Sisi (2013-present)  In general, these four men have ruled Egypt with strong backing from the country's security establishment  The only significant and abiding opposition has come from the Egyptian Muslim Brotherhood, an organization that has opposed single party military-backed rule and advocated for a state governed by a vaguely articulated combination of civil and Shariah (Islamic) law  Egypt's sole departure from this general formula took place between 2011 and 2013, after popular demonstrations sparked by the "Arab Spring," which had started in neighboring Tunisia, compelled the military to force the resignation of former President Hosni Mubarak in February 2011  During this period, Egypt experienced tremendous political tumult, culminating in the one-year presidency of the Muslim Brotherhood's Muhammad Morsi  When Morsi took office on June 30, 2012, after winning Egypt's first truly competitive presidential election, his ascension to the presidency was supposed to mark the end of a rocky 16-month transition period  Proposed time lines for elections, the constitutional drafting process, and the military's relinquishing of power to a civilian government had been constantly changed, contested, and sometimes even overruled by the courts  Instead of consolidating democratic or civilian rule, Morsi's rule exposed the deep divisions in Egyptian politics, pitting a broad cross-section of Egypt's public and private sectors, the Coptic Church, and the military against the Brotherhood and its Islamist supporters  The atmosphere of mutual distrust, political gridlock, and public dissatisfaction that permeated Morsi's presidency provided Egypt's military, led by then-Defense Minister Sisi, with an opportunity to reassert political control  On July 3, 2013, following several days of mass demonstrations against Morsi's rule, the military unilaterally dissolved Morsi's government, suspended the constitution that had been passed during his rule, and installed an interim president  The Muslim Brotherhood and its supporters declared the military's actions a coup d'etat and protested in the streets  Weeks later, Egypt's military and national police launched a violent crackdown against the Muslim Brotherhood, resulting in police and army soldiers firing live ammunition against demonstrators encamped in several public squares and the killing of at least 1,150 demonstrators  The Egyptian military justified these actions by decrying the encampments as a threat to national security  As Egyptian President Abdel Fattah al Sisi consolidates his power amid a continuing macroeconomic recovery, Egypt is poised to play an increasingly active role in the region, albeit from a more independent position vis-a-vis the United States than in the past  Although Egyptian relations with the Trump Administration are solid, and Egypt has relied on the International Monetary Fund (IMF) program to guide its economic recovery, Egypt seems committed to broadening its international base of support  The United States plays a key role in that international base, but Egypt also has other significant partners, including the Arab Gulf states, Israel, Russia, and France  The Egyptian government blames American criticism of its human rights record for preventing closer U S -Egyptian ties  From the U S  perspective, some Members of Congress, U S  media outlets, and advocacy groups document how Egyptian authorities have widened the scope of a crackdown against dissent, which initially was aimed at the Muslim Brotherhood but has evolved to encompass a broader range of political speech  Egypt's parliament is currently considering whether to adopt a package of draft constitutional amendments that would extend presidential term limits and executive branch control over the judiciary  If Egypt's 2019 constitutional amendments are approved, President Sisi will attain unprecedented power in the political system over the military and the judiciary and, if reelected, will have the potential to remain in office until 2034  He has inserted his older brother and oldest son into key security and intelligence positions while stymying all opposition to his rule and criticism of his government  This consolidation of power and crackdown against dissent has taken place during a period of steady economic growth, which has not benefitted wide swaths of the population  The state has enacted a series of austerity measures to reduce debt in compliance with IMF-mandated reforms  In the year ahead, economists anticipate gross domestic product (GDP) growth of 5 3%, driven by an expansion in tourism and natural gas production  Nevertheless, Egyptians continue to endure double-digit inflation stemming in part from the 2016 flotation of the currency, tax increases, and reductions in food and fuel subsidies  While it is difficult to ascertain how dissatisfied the public is with rising prices, President Sisi has responded to criticisms of his economic policies, stating: "The path of real reform is difficult and cruel and causes a lot of suffering     But there is no doubt that the suffering resulting from the lack of reform is much worse " The IMF has praised the Egyptian government's record of reform implementation, while also highlighting the need for private sector growth "that will absorb the rapidly growing labor force and ensure that the benefits are perceived more widely " After several years of observers seeing Egypt as more inwardly focused, several recent developments suggest an increasingly active foreign policy  In January 2019, Egypt hosted an international forum on Mediterranean gas which included European and Arab countries together with Israel  A month later, President Sisi was elected head of the African Union for a year-long term  In February 2019, Egypt hosted the first-ever European Union- Arab summit in Sharm el Sheikh, where officials discussed terrorism, migration, and the need for greater European-Arab cooperation to counter a perceived growing Chinese and Russian interest in the Middle East  Personnel moves and other developments in Egypt highlight apparent efforts by President Sisi to consolidate power with the help of political allies, including colleagues from Egypt's security establishment  In June 2018, Sisi reshuffled his cabinet, making key changes to the defense and interior ministries, among other appointments  Sisi appointed Mohamed Ahmed Zaki, former head of the Republican Guard, as defense minister and Mahmoud Tawfik, former head of the National Security Service, as interior minister  According to one account, Sisi may have been rewarding Zaki for his role in arresting former Egyptian President Mohamed Morsi in 2013  In July 2018, parliament passed Law 161 of 2018, providing judicial immunity to senior military commanders for military acts committed during the two-and-a-half-year period beginning with the military coup of July 2013  The new law grants immunity to senior commanders while potentially keeping high-ranking officers on reserve duty for life, making them ineligible to run for president  In order for a senior commander to be prosecuted under this new law, a case would have to be first authorized by the Supreme Council of the Armed Forces (SCAF), which President Sisi appoints  According to one analysis, the law deters senior officers from challenging President Sisi (for example, some challenges occurred during the run-up to the 2018 presidential election), thereby acting "as a guarantor of President Sisi's authoritarian rule, setting the stage for him to remain president for life " Per the 2014 Egyptian constitution (article 140), President Sisi, who was reelected in April 2018, may only serve two four-year terms in office (current term ends in 2022)  However, his supporters have proposed a set of amendments to the constitution which, if approved by parliament and public referendum, have the potential to make President Sisi eligible for an additional two six-year terms when his current term ends in 2022  Other proposed changes to the constitution include granting the president the authority to appoint all chief justices of Egyptian judicial bodies, and the public prosecutor; requiring that at least one-quarter of the seats in the parliament be allocated to women and reducing the number of the seats in the House of Representatives from 596 to 450; and establishing an upper house of parliament (Senate) consisting of 250 members, two-thirds of whom would be elected and one-third of whom would be appointed by the president  President Sisi has come under repeated international criticism for an ongoing government crackdown against various forms of political dissent and freedom of expression  Certain practices of Sisi's government, the parliament, and the security apparatus have been contentious  According to the U S  State Department's report on human rights conditions in Egypt in 2017: The most significant human rights issues included arbitrary or unlawful killings by the government or its agents; major terrorist attacks; disappearances; torture; harsh or potentially life-threatening prison conditions; arbitrary arrest and detention; including the use of military courts to try civilians; political prisoners and detainees; unlawful interference in privacy; limits on freedom of expression, including criminal "defamation of religion" laws; restrictions on the press, internet, and academic freedom; and restrictions on freedoms of assembly and association, including government control over registration and financing of NGOs [nongovernmental organizations]  LGBTI persons faced arrests, imprisonment, and degrading treatment  The government did not effectively respond to violence against women, and there were reports of child labor  Select international human rights, democracy, and development monitoring organizations provide the following rankings for Egypt globally: Other human rights issues of potential interest to Congress may include the 2013 convictions of American, European, and Egyptian civil society representatives; the controversial 2017 NGO law; the detention of American citizens in Egypt; and the treatment of Coptic Christians, discussed in the following sections  In 2013, an Egyptian court convicted and sentenced 43 individuals from the United States, Egypt, and Europe, including the Egypt country directors of the National Democratic Institute (NDI) and the International Republican Institute (IRI), for spending money from organizations that were operating in Egypt without a license and for receiving foreign funds (known as Case 173 or the "foreign funding case")  Some lawmakers had protested that those individuals were wrongfully convicted and had requested that the Egyptian government and judiciary resolve the matter  In 2018, a retrial began and, on December 20, 2018, the individuals were acquitted of all charges  In January 2019, U S  Secretary of State Michael R  Pompeo traveled to Cairo, where he remarked: "I was happy to see our citizens, wrongly convicted of improperly operating NGOs here, finally be acquitted  And we strongly support President Sisi's initiative to amend Egyptian law so that this does not happen again  More work certainly needs to be done to maximize the potential of the Egyptian nation and its people  I'm glad that America will be a partner in those efforts " However, Case 173 remains active, as the judiciary has imposed asset freezes and travel bans on several Egyptian civil society activists  In May 2017, President Sisi signed Law 70 of 2017 on Associations and Other Foundations Working in the Field of Civil Work  The parliament had passed this bill six months earlier, and both the passage and signing drew widespread international condemnation  The new law (which replaced a 2002 NGO law) requires NGOs to receive prior approval from internal security before accepting foreign funding  It also restricts the scope of permitted NGO activities and increases penalties for violations, including possible imprisonment for up to five years  However, the government did not issue implementing regulations for the new NGO law  At Egypt's November 2018 World Youth Forum in Sharm el Sheikh, President Sisi announced plans to amend Law 70  According to Sisi, "I want to reassure those who are listening to me inside Egypt and outside of Egypt, that in Egypt, we are keen that the law becomes balanced and achieves what is required of it to regulate the work of these groups in a good way  This is not just political talk " Since then, Egypt's Ministry of Social Solidarity has held multiple rounds of talks with local NGOs aimed at determining which articles of the law need to be amended  A draft proposal is expected to be ready in the spring of 2019, when it will be sent to parliament for consideration  The detention of American citizens in Egypt has continued to strain U S -Egyptian relations  Some Members of Congress are concerned about the case of 53-year-old New York resident Mustafa Kassem, who was detained by authorities in 2013 and sentenced to 15 years in prison in a mass trial in September 2018  These lawmakers insist that Kassem, who has been on a limited hunger strike, was wrongfully arrested and convicted, and they have sought Trump Administration support in securing his release from the government of Egypt  In January 2018, Vice President Pence raised Kassem's case directly with President Sisi in a meeting in Cairo, saying "I told him we'd like to see those American citizens restored to their families and restored to our country " Since taking office, President Sisi has publicly called for greater Muslim-Christian coexistence and national unity  In January 2019, he inaugurated Egypt's Coptic Cathedral of Nativity in the new administrative capital east of Cairo saying, "This is an important moment in our history     We are one and we will remain one " Despite these public calls for improved interfaith relations in Egypt, the minority Coptic Christian community continues to claim that they face professional and social discrimination, along with occasional sectarian attacks by terrorists and vigilantes  Coptic Christians have also voiced concern about state regulation of church construction  They have long demanded that the government reform long-standing laws (with two dating back to 1856 and 1934, respectively) on building codes for Christian places of worship  Article 235 of Egypt's 2014 constitution mandates that parliament reform these building code regulations  In 2016, parliament approved a church construction law (Law 80 of 2016) that expedited the government approval process for the construction and restoration of Coptic churches, among other structures  Although Coptic Pope Tawadros II welcomed the law, others claim that it continues to be discriminatory  According to Human Rights Watch , "the new law allows governors to deny church-building permits with no stated way to appeal, requires that churches be built 'commensurate with' the number of Christians in the area, and contains security provisions that risk subjecting decisions on whether to allow church construction to the whims of violent mobs " For 2019, the IMF projects 5 3% GDP growth for the Egyptian economy, noting that the outlook remains "favorable, supported by strong policy implementation " In 2016, the IMF and Egypt reached a three-year, $12 billion loan agreement, $10 billion of which has been disbursed as of March 2019  Key sources of foreign exchange (tourism and remittances) are up and unemployment is at its lowest level since 2011  In line with IMF recommendations, the government has taken several steps to reform the economy, including depreciating the currency, reducing fuel subsidies, enacting a value-added tax (VAT), and providing cash payments to the poor in lieu of subsidizing household goods (though many food subsidies continue)  Egypt's energy sector also is contributing to the economy's rebound  Egypt is the largest oil producer in Africa outside of the Organization of the Petroleum Exporting Countries (OPEC) and the third-largest natural gas producer on the continent following Algeria and Nigeria  In December 2017, an Egyptian and Italian partnership began commercial output from the Zohr natural gas field (est  30 trillion cubic feet of gas), the largest ever natural gas field discovered in the Mediterranean Sea (see Figure 3 )  The Egyptian government also has repaid debts owed to foreign energy companies, allowing for new investments from BP and BG Group  Egypt is attempting to position itself as a regional gas hub, whereby its own gas fields meet domestic demand while imported gas from Israel and Cyprus can be liquefied in Egypt and reexported  Israeli and Egyptian companies have bought significant shares of an unused undersea pipeline connecting Israel to the northern Sinai Peninsula (see Figure 4 )  The pipeline will be used to transport natural gas from Israel to Egypt for possible reexport, as part of an earlier 10-year, $15 billion gas deal between the U S  Company Noble Energy, its Israeli partner Delek, and the Egyptian company Dolphinus Holdings  In January 2019, Egypt convened the first ever Eastern Mediterranean Gas Forum (EMGF), a regional consortium consisting of Egypt, Israel, Jordan, the Palestinian Authority, Cyprus, Greece, and Italy, intended to consolidate regional energy policies and reduce costs  Despite Egypt's positive economic outlook, significant challenges remain  Inflation remains over 11%, making the cost of goods high for many Egyptians  In addition, while the fiscal deficit may be decreasing, Egypt's overall public and foreign debt have grown significantly in recent years and remain high, leading the government to allocate resources (nearly 38% of Egypt's budget) toward debt-service payments and away from spending on health and education  Economists forecast that total public debt will reach 84 8% of GDP and external debt 32% of GDP ($101 7 billion) in 2019  Some observers assert that Egypt's recent economic reforms, while successful in the short term, have not addressed deeper structural impediments to growth  For example, Egypt's industrial sector is heavily dependent upon imports and, as the economy expands, the demand for foreign currency increases  According to Bloomberg , "this means, the more the economy grows, the greater the pressure on dollar reserves  It doesn't help that these were built up almost entirely through foreign borrowing, pushing Egypt's foreign debt from $55 billion in 2016 to $92 billion in late 2018  It won't be long before the country's finances are once again in crisis " Many experts argue that to sustain growth over the long term, Egypt requires dramatic expansion of the nonhydrocarbon private sector  For decades, Egypt's military has played a key role in the nation's economy as a food producer and low-cost domestic manufacturer of consumable products; however, due to political sensitivities, the extent of its economic power is rarely quantified  Egypt's military is largely economically self-sufficient  It produces what it consumes (food and clothes) and then sells surplus goods for additional revenue  Egyptian military companies have been the main beneficiaries of the massive infrastructure contracts Sisi has commissioned  Moreover, military-owned manufacturing companies have expanded into new markets, producing goods (appliances, solar panels, some electronics, and some medical equipment) that are cheaper than either foreign imports or domestically produced goods made by the private sector  President Sisi, who led the 2013 military intervention and was elected president in mid-2014, came to power promising not only to defeat violent Salafi-Jihadi terrorist groups militarily, but also to counter their foundational ideology, which President Sisi and his supporters often attribute to the Muslim Brotherhood  President Sisi has outlawed the Muslim Brotherhood while launching a more general crackdown against a broad spectrum of opponents, both secular and Islamist  While Egypt is no longer beset by the kind of large-scale civil unrest and public protest it faced during the immediate post-Mubarak era, it continues to face terrorist and insurgent violence, both in the Sinai Peninsula and in the rest of Egypt  Terrorists based in the Sinai Peninsula (the Sinai) have been waging an insurgency against the Egyptian government since 2011  While the terrorist landscape in Egypt is evolving and encompasses several groups, the Islamic State's Sinai Province affiliate (IS-SP) is known as the most lethal  Since its affiliation with the Islamic State in 2014, IS-SP has attacked the Egyptian military continually, targeted Coptic Christian individuals and places of worship, and occasionally fired rockets into Israel  In October 2015, IS-SP targeted Russian tourists departing the Sinai by planting a bomb aboard Metrojet Flight 9268, which exploded midair, killing all 224 passengers and crew aboard  Two years later, on November 24, 2017, IS-SP gunmen launched an attack against the Al Rawdah mosque in the town of Bir al Abed in northern Sinai  That attack killed at least 305 people, making it the deadliest terrorist attack in Egypt's modern history  Combating terrorism in the Sinai is particularly challenging due to an array of factors, including the following: Geograph y : The peninsula's interior is mountainous and sparsely populated, providing militants with ample freedom of movement  Demograph y and Culture : The Sinai's northern population is a mix of Palestinians and Bedouin Arab tribes whose relationship to the state is filled with distrust  Sinai Bedouin have faced discrimination and exclusion from full citizenship and access to the economy  In the absence of development, a black market economy based primarily on smuggling has thrived, further contributing to the popular portrayal of Bedouin as outlaws  State authorities charge that the Sinai Bedouin seek autonomy from the central government, while residents insist on obtaining basic rights, such as property rights, full citizenship, and access to government services such as education and health care  Econom ics : Bedouins claim that Egypt has underinvested in northern Sinai, channeling development toward southern tourist destinations that cater to foreign visitors  Northern Sinai consists of mostly flat desert terrain inhospitable to large-scale agriculture without significant investment in irrigation  For decades, the Egyptian state has claimed to follow successive Sinai development plans  However, Egyptian governance and development of the Sinai has been hampered by corruption  Diploma cy : The 1979 Israeli-Egyptian peace treaty limits the number of soldiers that Egypt can deploy in the Sinai, subject to the parties' ability to negotiate changes as circumstances necessitate  Egypt and Israel mutually agree upon any short-term increase of Egypt's military presence in the Sinai  Since Israel returned control over the Sinai to Egypt in 1982, the area has been partially demilitarized, and the Sinai has served as an effective buffer zone between the two countries  The Multinational Force and Observers, or MFO, are deployed in the Sinai to monitor the terms of the Israeli-Egyptian peace treaty (see Figure 5 )  Egypt and Israel reportedly continue to cooperate in countering terrorism in the Sinai  In a televised interview, President Sisi responded to a question on whether Egyptian-Israeli military cooperation was the closest it has ever been, saying "That is correct  The [Egyptian] Air Force sometimes needs to cross to the Israeli side  And that's why we have a wide range of coordination with the Israelis " One news account suggests that Israel, with Egypt's approval, has used its own drones, helicopters, and aircraft to carry out more than 100 covert airstrikes inside Egypt against militant targets  In order to counter IS-SP in northern Sinai, the Egyptian armed forces and police have declared a state of emergency, imposed curfews and travel restrictions, and erected police checkpoints along main roads  Authorities also have limited domestic and foreign media access to the northern Sinai, declaring it an active combat zone and unsafe for journalists  According to Jane's Defence Weekly , Egypt may be upgrading an old air base in the Sinai (Bir Gifgafa), where it could deploy Apache attack helicopters and unmanned aerial vehicles for use in counterterrorism operations  While an increased Egyptian military presence in the Sinai may be necessary to stabilize the area, many observers have argued that military means alone are insufficient  These critics say that force should be accompanied by policies to reduce the appeal of antigovernment militancy by addressing local political and economic grievances  According to one account: Sinai residents are prohibited from joining any senior post in the state  They cannot work in the army, police, judiciary, or in diplomacy  Meanwhile, no development projects have been undertaken in North Sinai the past 40 years  The villages of Rafah and Sheikh Zuwayed have no schools or hospitals and no modern system to receive potable water  They depend on rainwater and wells, as if it were the Middle Ages  Egyptian counterterrorism efforts in the Sinai appear to have reduced the frequency of terrorist attacks somewhat  In February 2018, the military launched an offensive campaign, dubbed "Operation Sinai 2018 " During the campaign, the military deployed tens of thousands of troops to the peninsula and was able to eliminate several senior IS-SP leaders  One report suggests that unlike previous military operations against militants in the Sinai, this time the Egyptian military armed progovernment tribesmen to assist conventional forces in combating IS-SP  According to one analysis, the military's recent campaign has "to some degree, restricted the militants' movements, destroyed a number of hideouts, and most importantly eliminated several trained and influential elements " However, as in previous major operations, once the military reduces its presence in northern Sinai, terrorist groups may reconstitute themselves  In March 2019, CENTCOM Commander General Joseph L  Votel testified before Congress, stating that the "Egyptian Armed Forces have more effectively fought ISIS in the Sinai and are now taking active measures to address the underlying issues that give life to—to these violent extremist groups and are helping to contain the threat " Outside of the Sinai, either in the western desert near the Libya border or other areas (Cairo, Nile Delta, Upper Egypt), small nationalist insurgent groups, such as Liwa al Thawra (The Revolution Brigade) and Harakat Sawaed Misr (Arms of Egypt Movement, referred to by its Arabic acronym HASM), have carried out high-level assassinations of military/police officials and bombings of infrastructure  According to one expert, these insurgent groups are comprised mainly of former Muslim Brotherhood activists who have splintered off from the main organization to wage an insurgency against the government  On January 31, 2018, the U S  State Department designated Liwa al Thawra and HASM as Specially Designated Global Terrorists (SDGTs) under Section 1(b) of Executive Order (E O ) 13224  The State Department noted that some of the leaders of both groups "were previously associated with the Egyptian Muslim Brotherhood " Terrorist attacks against key sectors of the economy continue  In December 2018, a bus carrying a group of Vietnamese tourists to the pyramids in Giza hit a roadside bomb killing 4 people and injuring 11 others  No group claimed responsibility for the attack  In February 2019, a terrorist detonated a suicide bomb he was carrying while being pursued by police, killing himself and two officers near Cairo's popular Khan el Khalili market and famous Al Azhar Mosque  Egypt and Israel have continued to find specific areas in which they can cooperate  In 2018, Israeli and Egyptian companies entered into a decade-long agreement by reaching a $15 billion natural gas deal, according to which Israeli off-shore natural gas will be exported to Egypt for liquefaction before being exported elsewhere (see " The Economy " above)  While people-to-people relations remain cold, Israel and Egypt continue to cooperate against Hamas in the Gaza Strip  In mid-November 2018, Egyptian mediation between Israel and Hamas helped calm tensions after an Israeli raid inside Gaza escalated tensions  Egypt reportedly continues to broker indirect Israel-Hamas talks aimed at establishing a long-term cease-fire  Egypt is opposed to Islamist groups wielding political power across the Middle East, and opposes Turkish and Qatari support for Hamas  On the Egyptian-Gaza border, Egypt has tried to thwart arms tunnel smuggling into Gaza and has accused Palestinian militants in Gaza of aiding terrorist groups in the Sinai  In order to weaken Hamas's rule in Gaza, Egypt has sought to restore a Palestinian Authority (PA) presence in Gaza by reconciling it with the PA  Though Egypt has helped broker several agreements aimed at ending the West Bank-Gaza split, Hamas still effectively controls Gaza  Egypt controls the Rafah border crossing into Gaza, the only non-Israeli-controlled entryway into the Strip, which it periodically closes for security reasons  Control over the Rafah border crossing provides Egypt with some leverage over Hamas, though Egyptian authorities use it carefully in order not to spark a humanitarian crisis on their border  Egypt's relations with most Gulf Arab monarchies are strong  Saudi Arabia, the United Arab Emirates (UAE), and Kuwait have provided billions of dollars in financial assistance to Egypt's military-backed government since 2013  Saudi Arabia also hosts nearly 3 million Egyptian expatriates who work in the kingdom, providing a valuable source of remittances for Egyptians back home  From 2013 onward, Emirati companies have made significant investments in the Egyptian economy  Egypt transferred sovereignty to Saudi Arabia over two islands at the entrance to the Gulf of Aqaba—Tiran and Sanafir—that had been under Egyptian control since 1950, in a move that sparked rare public criticism of President Sisi  In June 2017, Egypt joined other Gulf Arab monarchies in boycotting Qatar  In Yemen, Egypt is officially part of the Saudi-led coalition against Houthi forces, though its contribution to the war effort has been minimal  The Egyptian government supports Field Marshal Khalifa Haftar and the Libyan National Army (LNA) movement, which controls most of eastern Libya  Haftar's politics closely align with President Sisi's, as both figures hail from the military and broadly oppose Islamist political forces  From a security standpoint, Egypt seeks the restoration of order on its western border, which has experienced occasional terrorist attacks and arms smuggling  From an economic standpoint, thousands of Egyptian guest workers were employed in Libya's energy sector prior to unrest in Libya in 2011, and Egypt seeks their return to Libya and a resumption of the vital remittances those workers provided the Egyptian economy  Diplomatically, Egypt has tried to leverage its close ties to Haftar and the LNA in order to play the role of mediator between the LNA and Fayez al Sarraj, the Chairman of the Presidential Council of Libya and Prime Minister of the U N -backed Government of National Accord  Egypt's policy toward Libya also is closely aligned with other foreign backers of the LNA, including France and the United Arab Emirates (UAE)  Reportedly, the three countries are working in concert to strengthen the position of Haftar in order to facilitate the eventual reunification of the Libyan army  A 2019 LNA offensive into southern Libya has placed additional pressure on the Government of National Accord and may complicate U S -backed efforts by the United Nations to facilitate a national dialogue, constitutional referendum, and elections in 2019  To Egypt's south, the government is embroiled in regional disputes with Nile Basin countries, such as Ethiopia, which is nearing completion of the $4 2 billion Grand Ethiopian Renaissance Dam, a major hydroelectric project  Egypt argues that the dam, once filled, will limit the flow of the Nile River below Egypt's agreed share  However, many analysts expect that Egypt will address the dispute by increasing water-use efficiency and investing in desalination, rather than using its military to bomb the dam  Reduced Nile flow into Egypt may exacerbate existing water shortages and cause short-term political problems for the Egyptian government, which faces extensive domestic water needs  In February 2019, President Sisi assumed the one-year chairmanship of the African Union, during which he is expected to promote closer relations with fellow African states  Egypt and Russia, close allies in early years of the Cold War, have again strengthened bilateral ties under President Sisi, who has promised to restore Egyptian stability and international prestige  His relationship with Russian President Vladimir Putin has rekindled, in the words of one observer, "a romanticized memory of relations with Russia during the Nasser era " President Sisi first turned to Russia during the Obama Administration, when U S -Egyptian ties were strained, and Egypt seemed intent on signaling its displeasure with U S  policy  Since 2014, Egypt and Russia have improved ties in a number of ways, including through arms deals  Reportedly, Egypt is upgrading its aging fleet of legacy Soviet MiG-21 aircraft to a fourth generation MiG-29M variant with additional deliveries to Egypt in 2018 (first delivered in April 2017)  Egypt also has purchased 46 standard Ka-52 Russian attack helicopters for its air force  Egypt reportedly also has purchased the naval version of the Ka-52 for use on Egypt's two French-procured Mistral-class helicopter dock vessels (see below), and the S-300VM surface-to-air missile defense system from Russia  In August 2018, Egyptian Defense Minister Mohamed Zaki visited Russia, where he attended a Russian arms exhibition  Additionally, Egypt and Russia reportedly have expanded their cooperation on nuclear energy  In 2015, Egypt reached a deal with Russian state energy firm Rosatom to construct a 4,800-megawatt nuclear power plant in the Egyptian Mediterranean coastal town of Daba'a, 80 miles northwest of Cairo  Russia is lending Egypt $25 billion over 35 years to finance the construction and operation of the nuclear power plant (this will cover 85% of the project's total costs)  The contract also commits Russia to supply the plant's nuclear fuel for 60 years and transfer and store depleted nuclear fuel from the reactors  As Egyptian and Russian foreign policies have become more closely aligned in conflict zones such as eastern Libya, bilateral military cooperation has expanded  One report suggests that Russian Special Forces based out of an airbase in Egypt's western desert (Sidi Barrani) may be aiding General Haftar  In November 2017, Egypt and Russia signed a draft agreement governing the use of each other's air space  While Egyptian-Russian ties have grown warmer in recent years, they are not without complications  In the aftermath of an October 2015 terrorist attack against a Russian passenger jet departing from Sharm El Sheikh, visits to Egypt by Russian tourists, previously the country's largest source of tourists, dropped significantly  Russian commercial aircraft have resumed direct flights to Cairo but not to Sharm El Sheikh  Egypt and Russia also engaged in a trade dispute in 2016 over Russian wheat imports  Egypt is the largest global importer of wheat, and the largest export market for Russian wheat  Aside from Russia, France stands out as a non-U S  country with which President Sisi has sought to build a diplomatic and military procurement relationship  In the last five years, as French-Egyptian ties have improved, Egypt has purchased major air and naval defense systems from French defense contractors, including the following: Four Gowind Corvettes (produced by Naval Group)—This deal was signed in July 2014  As part of the French-Egyptian arrangement, some of the Corvette construction has taken place at the Alexandria Shipyard in Egypt  One FREMM multi-mission Frigate (produced by Naval Group)—Named the Tahya Misr (Long Live Egypt), this vessel was delivered to Egypt in 2015  This ship has participated in an annual joint French-Egyptian naval exercise, known as Cleopatra  In February 2015, Egypt purchased 24 Rafale multirole fighters (produced by Dassault Aviation)  Under the initial agreement, Egypt and France may enter into a new procurement agreement for 12 additional Rafale fighters  According to the manufacturer, the Rafale has flown in combat in Afghanistan, Libya, Mali, Iraq, and Syria and is used by Egypt, Qatar, and India  In 2018, French officials said that the United States would not permit France to export the SCALP air-launched land-attack cruise missile used on the Rafale to Egypt under the International Trade in Arms Regulation (ITAR) agreement  The United States may have been concerned over the transfer of sensitive technology to Egypt  Two Mistral-class Helicopter Carriers (produced by Naval Group)—In the fall of 2015, France announced that it would sell Egypt two Mistral-class Landing Helicopter Dock (LHD) vessels (each carrier can carry 16 helicopters, 4 landing craft, and 13 tanks) for $1 billion  The LHDs (ENS Anwar El Sadat and ENS Gamal Abdel Nasser ) were delivered in 2016  In 2017, Egypt announced that it would purchase Russian 46 Ka-52 Alligator helicopters, which can operate on the LHDs  In January 2019, French President Emmanuel Macron paid a three-day visit to Egypt, where he raised human rights issues in public and with Egyptian authorities and civil society representatives  According to Macron, "I can't see how you can pretend to ensure long-term stability in this country, which was at the heart of the Arab Spring and showed its taste for freedom, and think you can continue to harden beyond what's acceptable or justified for security reasons " President Trump has praised the Egyptian government's counterterrorism efforts while his Administration has worked to restore high-level diplomatic engagement, joint military exercises, and arms sales  Many commentators initially expected President Trump to bring the United States and Egypt closer together, and that largely has been the case  The Administration has withheld some foreign assistance for policy reasons on at least one occasion, however, and the United States has not had an ambassador in Cairo since June 30, 2017  As evidence of improved bilateral ties, the U S  Defense Department notified Congress in November 2018 of a major $1 billion sale of defense equipment to Egypt, consisting of 10 AH-64E Apache Attack Helicopters, among other things  The Egyptian Air Force already possesses 45 less advanced versions of the Apache that were acquired between 2000 and 2014  In January 2019, U S  Secretary of State Michael Pompeo delivered a major policy speech at the American University in Cairo, where he stated: "And as we seek an even stronger partnership with Egypt, we encourage President Sisi to unleash the creative energy of Egypt's people, unfetter the economy, and promote a free and open exchange of ideas  The progress made to date can continue " U S  officials have not yet publicly criticized efforts by supporters of President Sisi to advance amendments to the constitution (see above) to extend the possibility of Sisi's continued presidency  Human rights advocates have called for Western governments to withhold assistance to Egypt if the amendments are approved  According to Human Rights Watch , "Al-Sisi's government is encouraged by the continued silence of its allies, and if the US, UK, and France want to avoid the destabilizing consequences of entrenching authoritarian rule in Egypt, they should act now " On February 22, 2019, a bipartisan group of national security experts called on U S  officials to "express strong concern about the amendments to the Egyptian constitution now moving through a rapid approval process " Egypt's poor record on human rights and democratization has sparked regular criticism from U S  officials and some Members of Congress  Since FY2012, Members have passed appropriations legislation that withholds the obligation of FMF to Egypt until the Secretary of State certifies that Egypt is taking various steps toward supporting democracy and human rights  With the exception of FY2014, lawmakers have included a national security waiver to allow the Administration to waive these congressionally mandated certification requirements under certain conditions  Over the last year, the Administration has obligated several tranches of FMF to Egypt, including the following: In September 2018, the Administration obligated $1 billion in FY2018 FMF  Per Section 7041(a)(3)(A) of P L  115-141 , the Consolidated Appropriations Act, FY2018, $300 million in FMF remains withheld from obligation until the Secretary of State certifies that Egypt is taking various steps toward supporting democracy and human rights  In previous acts, the amount withheld had been $195 million  FY2018 FMF for Egypt remains available to be expended until September 30, 2019  In August 2018, the Administration waived the certification requirement in Section 7041(a)(3)(B) of P L  115-31 , the Consolidated Appropriations Act, FY2017, allowing for the obligation of $195 million in FY2017 FMF, which occurred in September 2018  However, according to one report, Senator Patrick Leahy has placed a hold on $105 million in FY2017 FMF and is seeking more information on the plight of detained Egyptian-American Moustafa Kassem  In January 2018, the Administration notified Congress of its intent to obligate $1 039 billion in FY2017 FMF out of a total of $1 3 billion appropriated for FY2017  It chose not to obligate $65 7 million in FY2017 FMF  The remaining $195 million had been withheld until a national security waiver was issued in August 2018 (see above)  For FY2019, the President requested a total of $1 381 billion in foreign assistance for Egypt, the same amount requested for the previous year  Nearly all of the requested funds for Egypt are for the FMF account  For FY2020, the request is nearly identical from previous years, as the President is seeking a total of $1 382 billion in bilateral assistance for Egypt  The FY2019 Omnibus ( P L  116-6 ) provides the following for Egypt: a total of $1 419 billion in bilateral U S  foreign assistance for Egypt, of which $1 3 billion is in FMF, $112 5 million in ESF, $3 million in NADR, $2 million in INCLE, and $1 8 million in IMET; and a reauthorization of ESF to support future loan guarantees to Egypt; P L  116-6 sets the following conditions for Egypt: As in previous years, it requires that funds may only be made available when the Secretary of State certifies that the government of Egypt is sustaining the strategic relationship with the United States and meeting its obligations under the 1979 Egypt-Israel Peace Treaty  As in previous years, the act withholds ESF that "the Secretary determines to be equivalent to that expended by the United States Government for bail, and by nongovernmental organizations for legal and court fees, associated with democracy-related trials in Egypt until the Secretary certifies and reports to the Committees on Appropriations that the Government of Egypt has dismissed the convictions issued by the Cairo Criminal Court on June 4, 2013, in Public Prosecution Case No  1110 for the Year 2012 and has not subjected the defendants to further prosecution or if convicted they have been granted full pardons  " This last condition (bolded) was added in 2019 to account for the acquittal of the 43 foreign defendants in Case 173 (see above)  As in previous years, the FY2019 Omnibus also includes a limitation on ESF, stating that no FY2018 ESF or prior-year ESF "may be made available for a contribution, voluntary or otherwise, to the Civil Associations and Foundations Support Fund, or any similar fund, established pursuant to Law 70 on Associations and Other Foundations Working in the Field of Civil Work [informally known as the NGO law] " As in previous years, the act also includes a provision that withholds $300 million of FMF funds until the Secretary of State certifies that the Government of Egypt is taking effective steps to advance, among other things, democracy and human rights in Egypt  The Secretary of State may waive this certification requirement, though any waiver must be accompanied by, among other things, an assessment of the Government of Egypt's compliance with United Nations Security Council Resolution 2270 and other such resolutions regarding North Korea  There has been some concern in the Administration and Congress over Egypt's alleged weapons procurement from North Korea in recent years  P L  115-245 , the Department of Defense (DOD) and Labor, Health and Human Services, and Education Appropriations Act, 2019 and Continuing Appropriations Act, 2019, specifies that the Secretary of Defense may provide Egypt with funds from the Counter-ISIS Train and Equip Fund (CTEF) to enhance its border security  To date, Egypt has not received security assistance from DOD-managed accounts  Between 1946 and 2016, the United States provided Egypt with $78 3 billion in bilateral foreign aid (calculated in historical dollars—not adjusted for inflation)  The 1979 Peace Treaty between Israel and Egypt ushered in the current era of U S  financial support for peace between Israel and its Arab neighbors  In two separate memoranda accompanying the treaty, the United States outlined commitments to Israel and Egypt, respectively  In its letter to Israel, the Carter Administration pledged to "endeavor to take into account and will endeavor to be responsive to military and economic assistance requirements of Israel " In his letter to Egypt, former U S  Secretary of Defense Harold Brown wrote the following: In the context of the peace treaty between Egypt and Israel, the United States is prepared to enter into an expanded security relationship with Egypt with regard to the sales of military equipment and services and the financing of, at least a portion of those sales, subject to such Congressional review and approvals as may be required  All U S  foreign aid to Egypt (or any foreign recipient) is appropriated and authorized by Congress   The 1979 Egypt-Israel Peace Treaty is a bilateral peace agreement between Egypt and Israel, and the United States is not a legal party to the treaty  The treaty itself does not include any U S  aid obligations, and any assistance commitments to Israel and Egypt that could be potentially construed in conjunction with the treaty were through ancillary documents or other communications and were—by their terms—subject to congressional approval (see above)  However, as the peace broker between Israel and Egypt, the United States has traditionally provided foreign aid to both countries to ensure a regional balance of power and sustain security cooperation with both countries  In some cases, an Administration may sign a bilateral "Memorandum of Understanding" (MOU) with a foreign country pledging a specific amount of foreign aid to be provided over a selected time period subject to the approval of Congress  In the Middle East, the United States has signed foreign assistance MOUs with Israel and Jordan  Currently, there is no U S -Egyptian MOU specifying a specific amount of total U S  aid pledged to Egypt over a certain time period  Congress typically specifies a precise allocation of most foreign assistance for Egypt in the foreign operations appropriations bill  Egypt receives the bulk of foreign aid funds from three primary accounts: Foreign Military Financing (FMF), Economic Support Funds (ESF), and International Military Education and Training (IMET)  The United States offers IMET training to Egyptian officers in order to facilitate U S -Egyptian military cooperation over the long term  Since the 1979 Israeli-Egyptian Peace Treaty, the United States has provided Egypt with large amounts of military assistance  U S  policymakers have routinely justified this aid to Egypt as an investment in regional stability, built primarily on long-running military cooperation and sustaining the treaty—principles that are supposed to be mutually reinforcing  Egypt has used U S  military aid through the FMF to (among other things) purchase major U S  defense systems, such as the F-16 fighter aircraft, the M1A1 Abrams battle tank, and the AH-64 Apache attack helicopter  For decades, FMF grants have supported Egypt's purchases of large-scale conventional military equipment from U S  suppliers  However, as mentioned above, the Obama Administration announced that future FMF grants may only be used to purchase equipment specifically for "counterterrorism, border security, Sinai security, and maritime security" (and for sustainment of weapons systems already in Egypt's arsenal)  It is not yet clear how the Trump Administration will determine which U S -supplied military equipment would help the Egyptian military counter terrorism and secure its land and maritime borders  Overall, some defense experts continue to view the Egyptian military as inadequately prepared, both doctrinally and tactically, to face the threat posed by terrorist/insurgent groups such as Sinai Province  According to a former U S  National Security Council official, "they [the Egyptian military] understand they have got a problem in Sinai, but they have been unprepared to invest in the capabilities to deal with it " To reorient the military toward unconventional warfare, the Egyptian military needs, according to one assessment, "heavy investment into rapid reaction forces equipped with sophisticated infantry weapons, optics and communication gear     backed by enhanced intelligence, surveillance and reconnaissance platforms  In order to transport them, Egypt would also need numerous modern aviation assets " In addition to substantial amounts of annual U S  military assistance, Egypt has benefited from certain aid provisions that have been available to only a few other countries  For example Early Disbursal and Interest - Bearing Account : Between FY2001 and FY2011, Congress granted Egypt early disbursement of FMF funds (within 30 days of the enactment of appropriations legislation) to an interest-bearing account at the Federal Reserve Bank of New York  Interest accrued from the rapid disbursement of aid has allowed Egypt to receive additional funding for the purchase of U S -origin equipment  In FY2012, Congress began to condition the obligation of FMF, requiring the Administration to certify certain conditions had been met before releasing FMF funds, thereby eliminating their automatic early disbursal  However, Congress has permitted Egypt to continue to earn interest on FMF funds already deposited in the Federal Reserve Bank of New York  The Excess Defense Articles (EDA) program provides one means by which the United States can advance foreign policy objectives—assisting friendly and allied nations through provision of equipment in excess of the requirements of its own defense forces  The Defense Security Cooperation Agency (DSCA) manages the EDA program, which enables the United States to reduce its inventory of outdated equipment by providing friendly countries with necessary supplies at either reduced rates or no charge  As a designated "major non-NATO ally," Egypt is eligible to receive EDA under Section 516 of the Foreign Assistance Act and Section 23(a) of the Arms Export Control Act  Over the past two decades, U S  economic aid to Egypt has been reduced by over 90%, from $833 million in FY1998 to a request of $75 million for FY2019  Beginning in the mid to late 1990s, as Egypt moved from an impoverished country to a lower-middle-income economy, the United States and Egypt began to rethink the assistance relationship, emphasizing "trade not aid " Congress began to scale back economic aid both to Egypt and Israel due to a 10-year agreement reached between the United States and Israel in the late 1990s known as the "Glide Path Agreement," which gradually reduced U S  economic aid to Egypt to $400 million by 2008  U S  economic aid to Egypt stood at $200 million per year by the end of the George W  Bush Administration, whose relations with then-President Hosni Mubarak suffered over the latter's reaction to the Administration's democracy agenda in the Arab world  During the final years of the Obama Administration, distrust of U S  democracy promotion assistance led the Egyptian government to obstruct many U S -funded economic assistance programs  According to the Government Accountability Office (GAO), the Department of State and the U S  Agency for International Development (USAID) reported hundreds of millions of dollars ($460 million as of 2015) in unobligated prior year ESF funding  As these unobligated balances grew, it created pressure on the Obama Administration to reobligate ESF funds for other purposes  In 2016, the Obama Administration notified Congress that it was reprogramming $108 million of ESF that had been appropriated for Egypt in FY2015 but remained unobligated for other purposes  The Administration claimed that its actions were due to "continued government of Egypt process delays that have impeded the effective implementation of several programs " In 2017, the Trump Administration also reprogrammed FY2016 ESF for Egypt  U S  economic aid to Egypt is divided into two components: (1) USAID-managed programs (public health, education, economic development, democracy and governance); and (2) the U S -Egyptian Enterprise Fund  Both are funded primarily through the Economic Support Fund (ESF) appropriations account  


Report 2: The U S  Fourth National Climate Assessment, released in 2018, concluded that "the impacts of global climate change are already being felt in the United States and are projected to intensify in the future—but the severity of future impacts will depend largely on actions taken to reduce greenhouse g as [GHG] emissions and to adapt to the changes that will occur " Although a variety of efforts seeking to reduce GHG emissions are currently underway on the international and sub-national level, federal policymakers and stakeholders have different viewpoints over what to do, if anything, about future climate change and related impacts  Their views regarding climate change cover a wide range of perspectives  For example, some contend that climate change poses a "direct, existential threat" to human society and that nations must start making significant reductions in GHG emissions in order to avoid "dire effects " To support this argument, proponents of climate change mitigation highlight the evidence and conclusions from recent reports that are generally considered authoritative, including: 1  The Intergovernmental Panel on Climate Change, Global W arming of 1 5°C , 2018; and 2  The U S  Global Change Research Program, Fourth National Climate Assessment , Volume II: Impacts, Risks, and Adaptation in the United States , 2018  On the other hand, some question whether there are sufficient risks of climate change to merit a federal program requiring GHG emission reductions  In addition, others argue that a unilateral approach to climate change by the United States could disproportionately impact domestic industries while achieving minimal results in global climate change mitigation  If Congress were to consider establishing a program to reduce GHG emissions, one option would be to apply a tax or fee on GHG emissions or the inputs that produce them  This type of approach is commonly called a carbon tax or a GHG emissions fee (see "Terminology Issues: A Carbon Tax or an Emissions Fee?")  This report does not compare and analyze the multiple policy tools available to Congress that could address climate change (see text box "Other Policy Options for Addressing GHG Emissions")  This report focuses on the policy considerations and potential impacts of using a carbon tax or GHG emissions fee to control GHG emissions  The key human-related GHG is CO 2 , which is generated primarily through the combustion of fossil fuels: coal, oil, and natural gas  In 2016, fossil fuel combustion accounted for 94% of U S  CO 2 emissions and 76% of U S  GHG emissions  A carbon tax could apply either directly to GHG emissions or to the materials—based on their carbon contents—that ultimately generate the emissions (i e , "emissions inputs")  A carbon price on emissions or their emissions inputs—mainly fossil fuels—would increase the relative price of the more carbon-intensive energy sources, particularly coal  This result could spur innovation in less carbon-intensive technologies (e g , renewable energy, nuclear power, carbon capture and sequestration [CCS]) and stimulate other behavior that may decrease emissions, such as efficiency improvements  The energy price increases could also have both economy-wide impacts and negative effects on specific industries and particular demographic groups  A carbon tax approach has received some attention and debate in recent years  In the 115 th Congress, Members introduced nine carbon tax or fee proposals  Outside of Congress, the Climate Leadership Council—a bipartisan group of former policymakers and industry leaders—published a conceptual carbon tax approach in 2017 that generated some interest  Some of the industry leaders on the council represent major energy companies, including Shell, BP, and ExxonMobil  On the other hand, many Members have expressed their opposition to a carbon tax  Starting in the 112 th Congress and going through the 115 th Congress, Members have introduced resolutions in both the House and Senate expressing the view that a carbon tax is not in the economic interests of the United States  In 2018, the House passed a resolution "expressing the sense of Congress that a carbon tax would be detrimental to the United States economy" ( H Con Res  119 )  An analogous resolution was not introduced in the Senate in the 115 th Congress  The first section of this report examines carbon tax design issues, including the point of taxation, the rate of taxation, and potential border carbon adjustments  The second section discusses issues related to the distribution of carbon tax revenues  The third section discusses additional considerations associated with a carbon tax program, including estimates of GHG emissions, federal revenue, and fossil fuel prices and changes in energy use  The fourth section provides concluding observations  If policymakers decide to establish a carbon tax system, Congress would face several key design decisions, including the point of taxation—where to impose the tax and what to tax—the rate of taxation, and whether and/or how to address imported carbon-intensive materials  Alternatively, Congress could direct one or more federal agencies to determine these design features through a rulemaking procedure  Although a few of the GHG emission reduction proposals in prior Congresses delegated such authority to an agency, such as the U S  Environmental Protection Agency (EPA), all of the proposals since the 111 th Congress have included some degree of design details in the statutory language  (A later section discusses carbon tax revenue application considerations ) The point of taxation would determine which entities would be required to (1) make tax payments based on emissions or emission inputs, such as fossil fuels, (2) monitor emissions or emission inputs, and (3) maintain records of relevant activities and transactions  This section provides some considerations for policymakers deciding which GHG emissions and/or emission sources to cover in a carbon tax system  Throughout the U S  economy, millions of discrete sources generate GHG emissions: power plants, industrial facilities, motor vehicles, households, commercial buildings, livestock, etc  Administrative costs and challenges would likely increase with a broader scope of an emissions tax  A carbon tax may apply to CO 2 emissions alone, which account for most U S  GHG emissions, or to multiple GHGs  Carbon tax proposals that apply only to CO 2 generally attach a price to a metric ton of CO 2 emissions (mtCO 2 )  Some sources emit non-CO 2 GHGs, such as methane, nitrous oxides, and sulfur hexafluoride  GHG emissions from these sources could be addressed by attaching a price to a metric ton of CO 2 emissions-equivalent (mtCO 2 e)  This term of measure is used because GHGs vary by global warming potential (GWP)  At these sources, the determined GWP values would be an important issue  Policymakers may consider limiting the tax to sectors or sources that emit above a certain percentage of total U S  GHG emissions, many of which currently report their emissions to the government  For more than 20 years, monitoring devices or systems have been installed in smokestacks of most large facilities, such as power plants, which are required to periodically report emissions data to EPA  In addition, since 2010, EPA has collected annual emissions data from approximately 8,000 facilities that directly release above certain amounts of GHG emissions  Using these established monitoring frameworks, policymakers could employ a "downstream" approach, applying a carbon tax at the point where the GHGs from these facilities are released to the atmosphere  Alternatively, the tax could be applied to reliable proxies for emissions, such as emission inputs  For example, the carbon content of fossil fuels—coal, natural gas, petroleum—can serve as a proxy for the emissions released when the fuels are combusted  Applying a tax on emission inputs allows for the consideration of various points of taxation  For instance, emission inputs could be taxed at "upstream" (e g , wells) or "midstream" stages in that process (e g , refineries), the latter allowing for potential tax administration advantages that may be provided by specific infrastructure chokepoints in the fossil fuel market  For example, with respect to petroleum, the number of upstream sources—wells that produce crude oil—is over 445,000, but the number of midstream sources—facilities that refine crude oil—is only 137  Table A-1 (in Appendix A) lists the top GHG emission sources in the United States  These sources combined to account for approximately 95% of U S  GHG emissions in 2016  Table A-1 identifies the number of entities for each source category (e g , number of coal mines, number of steel production facilities) and the percentage of total U S  GHG emissions the category contributes  In the case of fossil fuel combustion—which accounted for 76% of total U S  GHG emissions—the table provides several options for segmenting the universe of sources if policymakers choose to implement a carbon tax  It identifies the number of entities that might be subject to the carbon tax under a particular option (pending any exclusions)  For example, policymakers could address fossil fuel combustion emissions by applying a carbon tax to fossil fuels (based on their carbon content) at the following entities, which include both upstream and midstream infrastructure chokepoints: 137 petroleum refineries (based on 2017 data) and 166 petroleum importers (based on 2018 data); 671 coal mines and eight companies supplying imported coal (based on 2017 data); and 1,679 entities that report natural gas deliveries to the Energy Information Administration (EIA) on Form EIA-176 and 123 natural gas fractionators (based on 2016 data)  Some of the above points of taxation might take advantage of the administrative frameworks for existing federal excise taxes  For example, a per-barrel federal excise tax on crude oil at the refinery supports the Oil Spill Liability Trust Fund  An excise tax on the sale or use of coal supports the Black Lung Disability Trust Fund  A central policy choice when establishing a price on GHG emissions is the rate of the carbon tax  Several approaches, which are discussed below, could inform the decision  One approach would set the carbon tax rate at a level or pathway—based on modeling estimates—that would achieve a specific GHG emissions target  For example, a 2018 study estimated the carbon tax rate needed to meet the U S  GHG emission reduction targets established under the 2015 Paris Agreement: 26%-28% below 2005 net GHG emission levels by 2025  The study found that a constant tax rate of $43/ton starting in 2019 would meet the 2025 reduction target  Emissions reduction estimates from carbon tax programs are based on multiple assumptions  Accordingly, such estimates provide different tax rates needed to meet a particular emissions target depending on these assumptions  See " Impacts on GHG Emission Levels " for selected analyses of emission reductions for a given carbon price and rate of price increase  Under another approach, policymakers could base the carbon tax rate on the estimated marginal net benefits associated with reduced CO 2 emissions  The net benefits would be the avoided net damages (i e , costs) of climate change  The estimates of net benefits of avoided emissions often rely on analyses of the social cost of carbon (SC-CO 2 ) or the social cost of greenhouse gases (SC-GHG )  Therefore, policymakers could use SC-CO 2 measurements—as the basis for an estimate of the net benefits of a marginal change in emissions—to set the rate of a carbon tax or emissions fee  One potential challenge of relying on SC-CO 2 estimates to set a carbon fee are methodological concerns  For example, the existing estimates in peer-reviewed research cover a wide range  In addition, some argue that the underlying simulation models for estimating the SC-CO 2 values are insufficient  For any level of emissions, the projected increase in global average temperature may cover multiple degrees Fahrenheit, and other measures of climate change, such as precipitation patterns, may encompass directional uncertainties  No estimates of impacts are comprehensive at this time, and many of the risks are difficult to estimate and value  When valuing the SC-CO 2 , analysts encounter a range of views on methods and assumptions, and establishing study parameters may be challenging  For example, estimates of the monetary values of climate change impacts may be difficult or controversial to estimate, such as the monetary values associated with human deaths or sickness  A related framework question is whether to include global climate impacts or just domestic impacts  In addition, the element of time in climate change impacts particularly complicates the valuation  The fact that many impacts of climate change will occur in the distant future requires consideration of society's willingness to pay in the near term to reduce emissions that would cause future damages, mostly to future generations  To take time into account, economists discount future values to a calculated "present value " Economists do not agree on the appropriate discount rate(s) to use for a multi-generational, largely nonmarket issue such as human-induced climate change  The choice of discount rate can significantly increase or decrease values of the SC-CO 2   A low discount rate would give greater value today to future impacts than would a higher discount rate  High discount rates can reduce the value today of future climate change impacts to a small fraction of their undiscounted values  A high discount rate would recommend applying fewer of today's resources to addressing climate change impacts in the future  Since 2008, federal agencies have used SC-CO 2 estimates in dozens of final rulemakings as a method to estimate the net benefits of abating CO 2 emissions  An Interagency Working Group prepared SC-CO 2 estimates, which were updated over time and subjected to expert and public comment  On March 28, 2017, President Trump issued Executive Order 13783, "Promoting Energy Independence and Economic Growth," which effectively withdrew the federal SC-CO 2 estimates  Nonetheless, federal agencies have used new, interim values generated by EPA in 2017, modified from the withdrawn technical support documents, in regulatory and other decisions  Legislation could set a carbon price citing any of these SC-CO 2 values or others available from nonfederal researchers or prescribe methods for estimating new ones  Using SC-CO 2 estimates to set the tax rate would involve a cost-benefit framework  Although many posit that a cost-benefit framework remains the best option, some economists argue that a cost-benefit framework may be inappropriate for climate change policy for these reasons Many experts expect climate change—and policies to address it—to cause nonmarginal changes to economies and ecosystems  The changes are expected to increase disproportionately with incremental climate change with a potential for crossing critical "tipping points" after which systems change dramatically and rapidly  Climate change impacts are multi-generational, and uncertainty and disagreement exists about whether and how to assign a present value to social costs and benefits over generations  Some impacts from climate change may be irreversible on the timescale of human civilizations, such as melting of major ice sheets in Antarctica or Greenland  Policymakers might consider a carbon tax as a fiscal tool to help reduce the federal deficit, reduce other taxes, or pay for specific programs that may or may not be related to climate change policy  In addition, some have proposed a phased-in approach, setting a rate that is initially lower but increases at an announced or adjustable rate either for a fixed period or indefinitely  Advantages of this approach include providing an opportunity for consumers and investors to adjust their behavior before the higher tax rates go into effect, such as purchasing more energy efficient appliances or investing in low-emissions technologies  Phasing in a carbon tax, however, could delay climate-related benefits  If Congress finds agreement in principle on carbon pricing, the rate(s) could emerge from the process of reaching political agreement  Elements that might be considered include the options described above or consideration of the magnitude of overall economic impact; impacts on certain economic sectors, regions, or population groups; timing to motivate and allow an orderly transition to a lower-GHG economy; or other factors  Many stakeholders have voiced concerns over how a U S  carbon price system would interact with policies in other nations, particularly if the United States were to enact a carbon tax system that covers more sources or is more stringent than enacted elsewhere  A central concern is that a U S  carbon tax could raise U S  prices more than the prices of goods manufactured abroad, potentially creating a competitive disadvantage for some domestic businesses  Certain businesses may become less profitable, lose market share, and reduce jobs  The industries generally expected to experience disproportionate impacts under a U S  carbon tax are often described as "emission-intensive, trade-exposed" industries  An industry's CO 2 emission intensity is a function of both direct CO 2 emissions from its manufacturing process (e g , CO 2 from cement or steel production) and indirect CO 2 emissions from the inputs to the manufacturing process (e g , electricity, natural gas)  Such industries are likely to experience greater cost increases than less carbon intensive industries, all else being equal  In general, trade-exposed industries are those that face greater international competition compared to other domestic industries  A carbon tax could present a particular challenge for these industries, because they might be less able to pass along the tax in the form of higher prices, because they may lose global market share—and jobs—to competitors in countries lacking comparable carbon policies  Policymakers might consider approaches to mitigate these potential economic impacts in several ways  One approach that has received interest in recent years is a border adjustment mechanism, which is often described as a border carbon adjustment (BCA) in the carbon tax context  A BCA would apply a tariff to emission-intensive, imported goods such as steel, aluminum, cement, and certain chemicals  Each of the carbon price proposals in the 115 th Congress would have established a BCA to address emission-intensive imports  Another rationale for adding a BCA to a carbon tax system is the possibility that it would encourage other nations to adopt comparable carbon price policies  Many of the recently proposed BCA mechanisms allow for exemptions for nations with comparable programs  To date, no nations have implemented a BCA as part of their climate change policies  Establishing an economically efficient BCA would likely present substantial challenges  For example, policymakers must decide which goods and/or industries would be covered by a BCA and how the adjustment program would assess the comparability of varied climate-related policies in other nations  In addition, accurately determining and verifying the volume of GHG emissions embodied in a particular imported product would be data intensive and challenging  To alleviate some of the measurement complexity, policymakers could limit the program to selected industries and apply default values and assumptions to particular manufacturing processes  However, this simplified approach could result in less accurate import price adjustments, which could potentially affect the accuracy of GHG emission reductions achieved by the carbon tax program  Another option would be to allow companies to provide measured, independently verified emissions data as an alternative to default values  In addition, the border adjustment approach would likely raise concerns of violating international trade rules  Further, some researchers have highlighted the potential for unintended consequences from a BCA  For example, some studies have found that a border adjustment may lead to lower net exports than the carbon price alone, due to the adjustment's terms-of-trade effect on U S  currency  These issues are beyond the scope of this report, but some of the concerns may be lessened to some degree if a larger number of nations establish comparable emission reduction policies, as many have agreed to do under the Paris Agreement  Another possible rationale for a BCA is to address the concern of "emissions leakage" (or "carbon leakage")  Emissions leakage "occurs when economic activity is shifted as a result of the emission control regulation [e g , a carbon tax program] and, as a result, emission abatement achieved in one location that is subject to emission control regulation is [diminished] by increased emissions in unregulated locations " The concern of emissions leakage has been central in the debate over whether the United States (or any nation) should unilaterally address GHG emissions  A BCA may diminish the potential for emissions leakage by reducing the incentive to shift economic activity to a nation without a comparable carbon tax  However, some recent studies raise questions regarding the degree to which emissions leakage would be a concern under a unilateral U S  carbon tax  Although a tax may be levied on fossil fuels or GHG emission sources at various points in the economy, the carbon tax impacts may be experienced elsewhere  Policymakers have multiple options to address these expected impacts  Policymakers would face challenging decisions regarding the distribution of the new carbon tax revenues  As discussed below, some economic analyses indicate that certain distributions of tax revenue—depending on the level of the tax—would have a greater economic impact than the direct effects from the tax or fee on GHG emissions  Carbon tax revenues could be treated as general fund revenue without a dedication to a specific purpose in the enacting legislation (i e , subject to the annual appropriations process), or policymakers could state that the new revenues would support deficit (or debt) reduction  Alternatively, the enacting legislation could return the tax revenue to the economy in some manner, sometimes called "revenue recycling " All of the carbon tax legislative proposals in recent Congresses have proposed some manner of revenue recycling, specifically directing the carbon tax revenue to support specific policy objectives  Carbon tax revenues may be used to support a variety of policy goals  When deciding how to allocate the new revenue stream, policymakers would likely encounter trade-offs among objectives, including: reducing the economy-wide costs resulting from a carbon tax program; alleviating the costs borne by subgroups in the U S  population, particularly low-income households and/or communities most dependent on carbon-intensive economic activity; and supporting specific policy objectives, such as domestic employment, climate change adaptation, energy efficiency, technological advance, energy diversity, or federal deficit reduction, among others  In general, economic carbon tax studies have found that the relative ranking of revenue recycling options to mitigate the economy-wide impacts is generally the opposite of the relative ranking for alleviating distributional impacts  The contrasting relative rankings highlight a central tradeoff policymakers would face when deciding how to allocate carbon tax revenues  The following sections discuss these trade-offs and some of the revenue application options that have received attention in recent years  A large body of economic literature has examined the economic impacts of hypothetical carbon tax programs, particularly the impacts of using the carbon tax revenues for different purposes  Many of the economic studies cited below were prepared prior to the enactment of the Tax Cuts and Jobs Act (TCJA, P L  115-97 )  Signed by President Trump in December 2017, the act changed various elements of the U S  federal tax system  In particular, the act lowered the corporate income tax rate from 35% to 21%  As discussed below, adjusting the corporate income tax rate is one of the central policy options generally considered in carbon tax economic literature both before and after enactment of P L  115-97   Based on a selected review of the economic literature that includes the tax code changes in P L  115-97 , the central conclusions from carbon tax literature regarding revenue recycling appear to be largely unchanged  A primary concern with a carbon tax is the potential economy-wide costs that may result  Generally, a tax or fee on GHG emissions or the fuels that generate them would increase certain energy prices, namely fossil fuels, in the near- to medium-term as well as the prices of goods and services produced using these materials, like electricity  This outcome is inherent to the carbon tax, as its purpose is to increase the relative price of the more carbon-intensive energy sources compared to less carbon-intensive alternatives, encourage innovation in less carbon-intensive technologies, and promote other activity (e g , energy efficiency) that may decrease emissions  These expected outcomes will have some economy-wide impacts  Ultimately, the economy-wide effects would depend on a number of factors, including, but not limited to, the magnitude and scope of the carbon tax and, most importantly, use of the ensuing revenues  Economy-wide costs (referred to as macroeconomic costs) are often measured in terms of changes in projected gross domestic product (GDP) or another societal-scale metric, such as economic welfare  The magnitude of macroeconomic impacts from a carbon tax has been a subject of debate among policymakers and stakeholders  In addition, results of economy-wide impacts will not include comparisons of impacts to different subpopulations or geographic regions, which may be of interest to policymakers  Multiple economic studies and models have examined and compared various options for addressing the economy-wide impacts that may result from a carbon tax  One option for reducing the economic cost of a carbon tax is using the revenue to reduce existing taxes, such as those on labor, income, and investment  Economists generally describe such taxes as distortionary, because the taxes discourage economically beneficial activity, such as employment and investment  Another option for policymakers is to use the tax revenues to address the national debt  Fewer studies have examined deficit reduction scenarios, because "modeling the effects of budget deficits is much more difficult than modeling the effects of tax cuts " Some studies have concluded that using tax revenues for this purpose would help alleviate economy-wide costs from a carbon tax because of the reduced need to impose distortionary taxes in the future  These studies indicate that the economy-wide benefit would be delayed and its realization assumes policymakers would, sometime in the future, address the deficit by raising taxes  Many recent legislative proposals would distribute the carbon tax revenue back to households in lump-sum payments  Policymakers have generally included this carbon tax revenue application to address distribution impacts (discussed below)  These payments could take multiple forms  Economic analyses typically assume an equal payment to individuals or households regardless of their income or location or the effects of the carbon price on them individually  Alternatively, payments could be targeted or scaled to different segments of the population  Among the options mentioned above, economic studies indicate that using carbon tax revenues to offset reductions in existing, distortionary taxes would be the most economically efficient use of the revenues and yield the greatest benefit to the economy overall  This concept is sometimes referred to as a "tax swap " Using carbon tax or fee revenues to offset other distortionary taxes (e g , labor or capital) may yield a "double-dividend," which includes: reduced GHG emissions; and reduced market distortions by reducing other distortionary taxes, such as investment or income  The economic models that examine the economic impacts of a carbon tax differ in their frameworks and underlying assumptions and often include multiple scenarios involving different uses of carbon tax revenue  In general, the economic models find that certain revenue recycling options may reduce the economy-wide carbon tax impacts but may not eliminate them entirely  Some studies cite particular economic modeling scenarios in which a carbon tax with certain revenue recycling applications would produce a net increase in GDP or economic welfare compared to a baseline scenario  These results indicate that, in certain modeling conditions, the economic improvements gained by reducing existing distortionary taxes would be greater than the costs imposed by the new carbon tax (without including the intended climate benefits of the policy)  For example, results from a 2018 study demonstrated a net increase in GDP, compared to baseline conditions, when carbon tax revenues were used to finance proportionate reductions in labor tax rates (payroll tax)  In general, the economic carbon tax studies usually agree on the relative ranking of revenue recycling options in terms of their ability to mitigate the economy-wide impacts of a carbon tax program  The studies indicate that the approaches that use carbon tax revenue to proportionately lower existing tax rates are able to mitigate more of the carbon tax economy-wide costs than using the revenue to provide a lump-sum distribution to individuals or households  Researchers prepared multiple carbon tax analyses prior to the enactment of the TCJA in 2017 that estimated the magnitude GDP impacts  As with other estimates relating to carbon tax impacts, the results depend on the scope of the carbon tax, underlying assumptions in the analytical model, and the terms of measurement: Some estimates measure GDP growth rates; others measure actual GDP  Figure 1 illustrates the modeled GDP results from a 2018 carbon tax analysis that includes the changes made by the TCJA  This study assessed the GDP impacts under a $50/mtCO 2 e carbon tax (starting in 2020 and increasing by 2% annually) that would apply to CO 2 emissions from fossil fuel combustion and methane emissions from fossil fuel production activities  The figure compares projected GDP impacts under a baseline scenario (i e , no carbon tax) with three carbon tax revenue applications: a payroll tax rate reduction tax swap, a lump-sum distribution to households, and a scenario that would use tax revenue to reduce the national debt for 10 years and then use revenues for a lump-sum distribution to households  The figure projects GDP impacts in 2020, 2024, 2029, and 2039  As the figure indicates, the payroll tax rate scenario would result in a 0 1% loss of GDP in the first year (2020), but would yield GDP gains in subsequent years compared to baseline  The lump-sum distribution approach would yield GDP losses each year, ranging from 0 3% to 0 4% below the projected baseline  The deficit reduction approach would yield a range of GDP losses in the first 10 years—ranging from 0 4% to 0 04%—but would yield a GDP gain in 2039 (if not before), compared to baseline  Opponents of a carbon tax approach often highlight the GDP losses that would result from a carbon tax  Policymakers and stakeholders may have different perspectives regarding whether the magnitude of the GDP impacts are significant  In addition, GDP impact estimates may be presented in several ways  For example, one could compare the differences in GDP value for a particular year between carbon tax scenarios and a baseline scenario  This approach is employed in the above figure  Alternatively, one could present the GDP losses with a cumulative measure  For instance, if one were to add up the annual GDP losses (for example, over a 10-year period) from the lump-sum scenario compared to the baseline scenario, the resulting sum would be much larger  These types of calculations would require assumptions about annual GDP growth rates  Some may point out that the GDP impact estimates do not account for the environmental and public health benefits for reducing GHG emissions and that the GDP projections should be compared with the climate benefits achieved from the program as well as the estimated costs of taking no action  As discussed above, estimates of climate-related benefits and costs often contain considerable uncertainty and have generated debate in recent years  Many economic analyses have found that a carbon tax (before revenue recycling) would produce a regressive outcome among households, with lower-income households facing a larger impact from the tax than higher-income households  However, "the degree to which a carbon tax is found to disproportionately burden low-income households varies across studies, based on the metrics against which analysts measure costs " Entities that pay the carbon tax may pass its costs back to fuel producers or forward to fuel consumers  If entities pass the costs forward, consumers would face higher prices for fuels and electricity and carbon-intensive products  When the carbon tax is passed forward to consumers, lower-income households in particular would likely face a disproportionate impact (i e , regressive outcome), because a larger percentage of their income is used to pay for energy needs, such as electricity, gasoline, or home heating oil  Many economic analyses of carbon price scenarios assume that the vast majority (if not all) of the carbon tax impact is passed forward to consumers, leading to a regressive outcome  On the other hand, if entities pass the costs backward to producers, the tax impacts would fall on labor through reduced wages or owners of capital through reduced returns on investment  Economic models that assume this outcome produce more progressive results (absent revenue recycling), with lower-income households experiencing smaller impacts than higher-income households  The economic analyses appear to agree that the distributional effects among households (i e , regressive vs  progressive) of a carbon tax program would be largely dependent on how the carbon tax revenues were used  A number of economic studies have used models to estimate the impacts of a carbon tax across households under several revenue distribution scenarios  The results vary because the studies use different modeling frameworks, carbon tax rates and scopes, underlying assumptions, and ways to measure impacts  For example, a 2018 study assessed the impacts to household income for different household quintiles under a carbon tax of $50/mtCO 2 e, starting in 2020  This study examined four revenue distribution scenarios: 1  reduce federal deficit, 2  reduce corporate income tax rate, 3  reduce payroll tax rate, and 4  provide a per-capita rebate to households  This report highlights this study, because it includes carbon tax revenue applications that have generated interest in recent years  In addition, this analysis was prepared after the 2017 tax rate changes in P L  115-97   Figure 2 illustrates the modeled results, which the study measured as percentage reductions to household income  Thus, negative percentages illustrated in the figure are gains to household income  The per-capita rebate approach provides the most progressive result, yielding a net benefit for the bottom three household quintiles but a net loss for the top quintile  The fourth quintile impact is zero  By comparison, the other approaches produce varying degrees of regressive outcomes while providing a net gain for wealthier groups in two particular instances  Of the four options, the payroll tax rate reduction approach estimates the smallest variance between the income quintiles, ranging from a 0 5% loss for the lowest quintile to a 0 2% gain for the fourth quintile  The fifth quintile impact is zero  The relative ranking among options for progressivity is generally the opposite of the relative ranking for mitigating economy-wide impacts  Other economic analyses have found similar relative rankings of revenue recycling options  The contrasting rankings highlight a central tradeoff policymakers would face when deciding how to allocate carbon tax revenues  Policymakers could allot some portion of the revenues to partially support both objectives  In a 2018 carbon tax study, economic modelers assessed a scenario in which a portion of the revenue was used to offset the welfare impacts for the lowest-income household quintile and the remaining revenue supported reductions in capital tax rates  The study's models estimated that a carbon tax's impacts on the lowest-income household quintile could be counteracted with approximately 10% of the revenue  This would allow for 90% of the revenue to be used to reduce capital tax rates and thus address the economy-wide impacts from the carbon tax  As discussed above, a carbon tax is projected to disproportionately impact certain industries, particularly those that are described as "emission-intensive, trade-exposed industries " To address these concerns, many of the recent carbon tax legislative proposals have included design mechanisms that would attach a carbon price to certain imported materials and products (see " Border Carbon Adjustments ")  Another approach to addressing the competitiveness concerns of domestic industries would involve distributing a portion of the carbon tax revenues to emission-intensive, trade-exposed industries as rebates based on their output  Output rebate proposals generally determine rebate amounts by measuring emissions intensity at the relevant sector level or by a benchmark that would encourage facilities to reduce their emissions intensity  These rebates could be phased out over time or continue until other nations adopt comparable carbon price policies  Under a carbon tax system in Canada, which is scheduled to take effect in 2019, industries will be subject to an "output-based pricing system " Some contend that the data and administrative resources necessary to implement such a program would be substantial  A carbon tax system is also expected to disproportionately impact fossil fuel industries and the communities that rely on their employment  In particular, coal-mining communities are expected to experience substantial impacts based on the coal production declines predicted in carbon tax analyses  For example, one model estimates that under a $50/mtCO 2 e carbon tax, annual U S  coal production would decline by almost 80% in 2030 compared to a reference case  Policymakers may consider supporting worker transition or community transition assistance to help mitigate the economic impacts  Several of the recent carbon tax proposals would have devoted carbon tax revenues for this objective  Policymakers may also consider using the carbon tax revenues to provide funding to support a range of objectives, which may include policy goals that are not directly related to climate change  Some options are identified below, and many have been included in recent legislative proposals or in state GHG mitigation programs that raise revenues: Technology development and deployment: Efforts to reduce the costs of emission mitigation technologies—particularly carbon capture, utilization, and sequestration—are often considered in carbon tax programs, and Congress has funded such programs in other legislation  Energy efficiency programs: Although a carbon tax would likely stimulate energy efficiency to some degree, Congress may consider using the revenues to provide additional incentives and/or technical assistance, particularly to encourage households and small businesses to increase efficiency, which would also reduce the effects of the tax on their energy bills  States in the Regional Greenhouse Gas Initiative (RGGI) have used revenues from the program to support efficiency improvements, among other objectives  Biological sequestration: Trees, plants, and soils sequester carbon, removing it from the earth's atmosphere  Revenues could be used to promote carbon sequestration efforts, particularly forestry or agricultural activities, which would supplement the GHG reductions of the carbon tax  Adaptation to climate change: Regardless of emission reduction efforts taken today, climatic changes are expected due to the ongoing accumulation of GHGs in the atmosphere  Therefore, some advocate using revenues to reduce potential damage—domestically and internationally—of a changing climate  Deficit reduction: The possible contribution of a carbon tax to deficit reduction would depend on the magnitude and scope of the carbon tax, various market factors, and assumptions about the size of the deficit  Some carbon tax proposals in recent congressional sessions would have allotted a portion of revenues for deficit reduction  Infrastructure funding: Some recent proposals have provided funding for infrastructure projects  This objective could be combined with funding for adaptation activities  Multiple economic studies have estimated the emission reductions that particular carbon tax designs could achieve  Economic models provide estimates based on the best information available at the time  Comparing results from different studies is problematic, because the studies' scenarios differ in multiple ways, including the tax rate, start date, scope of the program, assumptions about economic growth and technological advances, and assumptions about other federal and state policies and their effects  A 2018 study avoided some of these comparison difficulties by inviting modeling teams to analyze a coordinated set of scenarios  The 2018 Stanford Energy Modeling Forum study ("EMF 32") assembled 11 modeling teams to analyze the economic impacts of four carbon tax scenarios starting in 2020: a $25/metric ton and $50/metric ton carbon tax, increasing annually by 1% and 5%  Within each of these carbon price frameworks, the models ran separate revenue distribution scenarios: a reduction in labor tax rates, a reduction in capital tax rates, and household rebates  Figure 3 illustrates the study's estimates of CO 2 emissions from fossil fuel combustion  The red lines in the figure display the average values for the 11 models  The shaded areas illustrate the range of results, highlighting the uncertainties in emission reduction estimates  Based on these results, the study authors concluded that each of the tax rate scenarios would likely achieve the U S  CO 2 emission reduction targets under the Paris Agreement  As Figure 3 indicates, a carbon tax or emissions fee could be set with the expectation that it would achieve an emissions reduction target, but the resulting level of emissions would be uncertain  The uncertainty of resulting emissions may lead some stakeholders to disfavor a carbon tax or fee option to control GHG emissions  Although uncertain emissions are inherent with a carbon tax approach, Congress could employ certain design elements to enhance the emission control certainty  For example, the existing GHG emission reporting data could be used to track the impact and performance of a carbon price  If policymakers determine that emission reduction is not occurring at a desired pace, the price could be amended  Legislation could establish the conditions and process by which price changes could occur  Some may argue that adjusting the carbon price to reflect actual emissions performance would undermine the benefits of price certainty  Others may point out that unplanned adjustments to the carbon price could be politically unpalatable  For example, it may be difficult for policymakers to increase the tax rate, especially during periods of high energy prices  Some have suggested that Congress authorize an independent board or agency with the mandate to modify the tax rate administratively in order to meet pre-determined emission reduction objectives  Although this approach would likely improve emission certainty, long-term price certainty may be sacrificed to some degree, depending on the authority of the delegated entity to adjust the tax rate  Some would argue that potential year-to-year emission variations under a carbon tax would not undermine efforts to control climate change so long as long-term emission goals are achieved  Indeed, they would assert that annual emission fluctuations are preferable to price volatility that could result from an emissions cap program  They support their preference for price control by suggesting that CO 2 generates damages through its overall accumulation as concentrations in the atmosphere, not its annual flow  A potential concern of a carbon tax is whether it would be effective in reducing GHG emissions in all of its covered sectors, particularly emissions in the transportation sector  As of 2016, the transportation sector contributes the largest percentage (36%) of CO 2 emissions from fossil fuel combustion, with electric power second at 35%  Carbon tax analyses generally agree that the majority of the emission reductions resulting from a carbon tax program would occur in the electricity sector  By comparison, economic models generally conclude that a carbon tax would have much less of an impact on emissions in the transportation sector  Several factors explain this projected outcome  The transportation sector offers fewer opportunities to switch to less carbon-intensive fuels in the short term than does the electric power sector, which can displace coal with natural gas relatively quickly  In addition, short-term emission changes in the transportation sector are largely influenced by changes in driving demand, which has historically been relatively insensitive to gasoline price increases  Based on these projected outcomes, some may contend that to achieve deeper, long-term reductions in total GHG emissions, policymakers would need to complement a carbon tax with other programs, such as vehicle technology standards (e g , Corporate Average Fuel Economy, CAFE) or fuel performance standards, among other options  The quantity of revenues generated under a carbon tax system depend on the program's design features, namely the tax base and rate, as well as such independent factors as prices in global energy markets  They would also depend on how covered emission sources respond to the carbon price, for example by adopting alternative technologies or changing behavior  Several carbon tax studies have prepared revenue estimates, which are presented in Table 1   From a public finance perspective, a carbon tax may not be a reliable source of long-term funding, because a primary goal of the carbon tax is to reduce its tax base—GHG emissions  The estimates in Table 1 project carbon tax revenue values in 2020  Multiple studies have projected carbon tax revenue trajectories beyond 2020  In the 2018 EMF 32 study, all but one of eight models projected carbon tax revenue increases from 2020 through 2040  The carbon tax scenarios with larger annual rate increases resulted in steeper trajectories of increasing revenues through 2040  The models' estimates of annual carbon tax revenue in 2040 ranged from approximately $250 billion to $475 billion (under the tax rate scenario of $50/metric ton, increasing 5% annually)  Fossil fuels have a wide range of CO 2 emission intensity (i e , emissions per unit of energy)  As illustrated in Figure 4 , the CO 2 emission intensity of coal is approximately 30% more than oil and approximately 80% more than natural gas  These emissions intensity differences would lead to different tax rates per unit of energy across different fuels in a carbon tax regime  Carbon taxes could affect fuel prices in complex ways  The change in consumer fuel prices would likely not be the same as the price paid by the party directly subject to the tax  Actual price impacts for consumers would depend on multiple factors, including whether: a carbon tax is applied at the beginning of the production process ("upstream") to fossil fuels; and the price impacts are passed through to end users and not absorbed by upstream energy producers or midstream entities, such as retailers  In addition, market participants such as electric power plant operators can avoid paying the increased costs by substituting fuels or technologies  Energy consumers may modify their behavior in the marketplace—energy conservation, consuming less or different products and services—to mitigate impacts from the increased prices  Table 2 includes estimates of price increases on coal, crude oil, natural gas, home heating oil, and motor gasoline based on a carbon tax rate of $25/mtCO 2 that applies CO 2 emissions from fossil fuel combustion  As indicated in the table, a carbon tax would have the greatest impact on the price of coal due to coal's relatively high CO 2 emissions intensity  By comparison, a carbon tax is expected to have less of an impact on the price of gasoline, increasing its price by 8%  Economic models have projected how carbon prices would impact energy use, particularly the consumption of different fossil fuels and less carbon-intensive alternatives, such as renewables or nuclear power  For example, the 2018 EMF 32 study, which included results from 11 modeling groups, assessed how several carbon tax scenarios would impact energy consumption  Highlights of these models' results (compared to reference case scenarios) include the following: Coal consumption could decline by 40% to nearly 100% by 2030 under a $50/mtCO 2 carbon tax, though one model projected an increase in coal due to the model incorporating CCS technology  Natural gas consumption estimates vary across the models, with some showing minimal change in 2030 and others showing declines ranging between 40% and 60%  Oil consumption estimates indicate that the largest decline (approximately 4% by 2030) would occur under the $50/mtCO 2 carbon tax scenario  Wind energy consumption could increase by 48% to 300% by 2030 under a $50/mtCO 2 carbon tax scenario  A carbon tax is one policy option to address U S  GHG emission levels, which contribute to climate change and related impacts  Economic modeling indicates that a carbon tax would achieve emission reductions, the level of which would depend on which GHG emissions and sources are covered and the rate of the carbon tax  A carbon tax would generate a new revenue stream  The magnitude of the revenues would depend on the scope and rate of the tax and multiple market factors, which introduce uncertainty in the revenue projections  A 2018 CBO study estimated that a $25/metric ton tax on CO 2 emissions from energy-related activities and other selected GHG emission sources would yield approximately $100 billion in the first year of the program  To put this estimate in context, the CBO projected that total federal revenue would be $3 5 trillion in FY2019  Policymakers would face challenging decisions regarding the distribution of the new carbon tax revenues  Depending on the level of the tax, some economic analyses indicate that the distribution of tax revenue could yield greater economic impacts than the direct impacts of the tax  Some models indicate that the economic impacts are greatest in the early years of the carbon tax  Policymakers could apply the tax revenues to support a range of policy objectives  When deciding how to allocate the revenues, policymakers would encounter trade-offs among objectives  The central trade-offs involve minimizing economy-wide costs, lessening the costs borne by specific groups—particularly low-income households—and supporting a range of specific policy objectives  A primary concern with a carbon tax is the potential economy-wide costs that may result  The potential costs would depend on a number of factors, including the magnitude, design, and use of revenues of the carbon tax  In general, economic literature finds that some of the modeled revenue applications would reduce the economy-wide costs imposed by a carbon tax but may not eliminate them entirely  Policymakers and stakeholders may have different perspectives regarding whether these estimated economy-wide costs (typically measured in terms of GDP loss) represent a significant concern  Some argue that the estimated economy-wide costs should be compared with the policy option of not establishing a carbon tax  This comparison is uncertain as carbon tax analyses do not generally consider the benefits that would be gained by reducing GHG emissions and avoiding climate change and its adverse impacts  Some studies cite particular economic modeling scenarios in which a carbon tax and revenue recycling could produce a net increase in GDP or economic welfare, compared to a baseline scenario  These scenarios involve using carbon tax revenues to offset reductions in existing, distortionary taxes, such as corporate income or payroll taxes  Although the models indicate that these revenue applications would yield the greatest benefit to the economy overall, the models also find that lower-income households would likely face a disproportionate impact under such revenue applications  As lower-income households spend a greater proportion of their income on energy needs, these households are expected to experience disproportionate impacts from a carbon tax if revenues were not recycled back to them in some fashion, such as a lump-sum distribution  Carbon tax revenues that are used to offset the burden imposed on various sectors or specific population groups would not be available to support other objectives  An additional concern with a carbon tax involves potential disproportionate impacts to "emission-intensive, trade-exposed industries " Policymakers could select among several options to address these concerns, either by establishing a border carbon adjustment program or allocating some of the carbon tax revenues to selected industry sectors based on an output-based metric  If other nations were to adopt comparable carbon price policies, this concern may be alleviated to some degree  Relatedly, a carbon tax is projected to disproportionately impact fossil fuel industries, particularly coal, and the communities that rely on their employment  To alleviate these impacts, policymakers could allocate some of the carbon tax revenue to provide transition assistance to employees or affected communities  Table A-1 identifies sources of GHG emissions that account for 0 5% or more of total U S  GHG emissions  The sources are listed in descending order by their percentage contribution  CO 2 emissions from fossil fuel combustion, which accounts for almost 76% of total U S  GHG emissions, are broken down by fossil fuel type: petroleum, coal, and natural gas  The table identifies potential points in the economy at which a carbon tax could be applied  The table lists the approximate number of entities that would be involved with different tax applications  The number of entities listed is current as of the most recent data available and varies accordingly by category  See table notes for details  The right-hand column of the table provides additional comments for some of the emission sources  In some cases the comments discuss potential opportunities for additional GHG emissions coverage at a particular source  In other cases, the comments address potential limitations of covering all of the emissions from a particular source 

ground_truth: The U.S. Fourth National Climate Assessment, released in 2018, concluded that "the impacts of global climate change are already being felt in the United States and are projected to intensify in the future—but the severity of future impacts will depend largely on actions taken to reduce greenhouse gas [GHG] emissions and to adapt to the changes that will occur." Members of Congress and stakeholders articulate a wide range of perspectives over what to do, if anything, about GHG emissions, future climate change, and related impacts. If Congress were to consider establishing a program to reduce GHG emissions, one option would be to attach a price to GHG emissions with a carbon tax or GHG emissions fee. In the 115th Congress, Members introduced nine bills to establish a carbon tax or emissions fee program. However, many Members have expressed their opposition to such an approach. In particular, in the 115th Congress, the House passed a resolution "expressing the sense of Congress that a carbon tax would be detrimental to the United States economy." Multiple economic studies have estimated the emission reductions that particular carbon tax would achieve. For example, a 2018 study analyzed various impacts of four carbon tax rate scenarios: a $25/metric ton of CO2 and $50/metric ton of CO2 carbon tax, increasing annually by 1% and 5%. The study concluded that each of the scenarios would likely achieve the U.S. GHG emission reduction target pledged under the international Paris Agreement (at least in terms of CO2 emissions). A carbon tax system would generate a new revenue stream, the magnitude of which would depend on the scope and rate of the tax, among other factors. In 2018, the Congressional Budget Office (CBO) estimated that a $25/metric ton carbon tax would yield approximately $100 billion in its first year. CBO projected that federal revenue would total $3.5 trillion in FY2019. Policymakers would face challenging decisions regarding the distribution of the new carbon tax revenues. Congress could apply revenues to support a range of policy objectives but would encounter trade-offs among the objectives. The central trade-offs involve minimizing economy-wide costs, lessening the costs borne by specific groups—particularly low-income households and displaced workers in certain industries (e.g., coal mining)—and supporting other policy objectives. A primary argument against a carbon tax regards it potential economy-wide impacts, often measured as impacts to the U.S. gross domestic product (GDP). Some may argue that projected impacts should be compared with the climate benefits achieved from the program as well as the estimated costs of taking no action. The potential impacts would depend on a number of factors, including the program's magnitude and design and, most importantly, the use of carbon tax revenues. In general, economic literature finds that some of the revenue applications would reduce the economy-wide costs from a carbon tax but may not eliminate them entirely. In addition, some studies cite particular economic modeling scenarios in which certain carbon tax revenue applications produce a net increase in GDP compared to a baseline scenario. These scenarios involve using carbon tax revenues to offset reductions in other tax rates (e.g., corporate income or payroll taxes). Although economic models generally indicate that these particular revenue applications would yield the greatest benefit to the economy overall, the models also find that lower-income households would likely face a disproportionate impact under such an approach. As lower-income households spend a greater proportion of their income on energy needs (electricity, gasoline), these households are expected to experience disproportionate impacts from a carbon tax if revenues were not recycled back to them in some fashion (e.g., lump-sum distribution). A price on GHG emissions could create a competitive disadvantage for some industries, particularly "emission-intensive, trade-exposed industries." Policymakers have several options to address this concern, including establishing a "border carbon adjustment" program, which would levy a fee on imports from countries without comparable GHG reduction programs. Alternatively, policymakers could allocate (indefinitely or for a period of time) some of the carbon tax revenues to selected industry sectors or businesses. Relatedly, a carbon tax system is projected to disproportionately impact fossil fuel industries, particularly coal, and the communities that rely on their employment. To alleviate these impacts, policymakers may consider using some of the revenue to provide transition assistance to employees or affected communities.