By Dean Baker
Politicians in Washington tend to be a pretty arrogant group. They think they can just define their own terms and expect everyone else just to accept these terms at face value.
Senator Manchin gives us a great example of this pattern in his Wall Street Journal column complaining about President Biden’s plan for a $3.5 trillion reconciliation bill, which would increase federal spending by an amount equal to roughly to 1.3 percent of GDP over the next decade. Manchin complained that he was worried that this spending would add too much to the debt and could spur higher inflation.
While the proposal would address many issues, such as extending Medicare to include dental and hearing coverage, to expanded support for child care, most of the items in the bill fit clearly under the definition of investment. Much of the spending goes to combat global warming, either by promoting electric cars, conservation, and clean energy or increasing the resiliency of our infrastructure to deal with extreme weather events, like Hurricane Ida.
As a practical matter, spewing greenhouse gases into the atmosphere, without regard for its impact on the climate, is creating a type of debt. In future years, we will have more forest fires, droughts, and hurricanes due to a hotter planet. This will impose enormous costs as governments at all levels have to evacuate people, care for the injured, and constantly repair and replace damaged homes, businesses, and infrastructure.
Senator Manchin wants to pretend that this climate debt does not exist. He only wants to look at the debt that comes from the government directly borrowing money. He wants to ignore that the costs that we are imposing on future generations by not taking steps to counter global warming now. That may somehow work for his conscious, but it is absurd in the real world.
Also, if he is concerned about inflation, he may want to ask what happens to the price of beef when much of the land in the West where cattle now graze becomes too dry to support the herd. Or, to take the case of agriculture more generally, large parts of California, that now provide the bulk of our fruit and vegetable production, may no longer be suited for agriculture if they can’t get water due to persistent droughts. And, we will see more housing shortages and higher house prices, if rising temperatures and sea levels make much of our current housing stock inhabitable.
Inflation can come from too much demand, although that hardly seems the problem today. It can also come from reduced supply, which will be a problem if we insist on not taking global warming seriously.
I will also just briefly make the obvious point that the government creates debt not only through its direct spending, but also by granting patent and copyright monopolies to things like coronavirus vaccines. Again, choosing to ignore this form of debt (which is enormous) doesn’t make it go away.
This first appeared on Dean Baker’s Beat the Press blog.