Either way, the $ 2 trillion infrastructure package President Joe Biden unveiled on Wednesday marks the largest federal investment to date for the climate.
The U.S. Jobs Plan, described in a nearly 12,000-word fact sheet, spends $ 500 billion on investment and research in clean energy, including $ 174 billion for electric vehicles and power grids. recharging, $ 165 billion for transit and trains, and $ 100 billion for renewable electricity and new transmission lines. There are billions more to repair water systems, displace entire communities threatened by climate catastrophe, and plug abandoned oil wells and mines.
In all, the plan represents more than five times climate spending the Obama administration obtained the US Take-Back and Reinvestment Act in 2009.
Yet it’s still about five times too small to bring the US economy’s global warming emissions to zero, the level scientists say we need to keep warming within a relatively safe range.
The proposal would extend funding over eight years and amount to spending about 1% of the country’s gross domestic product per year. Most estimates indicate that it would take more than 4-5% of GDP, or nearly $ 1 trillion per year over 10 years, to completely decarbonize the U.S. economy.
Deficit policies hamper building a more sustainable and resilient economy that works for all.
Mark Paul, economist and researcher at the Roosevelt Institute
Supporters of establishing a much higher level of funding run across the ideological spectrum. Left-wing Roosevelt Institute Plan of 80 pages to remove pollution caused by climate change from the US economy, 5% of GDP was its north star. This is roughly the same number in the Report on the risky business project 2016 co-chaired by billionaire Michael Bloomberg and Henry Paulson, then George W. Bush-era Treasury Secretary. UK Clean Energy Consultant Michael Liebreich call for approximately $ 980 billion per year over 10 years in 2019.
Even University of Massachusetts Amherst economist Robert Pollin is more conservative estimate of 2% of GDP per year – a figure he came in part from extending investments over a longer period of time – was double what Biden proposed.
Progressives led by Sen. Ed Markey (D-Mass.) And Rep. Debbie Dingell (D-Mich.) On Monday announced a $ 10 trillion counter-proposal to the White House plan called the THRIVE Act, which would inject $ 1 trillion a year in green care infrastructure and economy works.
In the absence of large tax increases and sharp cuts to the military budget, the Biden administration would need to borrow money to fund this type of package, just as it increased the federal deficit for pay its $ 1.9 trillion pandemic relief bill.
Instead, the White House plan aims to offset its infrastructure spending with relatively modest new taxes in what appears to be an attempt to win the support of moderate Democrats for whom fiscal discipline is a key political issue.
“Deficit policy hinders building a more sustainable and resilient economy that works for all,” said Mark Paul, an economist who co-authored the Roosevelt Institute article on climate spending in the United States. “This is not a New Deal for America. It’s not Johnson’s Great Society. I wish it had.
Once a mighty stick that Republicans used to portray Democrats as unnecessary debauchery, the public’s understanding of how the federal deficit works has shifted in recent years. Because the federal government – unlike a state government, business, or household – issues the currency it spends, Congress can allow as much spending as necessary, especially when interest rates are low. , according to new macroeconomic research that has helped prop up both the Trump and Biden administrations’ Relief Spending Packages.
This research shows that the biggest risk of putting too much money into the system is inflation. Taxes, far from providing the liquidity the federal government needs to justify its spending, instead help control inflation by taking money out of circulation and causing buyers to push prices up.
Yet the old way of thinking about the deficit is still relevant to Biden. During the transition talks, according to a source close to the president’s approach, Biden has repeatedly indicated that he supports deficit spending on emergency relief, but not proactive federal investments.
A White House spokesperson did not respond to the HuffPost email requesting comment.
“The worst mistake we can make now would be to let worries about the state of the economy – overheating, inflation, deficit – convince people to do less than what Biden is proposing,” said JW Mason, associate professor at Biden. economics at the John Jay College of Criminal Justice and fellow of the Roosevelt Institute. “It would be a disaster, a terrible mistake.”
Earlier this month, Senator Joe Manchin (DW.Va.), the main vote swing in a Senate divided 50-50 along partisan lines, told reporters he wanted a “huge” infrastructure bill, but said Congress should do “whatever we can” to pay for it, including making “tax adjustments.”
The wealth tax Sen. Elizabeth Warren (D-Mass.) offers This month we would tax households and trusts valued between $ 50 million and $ 1 billion at 2% and add a 1% surtax on those over $ 1 billion. The tax would affect just 100,000 U.S. households and bring in $ 3 trillion over a decade, according to analysis by the University of California, Berkeley, economists Emmanuel Saez and Gabriel Zucman.
The White House infrastructure proposal does not include wealth tax. But he calls for overturning some of the tax cut laws passed by Republicans in 2017 and raising business taxes from 21% to 28%. It is also taking steps to discourage companies from listing tax havens as addresses and from deferring spending to offshore entities. Zucman called it an “ambitious first step”.
“This is an inflection point – and hopefully the start of a longer-term cycle of public investment and increased tax escalation, ”he said in a statement. E-mail.
Wall Street analysts viewed the package less as a climate bill and more as an infrastructure overhaul that included green provisions.
“It’s actually about rebuilding aging infrastructure, although he has also said advancing environmental policy and achieving a net zero energy sector by 2035 is also a priority,” Scott said. Levine, senior energy and industry analyst at investment research firm Bloomberg. Intelligence. “But these are different goals.”
I don’t know if we’re going to meet your size expectations, but it will definitely transform our economy.
White House Climate Czar Gina McCarthy
The proposed spending on housing has offered one of the most striking examples of where advocates say the package falls short of what’s needed.
While data from the US Energy Information Administration shows that a third of Americans cannot afford their utility bills, the plan pledges to “produce, preserve and renovate more than a million homes. affordable, resilient, accessible, energy efficient and electrified ”. – less than 1% of the building stock. The proposal also offers tax credits worth $ 20 billion over the next five years to build or rehabilitate approximately 500,000 homes, a significantly lower item than the more than $ 30 billion a year that the federal government does. expense to subsidize mortgages.
“Biden’s housing plan has great rhetoric, but his lack of ambition is abysmal – wasting a moment once in a generation,” wrote Daniel Aldana Cohen, a sociologist and climate policy expert at the University of Pennsylvania. series of tweets. “This plan is a drop in the bucket.”
In a private call with activist groups Tuesday night that HuffPost listened to, White House climate policy czar Gina McCarthy acknowledged that the spending package could disappoint climate advocates in the hope to see a more ambitious budget, but said it only marks one area of the administration’s decarbonization plans. .
“I don’t know if we’re going to meet your size expectations, but it will definitely transform our economy,” she said.
She urged advocates to “hyped” the infrastructure package, warning that criticism can shatter support for Congress and reduce ambition for what it includes.
“Let’s get really smart and just talk about how great it is to have a president come out that far,” McCarthy said. “Then we will discuss and we will fight, debate and push among ourselves. But we’ll all see our ideas in there. You will see what you have proposed.
McCarthy MP Ali Zaidi also said the package was just “the start of the race”.
Among the more ambitious provisions of the president’s proposal was a call for Congress to pass a clean energy standard requiring the country to produce all of its electricity from carbon-free sources by 2035. He also calls target 40% of the benefits of clean energy. and climate investments in some of the poorest and most polluted parts of the country, in communities disproportionately populated by blacks, Latin Americans and other non-white Americans.
Evergreen Action, the climate policy group formed by former staff on Washington Gov. Jay Inslee’s climate-focused presidential candidacy, said it was “thrilled” to see the clean energy standard and the environmental justice provisions.
“Today in Pittsburgh, President Biden will tell the United States that it is time to embark on building a new economy that runs on 100% clean energy,” said Jamal Raad, executive director of Evergreen Action, in a press release. “This is only the revelation, and now the ball is in Congress’ court.”
Calling all super HuffPost fans!
Sign up to become a Founding Member and help shape the next chapter of HuffPost