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One of These Things is Not Like the Others

Dan Delurey's picture
President Wedgemere Group

Dan is the President of Wedgemere Group. Established in 2002, "" Wedgemere is a DC-based consulting group with a focus on demand response and distributed energy and a...

  • Member since 2016
  • 35 items added with 49,626 views
  • Oct 22, 2021

I was thinking that I would not have time to write about what is happening on Capitol Hill, but it now appears that I can do that, as the rush to some kind of deal has slowed things a bit.

I think at this point everyone understands there are two Bills in play – Infrastructure and Reconciliation. It is the second one that I wish to comment on.

The situation you hear described is one where it is taken as a given that the number must be lower than the $3.5T originally proposed. The Democrats that are saying that number is too large seem to unfortunately be basing their objection on a gut feel of theirs, i.e. it just "sounds" too big. The Law of Round Numbers is in play.

However, the $3.5 would be spent over 10 years and it is intended to not just boost things like health care, education and climate action, but to sustain those efforts as they get new traction and a solid foundation for the future.

Second, it is not “credit card” spending, i.e. money that will be spent and then the means to pay the card statement looked for later. The bill will be largely if not entirely offset by changes in the tax system, including closing of loopholes and hiking tax rates on the very wealthy. These are called “Pay-Fors” in the parlance of the Hill.

For example, the Trump Tax Cut Bill was said to have a cost of $1.5 Trillion. But that was after the Pay-For offsets. The nominal price tag before the Pay-Fors was said to be $5.5 Trillion. The fact that the Democrats let this new Bill be spun as $3.5 Trillion makes me think they need a bunch of new Spin Doctors on their team.

Moreover, if the Pay-Fors turn out to have been based on overly optimistic projections offsets In the face of climate change, how much should we worry about that? Shouldn't we view it as a situation where we pay a little bit now to prevent and adapt versus pay more later through huge damage and restoration costs?

But returning to my (yet to be unveiled) theme...

Democrats are leaking that the final number will be much lower than $3.5 but yet will still be a round number. It could be all the way down to $1.5

This is leading to talk of three different choices in order to get the price tag down. One would be changing the spending from a 10-year plan to a 5-year one. Another would involve taking the paring knife to all of the elements of the Bill, i.e. taking a little bit from Health Care, Education, Climate and the other areas in order to make up the total reduction targeted. The third may be somewhat akin to Sophie’s Choice – choose one area to not cut and enable it as originally intended. Give the other areas a little something but nothing like was originally intended.

Which choice would you make? I think you know which one I would choose.

Don’t get me wrong. I believe that a fully funded new social compact is necessary in the U.S. I believe it will not only help the people who need help but would help the economy as well. Moreover, I believe it will help repair the tear in our national social and economic fabric that has come with the ever-growing income disparity among Americans.

But I choose Door #3 and full spending on climate. I do not think any of those other areas are anything like climate change. Here is my thinking:

1.    Pulling money from health care, education, etc. is nothing I would ever vote for, as I think those areas are extremely important for the present but also as a basis for a robust future. But if we were to get to them in a Bill next year, or even the year after, the near-term loss could be deemed something that could be dealt with. On the contrary, each year we don’t deal with climate change means another year of greenhouse gas emissions going into the atmosphere than necessary.

Those emissions will stay there for up to hundreds of years, and a year of no action means we just blew another year. If we had any cushion to offset non-action on emissions, we blew that during the four years of the previous administration. Each year at this point is so precious that it is hard to overstate the importance of not letting any more pass without having emissions constrained by policy.

2.    Those other areas I am willing (reluctantly) to tamp down all are areas that will be worse off under severe climate change. Already we are in a situation of where baked-in impacts due to past emissions are going to lead to health impacts from drought, excessive heat, wildfire smoke and migration by disease-bearing vectors. Climate affects everything, and addressing it benefits all other areas of the Bill. Educational infrastructure is not built for climate change, and a considerable investment will be necessary there.

3.    Do you hear that loud noise? It is the giant sucking sound of disasters. In 2021 so far, 1 out of 3 Americans have been somehow impacted by extreme weather events. 

American used to invest in things (like our highways, railroads, etc.) that became the foundations for overall economic growth. Not only do we not do that anymore, we don’t seem to be able to spend any money to prevent something bad from happening. We simply wait and spend the money to react to the bad thing after it happened.

Increasingly, the federal budget is going to be expected to respond to disasters that because of climate change are worse than they would otherwise be. The more money that goes to that area then, the less money that will go to other areas – like health care and education. When you constrain the total, it is more often-than-not a zero-sum game underneath the cap.

But here we are playing the usual game of sausage-making when we are facing the most unusual situation in history.

Seems like we ought to be changing the way we make policy doesn’t it?

Seems like we ought to be looking at what kind of spending is needed to address climate change, and figuring out the best way to pay for it, don’t you think?

If there was ever a true Bipartisan issue, it is climate change. It won’t matter if you wear a red or blue hat or live in a red or blue state. Just as with Covid, climate change doesn’t care.


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Dan Delurey's picture
Thank Dan for the Post!
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