Opinion – Paul Krugman: Did Democrats Just Save Civilization?

They really did. The Inflation Reduction Act, which is basically a climate change bill with a parallel aid to healthcare reform, passed the Senate on Sunday; by all statements it will pass easily in the House, so it is on the verge of becoming law.

This is a very big deal. The law alone is not enough to prevent climate disaster. But it is a huge step in the right direction and sets the stage for more action in the years to come. It will catalyze progress in green technology; its economic benefits will facilitate the passage of other laws; it gives the United States the credibility it needs to lead a global effort to limit greenhouse gas emissions.

There are, of course, cynics eager to downgrade achievement. Some on the left were quick to reject the bill as a gift to the fossil fuel industry by masquerading as environmental action. More importantly, Republicans – who unanimously opposed the legislation – are shouting the usual stuff: Big spending! Inflation!

But the real experts on energy and the environment are quite happy with what has been accomplished, and serious economists are not worried about the effect on inflation.

Starting with the environmental side. Many people I talk to believe that President Biden’s environmental agenda, as per his original “Rebuild Better” proposal, must have been very watered down in the legislation we actually received. After all, didn’t the Democrats have to make big concessions to win over Senator Joe Manchin? Aren’t there major freebies for fossil fuel interests, like help for a controversial natural gas pipeline?

However, energy analysts believe that any adverse climate effects from these concessions will be outweighed by gains in clean energy tax credits. Project Repeat, compiled by Princeton’s Zero Lab, produced a side-by-side comparison of emissions cuts under the Inflation Reduction Act and under the House of Rebuild Better’s earlier version. By 2035, they estimate, the Inflation Reduction Act will have delivered more than 90% of the emission reductions that Rebuild Better would have achieved. After all this legislative drama, Biden’s climate policy came out largely intact.

How was this possible? Early on, the Biden administration decided that its climate policy would be just attractive, no penalties — it would offer incentives for doing the right thing, not punishments for doing the wrong thing. This strategy was expected to prove politically viable in a way that, say, a carbon tax would not. And that hope was confirmed.

Furthermore, it is a strategy that seems likely to pay political dividends in the future. A new study, by E. Mark Curtis and Ioana Marinescu, concludes that “the growth of renewable energy leads to the creation of relatively high-wage jobs, which are often in areas that could lose out from declining jobs in fossil fuel extraction. “.

So what has the Biden administration lost? Unfortunately, much of the social spending originally included in Rebuild Better has been cut — tax credits for children, universal preschool and others. This is tragic, even as improved health insurance subsidies, which helped bring the US uninsured rate to a record low, have been expanded. But the Democrats have delivered on their climate promises more or less in full.

And the criticism from the right? In addition to the pathetic attempt to portray the Inflation Reduction Act as a massive tax increase on the middle class, Republicans like Mitt Romney are trying to merge this legislation with last year’s American Rescue Plan, which they claim caused the increase in inflation. inflation.

It doesn’t matter if that statement is true. The important thing is to do the math. The Inflation Reduction Act calls for spending less than $500 billion over a decade, compared to the US Rescue Plan’s $1.9 trillion in a single year — and it will actually reduce the deficit. That’s why independent analysts think it will have little effect on inflation.

But if the expense isn’t very big, how can it have such an extensive impact? The answer is that we are now sitting on a kind of ridge. Renewable energy technology has made revolutionary progress, and in many areas these energies are already cheaper than fossil fuels. A moderate push from public policy is all it will take to transition to a much greener economy. And the Inflation Reduction Law will give that impetus.

In the face of all this, however, why did all the Republican senators vote against the bill? They are not all ignorant; I’m sure Romney, for example, knows he’s talking nonsense.

Nor can we easily invoke differences in ideology. The climate pressure of the Inflation Reduction Act relies primarily on tax credits — and Republicans themselves have used tax credits to achieve social goals, such as the (much abused) Zone of Opportunity credits in Donald Trump’s 2017 tax cut.

Almost certainly what we are really seeing is the politics of spite. Every Republican in the Senate wanted to kill our best chance of averting climate disaster, simply to deny the Biden administration a victory.

The good news is that the legislation was passed despite their spite. And the world is a more hopeful place than it was a few weeks ago.

Translated by Luiz Roberto M. Gonçalves