Paul Krugman also calls out the stupidity of equating climate and deficits
by David Atkins
On January 9 I wrote a post mocking Tom Friedman for equating climate change and long-term deficits as if they were equivalent issues. From that post:
But there are a few enormous differences between the two. Pundits like Friedman claim that progressives don't want to do anything about the deficit because interest rates are low at the moment, so the deficit "problem" won't rear its head for quite a while. In this way we are compared to conservatives who refuse to act on climate change.Paul Krugman today makes the same point:
But that's not the actual reason most progressives oppose short-term austerity. The big differences between the two issues are:
1) Unlike runaway greenhouse effects, deficits will mostly decline naturally with economic growth. The biggest cause of the major debt-to-GDP ratio increase since 2007 is not surprisingly the Great Recession. Most of that problem will disappear with a robust, demand-driven recovery. Yes, there are certain problems to solve as the population ages, but those are almost entirely due to rising healthcare costs that are best controlled with a universal single-payer system. In the case of deficits, the "problem" really will mostly resolve itself by doing nothing. Not so with climate, which will spin out of control if nothing is done.
So, let’s start with climate change. Serious people are and should be deeply worried, indeed horrified, by the lack of action on greenhouse gases. But why? Why not just assume that when climate change becomes undeniable, we’ll do whatever is necessary?Amen. The "serious consensus" isn't serious and has never been serious. I suppose some climate change advocates welcome the attention of the Pete Peterson deficit crowd to the issue. But I just find it incredibly insulting. To equate the two issues is an insult to the magnitude of the climate problem, and gives lawmakers entirely the wrong impression how quickly, urgently and strongly it must be dealt with. There's no "sequester" on climate for which a can can be kicked down the road. And using the urgency of climate activism as an excuse for cutting social security benefits is terribly, terribly wrong.
The answer, first and foremost, is that each year we fail to act has more or less irreversible physical consequences. We’re pumping around 35 billion tons of carbon dioxide into the atmosphere annually; this stuff will stick around for a very long time, and its consequences for warming and sea level rise will last even longer. So each year that we fail to act has a direct physical impact on the future...
Now ask, what in the debate about “entitlements” corresponds at all to this kind of impact? Nothing physical, clearly. You could argue that it would have helped to prepay some of our future costs by paying down debt and indeed having the government acquire assets while the demography was favorable – not because this would have directly increased future resources (debt is money we owe to ourselves) but because it would have reduced the need for higher taxes, and hence the distortionary effect of those taxes. And this argument was, indeed, the reason people like me wanted to protect the Social Security lockbox way back when.
But we didn’t; Bush squandered the surplus on tax cuts and unfunded wars (and was, with notably rare exceptions, cheered on by the very people now lecturing us solemnly on the need to cut entitlements). Now the baby boomers are retiring fast, and as far as I can tell none of the deficit scolds are pushing for a big effort to pay debt down over the course of the next few years.
Instead, they’re pushing for things like a gradual rise in the retirement age and a change in the formulas used to compute benefits – things that will cut future rather than present outlays. Or to put it differently, they aren’t really trying to cut debt; they’re simply trying to lock us in now to the spending cuts they think we’ll eventually have to make anyway. And they never, as far as I can tell, really ask why it’s important to do this now...
The point is that there’s a pretty good case for letting the future of entitlements take care of itself. It’s not a slam-dunk case, but the case for urgency right now is quite weak, and nothing at all like the case that we need to stop pouring all that CO2 into the atmosphere as soon as possible.
Now, you might ask whether it’s really possible that the whole Serious consensus about the budget is based on such weak logical underpinnings. Don’t the great and the good think things through before getting all committed to their views?