“We’ve been fighting for this for decades,” he told The New York Times. “Now I can look my kids in the eye and say we’re really doing something about climate.”
Schatz apparently means well. But the bill he voted for is about as much of a mess as he was after he voted.
Neither will it have much effect on inflation. The anti-inflationary part of the bill comes from $300 billion in higher taxes that will put downward pressure on supply and increase the risk of recession, which would require Federal Reserve interest rate reductions that increase inflation.
The new taxes are only about 0.12 percent of gross domestic product in the coming year. The effect on 9.1 percent inflation could be about the same percentage—almost nothing.
Climate optimists will counter that the climate part of the bill will have a demonstration effect in which the rest of the world, most notably China and India, take notice and decrease emissions. But this is unlikely.
Beijing is more concerned with ruling the world. New Delhi is trying to remain free of China’s hegemony and knows it needs a thriving economy to achieve this.
Most Americans don’t understand these global dynamics. We aren’t contextualizing our climate politics in the multidimensional chess board on which we and everybody else find ourselves increasingly at a disadvantage to Beijing.
The new climate spending matters because, again, contrary to what Democrats think, it will have deleterious repercussions for the economy on which we depend to defend ourselves from China.
Over the course of this decade, according to The Atlantic, the three acts together will spend almost $80 billion annually on climate measures that will have almost no effect on the climate but will put upward pressure on inflation.
There’s also an opportunity cost when it comes to our defenses against the regime in Beijing. Currently, the People’s Liberation Army puts more ships in the ocean annually than the U.S. Navy does. They are building faster than we are. Eventually, they could push us out of Asia, which would lead to the crumbling of our alliance systems.
That dire eventuality could be forestalled had we instead spent the hundreds of billions of climate funding on 200 nuclear submarines for ourselves and our allies.
If China is allowed to pump all of that oil and gas, emissions will increase.
Those hundreds of billions in new defense spending might even have brought these two climate rogues to the negotiating table to address their emissions in a serious way, at which point we could safely address our own.
Without China and Russia joining us by together making the economic sacrifices that emission reduction requires, including transaction costs from transitioning to clean energy, we’re risking the international rule of law upon which all else depends.
Without making U.S. climate sacrifices contingent on progress in China and Russia, at least, our drops in the climate bucket are just weakening the United States and, therefore, democracy.
Instead, we need to use our limited resources to leverage the world toward net zero. We can’t achieve it alone or through a demonstration effect. We don’t live in isolation and need to lead on global climate issues, not pretend we can make real change through symbolism.
