Instead of CO2 cuts, why not focus on adaptation? Why cut GDP growth over the century by 12-13% when the costs of adaptation will be much lower (“the majority of economic models show that unconstrained global warming would cost rich nations around 2% of GDP and poor countries around 5% by 2100.”). And Lomborg argues that putting serious technology efforts online as part of this adaptation effort can actually make it a winning proposition.
Meanwhile, “a high carbon tax will simply hurt growth if alternative technology is not ready, making us all worse off.”
In short, spend (on technology) to save, not cut (emissions).
Politics and policy from inside Washington
From Brad DeLong:
Had John McCain won the presidential election of 2008, at the start of 2009 he would have in all likelihood proposed a trillion dollar fiscal stimulus bill–3/4 tax cuts and 1/4 aid to states–and he might have picked Tim Geithner for his Treasury Secretary. Democrats would have called for fewer tax cuts, more state aid, and some government infrastructure spending initiatives in the fiscal policy mix, but the need for the government to cushion the recession would have brought them into line. When Obama took office he bid $800 billion for his fiscal stimulus bill–about 1/3 spending, about 1/3 aid to states, about 1/3 tax cuts–thinking that would be a plan that would win broad bipartisan assent. And he was wrong.
Me: I agree that he would have “spent money” by cutting taxes more. But there is every reason to believe that large payroll tax cuts may have better met the “targeted, timely and temporary” formula. And been more effective. Thus they could have been smaller. And then Congress could have passed a separate infrastructure bill for repair ofvboth our transportation system and upgrading the grid.
This analysis of Amtrak is worth reading in full. But I like this paragraph in particular:
Even though the American freight-train business has enjoyed a renaissance in the last twenty years — companies like the Burlington Northern Santa Fe and CSX are admirable for their competitive spirit and financial results — I am skeptical that Amtrak is the company that can lead the way to the re-birth of U.S. passenger service. Freight, let’s remember, only flourished when Conrail was privatized and the industry deregulated.
To be clear, the $8 billion appropriated for high-speed corridor service has yet to be earmarked, and is best understood as discretionary funding that can be doled out to the states, if not to loyal unions. For his part, Senate majority leader Harry Reid hopes to open a drawbridge to fund high-speed rail service between Anaheim and Las Vegas.
Somehow, it is hard to imagine that the U.S. can restore its economic prosperity by rushing heavy rollers to the blackjack tables in Vegas.
Might the POTUS get rid of all the Bush tax cuts, even the ones for the middle class? Larry Summers certainly has hinted at this. And I missed this one from the WaPo a couple of weeks back:
As president, Obama has called for maintaining some of those policies –he would extend some of the Bush tax cuts beyond their 2010 expiration date, for example. But in light of the new deficit figures, Orszag hinted that Obama may revisit some of those decisions when he submits his next budget in February.“Whatever their cause, the administration is very concerned about those outyear deficit figures,” Orszag said, “and getting those deficits under control is a top priority of this administration.”
The great Lawrence Kudlow tells a hard truth, I think, about the economy and the day after tomorrow:
The threat of higher payroll taxes and energy costs is more than enough to deter new hiring. Taxes on upper-end investors are going to rise, too, and there may be a health-care surtax on top of that. And don’t forget that small businesses pay the top personal tax rate, which is going up. Oh, and how about the recent minimum-wage hike? Yet another business cost.
So while the government doles out money for transfer payments and one-time temporary tax credits, the ensuing increase in the private-sector tax-and-financing burden becomes a complete deterrent to new job creation, as well as capital formation.
We’re going to recover. Improved ISM reports for manufacturing and services, along with better profitability for big corporations, suggest we’re looking at a mild, V-shaped recovery of 3 percent. But it will be a jobless recovery.