Climate of Fear XX.

The global temperature has risen by 1 degree over the pre-industrial level (c. 1750). As a result, glaciers and sea ice are melting and weather patterns are changing. What will happen if the globe’s temperature rises by more than 2 degrees Celsius/3.6 degrees Fahrenheit over the pre-industrial level? The sea-level will rise by at least two feet as polar ice melts. In addition, climate scientists predict record high heat, drought, and famine.[1]

Is there a way to prevent these misfortunes? Yes/No. Global warming is caused by the emission of the “greenhouse gas” carbon dioxide as the result of burning carbon for energy. Currently, the world is headed toward emitting 59 billion tons of carbon dioxide per year by 2030. This would push global temperatures over the 2 degrees Celsius mark, probably to 4 degrees Celsius above the pre-industrial level. Climate scientists and the government officials whom they have persuaded of the danger hope that an international agreement will reduce emissions to 40 billion tons per year by 2030. That is a one-third reduction in emissions over the next fifteen years. However, that probably would hold the temperature rise to a 2.7-3.5 degrees Celsius rise above the pre-industrial mark. In short, well beyond the tipping-point.

A conference on climate change is scheduled for Paris in December 2015. In the run-up to the conference, the United Nations asked all 195 countries to submit a specific target for their reduction in emissions by 2030. The United States has committed to cut emissions by 26-28 percent below the 2005 level by 2025 through shifting energy production from coal to solar and wind, and by increasing the fuel-efficiency of vehicles. China has committed to reaching peak carbon-burning and drawing 20 percent of its energy from renewable sources by 2030. In addition, 148 other countries have submitted targets for reducing emissions.

Fine, that’s the good news. What’s the bad news? There’s plenty.

First, the Obama Administration doesn’t want the agreement reached in Paris to be a “treaty” that would be legally binding on its signers. Treaties have to be approved by the Senate. President Obama knows that he couldn’t get such a treaty through the Republican-dominated Senate.[2] However, that would leave the application of the agreement to whoever wins the election in 2016. In short, it would be no commitment at all. For that matter, the US reductions themselves are to be implemented by executive orders and regulatory changes, not legislation.

Second, India will not play ball. All it has is coal and 1.3 billion people (most of them very poor) who want a better life. Although it is already the third-biggest coal burner, India plans to double its coal production by 2020.

Third, very recently, China was “shocked, shocked to discover” that it has been burning far more coal than it had told the world. Hence, it’s commitment to reach peak carbon burning by 2030 is starting from a much higher base than had been supposed and the peak will be correspondingly higher still.

In sum, whatever agreement is reached at Paris in time for Christmas, isn’t likely to hold the line against climate change. Either an even more serious and costly effort will have to be made in the future or we’re just going to adapt to a changed environment.

The Woodrow Wilson-Barack Obama and the Versailles Treaty-Paris Climate Accord analogies will soon be flying like snow-flakes. Well, they would be if global warming hadn’t messed up the weather.

[1] “A crucial climate summit,” The Week, 4 December 2015, p. 13.

[2] For one thing, Senate Majority Leader Mitch McConnell (R-Kentucky) is incensed by President Obama’s plan to wreck the major industry in his state.

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Toward the cliff.

In brief compass, the “supply side” theories of the Reagan administration de-stabilized the traditional budget by cutting taxes without cutting expenditures.[1] Deficits expanded. However, observers were more concerned about the budget deficits that would be driven by the cost of entitlements—Medicare, Medicaid, and Social Security—for Baby Boomers. If one takes as a given that government can only account for some fixed share of GDP, then the growth of entitlements will crowd out spending on other areas: defense and the wide range of government functions labeled as “discretionary spending.”[2] These entitlements are so popular and the mythology surrounding them so powerful that the elected representatives in a democratic polity were unwilling to address them. The problem festered.

Then came the Great Recession. In 2009, the government’s deficit peaked at over 10 percent of Gross Domestic Product (GDP). By 2013 the Congressional Budget Office (CBO) projected that the deficit would fall to 2.1 percent of GDP. Moreover in September 2013 the CBO projected that short-term government deficits would shrink, thanks to the economy’s recovery from the Great Recession and the cuts enforced by “zee zequester.” So, the deficit has been mastered. We’re good, right?

Well, no. The deficit arising from the Great Recession has been mastered. However, that was a matter of course. Counter-cyclical deficit spending has been the normal response to recessions for half a century. Economic activity revises, spending falls, and tax revenues increase, so the deficit goes away.[3]

However, the deficit arising from entitlement programs has not been mastered. Or addressed. Or even acknowledged. Social Security, Medicare, and Medicaid are about to rise sharply in total cost as the fabled Baby Boomers begin to retire in droves. From 1973 to 2013, spending on Medicare, Medicaid, and Social Security averaged 7 percent of GDP per year; the CBO projects that they will rise to 14 percent of GDP by 2038. By 2023, government spending will rise to 3.5 percent of GDP; by 2038 it would reach 6.5 percent. The trouble is that the economy will not grow as much as does government spending. Moreover, federal revenues are projected to rise by only 2 percent of GDP over the same period. Hence, this will drive up the deficit from the 38 percent of Gross Domestic Product (GDP) that formed the average from 1968 to 2008 to 100 percent of GDP in 2038.

Neither Republicans nor Democrats have shown any willingness during the Obama Administration to address this important long-term problem. The administration has concentrated tis efforts on raising taxes on the higher income groups, rather than on trying to contain or reduce costs. The Republicans have concentrated on trying to repeal the Affordable Care Act, rather than on trying to address the ballooning costs of entitlement programs.

Nor is it likely to emerge as a major issue in the 2016 presidential election. Older people vote in larger percentages than do younger people. No one has yet formulated a way to deliver the same quality of medical care or retirement income at a much lower cost. No one yet has formulated a way to raise substantially larger tax revenues from all Americans.

[1] Jackie Calmes, “Budget Office Warns That Deficits Will Rise Again Because Cuts Are Misdirected,” NYT, 18 September 2013.

[2] Obviously, one does not have to agree that some fixed share of the economy should be devoted to government spending. Certainly Senator Sanders does not.

[3] See Paul Krugman’s terse, withering evaluation of President Obama’s performance in this regard in NYT, 8 May 2015.