Why Joe Manchin is Crucial to Biden's Climate Plan
by John Lawrence, January27, 2021
Joe Manchin is a conservative Democrat from West Virginia, probably the most conservative Democrat in the Senate. So why would Joe, who has already signaled his opposition to getting rid of the filibuster, and represents a coal mining state, go along with Biden's climate plan? The answer is that Biden's plan for converting to renewable energy will create a helluva lot of jobs in West Virginia transitioning all those coal related jobs to renewable energy jobs. Make no mistake. Joe Manchin will become a team player after these assurances of massive job creation in West Virginia. Similarly, Biden will target other fossil fuel generating states and communities with massive renewable energy projects so that workers in the fossil fuel industry will be placated and mollified. They will become his biggest fans as millions of good paying, union jobs are created for them. The oil industry's attempts to push back will be futile. They can save money by not lobbying because it won't get them anywhere. Joe Biden holds all the cards.
The genius of going all out for climate change is that Biden is making it an issue of job creation. Not that climate change in and of itself is not the main issue of paramount importance. It's just that reframing it as a jobs issue will take the air out of the oil industry profiteers who are making millions off of the status quo. They like things just the way they are despite the global warming catastrophe that awaits us if we don't act post haste. Joe Biden: "When I think of climate change, I think of jobs." Making John Kerry a Climate Change Envoy to the rest of the world is important because climate change cannot be forestalled within the borders of the US alone. There must be a coordinated, cooperative effort, and, in particular, China, Russia and India must be brought into the deal. What, you mean we can't afford to have any more enemies? We must make friends out of enemies using diplomacy rather than the bullying tactics of the Trump administration if we and the rest of the planet are to survive. Yes and it will nullify the ratinale of the bloated military-industrial complex. Instead of defunding the police, we should defund or reduce the funding of it to help pay for the Green New Deal.
So how are we going to pay for it? That seems to be the outstanding question. Thankfully, we have a former Chairman of the Federal Reserve as Treasury Secretary, Janet Yellin. She knows where the bodies are buried, so to speak, at the Fed. She knows that taxes do not have to be raised to pay or it, at least taxes on the poor and middle class. Taxes on the rich need to be raised, but more to reduce inequality than to pay for the response to climate change. Modern Monetary Theory has demonstrated that the US can never run out of money because it is a sovereign currency issuer. The Fed, as Janet Yellin well knows, can just create the money with a few keystrokes on a computer. This power, however, cannot be used irresponsibly. Inflation must be dealt with, and there are a number of arrows in the Fed's quiver to do this as was done during the build-up to WW II. As Stephanie Kelton has pointed out in her book The Deficit Myth, deficits don't matter. They are simply an accounting entry on the Fed's balance sheet. An unlimited amount of money was available when the banking crisis that caused the Great Recession in 2008 occurred. The Fed doesn't need tax receipts in order to create money which can then be transferred to the Treasury's account at the Fed. However, such transfers do have to be authorized by congress whereas the bank bail-outs did not require such authorization since the Fed is the loaner of last resort to the banks. The Fed can provide liquidity to the banking system whenever it thinks that that is prudent.
In the How to Pay for the Green New Deal the authors write: "Further, in what follows we do not assume that we need to raise taxes simply because government spending rises. The position we take is that taxes should be raised to fight inflation that would result from excess demands on resources. We would not raise taxes merely to balance spending with tax revenue. If more spending does not generate inflationary pressure, we do not need to raise taxes. In any event, we argue below that tax hikes are not necessarily the best way to counteract inflationary pressures should they arise." So tax increases are not necessary to fund a Green New Deal except possibly if the increased government spending would cause increased inflation, but there are other tools available to deal with inflation. Tax increases on the rich, however, are necessary in order that inequality doesn't get even worse than it is now. A recent report showed: "At $4.1 trillion, the total wealth of America’s 660 billionaires is two-thirds higher than the $2.4 trillion in total wealth held by the bottom half of the population, 165 million Americans." Creating new jobs to fight global warming ill help to mitigate both the climate crisis and the inequality crisis, but taxes on the rich will both decrease the need for money creation by the Fed and help to fund a Green New Deal.
