"Huge" Costs Of Climate Agreement Turn Out To Be Not So Huge After All

One sure-fire way to scare people is to throw out a big number without any context at all and I will readily admit that I’m not immune from that problem. But that’s also why I put together my Reality Check series so that some of these numbers, especially those relating to our national debt and deficit, are put into some reasonable context. Yesterday, the Wall Street Journal pulled the same trick in an article citing a Columbia Business School economist that outlines the costs of President Obama’s pledge to reduce greenhouse gas emissions by 80% by 2050. The sub-headline reads “President Barack Obama’s pledge to reduce emissions by 80% by 2050 would cost $5.3 trillion, a new study shows”. Wow, that sounds like an incredible amount of money – how can we possibly afford it? Reading a little farther, in Trumpian fashion, we are told that indeed the numbers are “huge”. But in the very next phrase, we also find out that it is $5.3 trillion over 30 years, or about $176 billion per year. Well that sounds a little better, but $176 billion is pretty big on its own. A little farther on, we read that improved battery technology might actually reduce that cost to $42 billion per year. That is actually beginning to sound almost manageable. We then learn that the US has already reduced emissions from the 2005 baseline that Obama was using, meaning that we are already 1/8 of the way to the emission targets. Finally, we learn that the study does not take into account any savings from the improved environment, either through better health or reduced storm damage. So maybe this really isn’t going to cost that much after all. The article mentions that Hillary Clinton would maintain Obama’s pledge while Trump would scrap it before ending an a down note with a quote from the author of the study, “It’s a sad comment on the political debate. This will affect people’s children and grandchildren.”

As Dean Baker points out, perhaps the parents of our children and our grandchildren would be helped by a little context. In the $20 trillion dollar GDP economy that we are projected to have, $176 billion  is just 0.9% of GDP. At their peak, the wars in Iraq and Afghanistan were consuming nearly 2.0% of GDP, more than twice as much as the cost of Obama’s program. He also makes the point that the reduction in potential output that was caused by the financial crisis is 10 times larger than the “huge” $5.3 trillion cost presented. Another way to put this in context is that, as of 2013, the US had already spent $2 trillion on the wars in Iraq and Afghanistan. And the projected costs for those conflicts are expected to grow to between $4 and $6 trillion dollars when you take into account the continued cost of care for wounded veterans and the replenishment of our armed forces. I’m pretty sure the Wall Street Journal never described the costs of those wars as “huge” and intimated that they were unaffordable. The sad part is that this article was in the economy section of the Journal as opposed to its factually challenged editorial page. It just shows how far the standards of the paper have fallen under the control of the Murdochs.