US Federal Debt Historically and Projected. Source Congress Budget Office
Guest essay by Eric Worrall
"You see where California is going now, the federal government has to get there." – Radical Greens are rushing to offer their climate policy guidelines to Joe Biden. However, the immediate risk to the US population is not climate change. The greatest short-term risk is an abrupt structural economic adjustment in which even people who keep their jobs are estimated to lose 30% or more of their purchasing power.
A Biden victory positions America for a 180 degree turn on climate change
The new administration will seek to move the US away from fossil fuels and expand public land protection, but is seriously opposed by the Senate GOP.
By Julia Eilperin, Dino Grandoni and Darryl fears
November 8, 2020 at 3:22 pm GMT + 10
Joe Biden, the proposed presidency winner, will seek to restore dozens of environmental protections that President Trump abolished and unleash the boldest climate change plan of any presidents in history. While some of Biden's most comprehensive programs will meet stiff opposition from Senate Republicans and Conservative attorneys general, the United States stands ready to change its policies on climate change and conservation by 180 degrees.
Biden has vowed to eliminate carbon emissions from the electricity sector by 2035 and to spend $ 2 trillion on investments ranging from weathering homes to building a nationwide network of electric vehicle charging points. This massive investment plan stands a chance only if his party wins two Georgia Senate runoff races in January. Otherwise, he would have to rely on a combination of executive action and more modest congressional deals to move his agenda forward.
Gene Karpinski, president of the League of Conservation Voters, pointed to California as a model that has already passed a standard for low carbon fuels and requires half of its electricity to come from carbon-free sources within five years. "You see where California is going now, the federal government needs to get there."
"It's really important to remember that human resources are politics," said Tom Steyer, a billionaire environmentalist who ran into Biden during elementary school but then raised money for him. "And every cabinet position has to be filled by someone who is aware of the climate."
Read more: https://www.washingtonpost.com/climate-environment/2020/11/07/biden-climate-change-monuments/
The Congressional Budget Office estimates that national debt will reach 98.2% of GDP this year and will reach 100% next year. On its current path, the CBO estimates that national debt will hit $ 25.657 trillion by 2024, which is 107% of GDP.
100% GDP debt is bad. The European experience shows that 130% get really bad. Greece entered the 2009 global financial crisis with a debt of 130%, a debt that skyrocketed. Although Greece has had weak growth for a number of years, investors have since stayed away from Greece because of an ongoing credit crunch caused by investor concerns about high government debt.
How close is the US to debt of 130% of GDP? The answer is too close for comfort. After deducting the existing borrowing, the next US president has room to borrow around $ 5 trillion before US national debt hits 130% of GDP.
Biden appears to be aware of the $ 5 trillion mark – Biden claims his green revolution will cost $ 5 trillion. If Biden had cost his plan more than $ 5 trillion, his plan to bring the US national debt above 130% of GDP would have generated a lot of negative comments from US economists.
How does the US solve its debt problem? Cheap energy and a return of production to the US could have reduced the deficit by curbing the continued bleeding of cash to foreign trading partners.
President Trump's support for the slate revolution reduced the U.S. trade deficit to two-thirds of what it would have been without slate. The return of construction orders to the US could end the order by reversing the structural trade deficit and removing a key reason why US national debt continues to rise.
The other possibility is for the US to lead the way in some valuable new technology. The US sovereign debt crisis after World War II was resolved by the post-war production boom. The US used new technology, newly developed US manufacturing capabilities, to pull the economy out of the debt trap of war.
If the US could find a way to say renewable energy works and create an energy system that is cheaper than existing technology, the world would come together to buy a piece of US expertise.
However, there are good reasons to believe that this is not possible. Solar panels and wind are already close to theoretical efficiency. Achieving a few percent more efficiency will not materially detract from the renewable energy balance.
And nothing can solve the horrific capital cost of collecting diffuse, low density renewable energy.
The limits of clean energy
If the world is not careful, renewable energies can become as destructive as fossil fuels.
BY JASON HICKEL | SEPTEMBER 6, 2019, 8:51 am
We need a swift transition to renewable energies, yes – but scientists warn that we cannot continue to increase energy consumption at the existing rates. No energy is innocent. The only really clean energy is less energy.
In 2017, the World Bank published a little-noticed report that provided the first comprehensive look at this issue. It models the increase in material extraction that would be required to build enough solar and wind utilities to produce around 7 terawatts of electricity annually by 2050. This is enough to supply around half of the global economy with electricity. By doubling the World Bank numbers We can estimate what it takes to become emission-free – and the results are breathtaking: 34 million tons of copper, 40 million tons of lead, 50 million tons of zinc, 162 million tons of aluminum and no less than 4.8 billion tons of iron.
In some cases it requires the transition to renewable energy a massive increase over existing extraction levels. For neodymium – an essential element in wind turbines – the extraction must increase by almost 35 percent compared to the current level. High-end estimates reported by the World Bank suggest this could double.
The same goes for silver, which is crucial for solar panels. Silver extraction will increase by 38 percent and perhaps as much as 105 percent. Demand for indium, which is also essential for solar technology, will more than triple and could soar by 920 percent.
And then there are all the batteries that we need for energy storage. To maintain the flow of energy when the sun is not shining and the wind is not blowing, enormous batteries at the grid level are required. That means 40 million tons Lithium – a staggering 2,700 percent increase from current extraction levels.
Read more: https://foreignpolicy.com/2019/09/06/the-path-to-clean-energy-will-be-very-dirty-climate-change-renewables/
The US can survive Biden for four years. Even the US, with 130% debt to GDP, can rebound if the president you elect in 2024 has economics. But the possibility of addressing profound structural economic problems in the US without serious economic difficulties for the common people is rapidly closing.
A continuation of Trump's boom in cheap power generation could have worked, although even that was not a guaranteed way out of the looming US debt trap.
The alternative is, if the US government does not address the underlying economic problems, the US government could lose control of the situation. If the US runs out of money and creditors pull out, there could be a painful structural economic adjustment in which ordinary people suddenly lose an estimated 30% or more of their purchasing power.
US government borrowing has slowed emerging structural adjustment for at least 20 years, but the US government cannot resist the laws of the market economy forever. There is a tight window of time to fix the problem without serious economic problems. Renewable energies are unlikely to be part of the solution.
History teaches us that even the world's great powers will eventually reach their credit limit. The road to ruin is paved with seductive but ultimately unsustainable opportunities for short-term relief, such as desperate borrowing by the US government to stem a painful economic contraction. The other old standby mode is running the printing presses to try to fill a growing hole in public finances and blow off the debt, but we all know how that ends. A breakdown is not inevitable, but when a breakdown occurs, it happens suddenly.