Why fiscal hawks and environmentalists should find common ground

Thirty years ago when The Concord Coalition began advocating fiscal and generational responsibility it was already clear that climate change posed a serious threat to the planet. There was not, however, much discussion about how climate change might affect the budget.

It is now increasingly clear that climate change is not just an environmental concern but a major economic and budgetary concern as well. Moreover, in our fieldwork, The Concord Coalition has found that younger audiences are very much attuned to this concern, and for good reason.

We do not face separate economic, fiscal and environmental challenges that can be easily siloed. Instead, we face interconnected challenges that will require farsighted and coordinated policies to avoid chronically slow economic growth, unsustainable budgets and an environmental crisis.    

Younger Americans seem to understand better than their elders that aside from environmental deterioration, which itself poses an existential threat, climate change also poses a substantial threat to their economic well-being and to the nation’s fiscal sustainability.

The Government Accountability Office (GAO) recognized this by adding climate change to its High-Risk report list in 2013, stating, “The federal government is not well-positioned to address the fiscal exposure presented by climate change, and needs a government-wide strategic approach with strong leadership to manage related risks.”

section in this year’s “Analytical Perspectives” of the president’s budget puts it bluntly, warning that, “The Federal Government’s budget is directly and substantially at risk from expected lost revenues and increasing expenditures due to climate change damages in coming decades, such as increasing costs from physical damages to our nation’s infrastructure and healthcare expenditures, the instability of certain subsidized insurance programs, and accelerating instability that threatens global security.”

Climate change is not just a problem for the United States. It is a global phenomenon. 

As noted in a 2021 report by the Organization for Economic Cooperation and Development (OECD), “Climate change impacts may lead to higher public expenditures for the reconstruction of infrastructure or disaster relief transfers, thereby causing an imbalance in public budgets. In addition, climate change may have adverse economic effects that reduce the tax base and thus lower tax revenues, increasing fiscal imbalances. These fiscal consequences of climate change are of special interest for governments around the globe, given that demographic change will already place a large burden on public finances in the coming decades.” It goes on to say, “for assessing the long-term fiscal sustainability of government budgets, environmental and climate-related factors will thus become more important.”

It is time to forge a new alliance between advocates of environmental sustainability and advocates of fiscal sustainability. In the long run, we can’t have one without the other. 

Environmental sustainability will require new resources from the federal government, either directly or through private sector incentives, to mitigate and ultimately prevent the harmful effects of climate change. This, in turn, will require a federal budget and an economy capable of producing such resources without having to rely on a perpetually rising stream of new debt, piled on top of the already unsustainable debt the nation faces in the coming decades. At the same time, ignoring the environmental challenge because it might be deemed “too expensive” would itself imperil future budgets and the economy. 

Environmental and fiscal responsibility advocates must realize the commonality and interdependence of their causes. They should seize the opportunity to join forces in a grassroots movement with a strong appeal to younger Americans to effect change that will help save the planet, stabilize the debt and enhance future economic opportunities.   

Investing in the environment is not a zero-sum game that detracts from economic growth. On the contrary, it holds the potential for new jobs in emerging clean energy industries that will spur economic growth. It would help protect existing infrastructure, homes and coastal communities from the impact of climate change. It would also help to ensure that the U.S. does not become dependent on other nations for the technologies and skills that will propel energy independence.

Environmental and fiscal responsibility advocates already have a common mindset: They think long term. They know that many people, including elected leaders, often do not. And, they know that the failure to think and act long term will result in a diminished or even disastrous future. 

In the short term, it is much easier to ignore these problems. Cutting taxes and raising spending pleases more people than doing the opposite. Revving up the favorite old gas guzzler might be more fun than opting for a hybrid or electric car. It will take a concerted effort to break through and change behavior on both fronts, but the chances of success will be greater by combining forces. 

This does not mean that there is one “right” way to address either climate change or fiscal irresponsibility. There is room for debate among advocates of diverse perspectives and political affiliations. Nor does it mean that anything labeled “green” is necessarily a wise investment. Care must be taken to ensure that waste is recognized as waste, even within a good cause.

What it does mean is that climate change needs a sound fiscal plan and sound fiscal planning must account for the growing threat of climate change. 

Recognizing the vital connection between these dual threats is the first step to finding solutions.

Robert L. Bixby is executive director of The Concord Coalition

Tags Budget Climate change Climate change policy Economy of the United States Politics of the United States

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