That could come as a surprise to a “particularly distressed” Senator Mitch McConnell (R-KY) — the incoming Senate Majority Leader — who said in a statement that the plan was “unrealistic,” and that it will “increase the squeeze on middle-class families” while ensuring “higher utility rates and far fewer jobs.” House Speaker John Boehner (R-OH) concurred: “It is the latest example of the president’s crusade against affordable, reliable energy that is already hurting jobs and squeezing middle-class families.” House Majority Leader Kevin McCarthy (R-CA) and Sen. James Inhofe (R-IA) piled on as well, saying the deal will “increase the cost of living and further reduce the number of American jobs” and “diminish” economic opportunity.
The key to why they’re wrong, explained Dean Baker, the co-founder of the Center for Economic and Policy Research, is that six years after the Great Recession, the U.S. economy still isn’t running at anything near full capacity. People that could be working remain unemployed, factories that could be operating are still idle, and so on. “We’re somewhere around four to five percent below the economy’s potential,” Baker said. In that context, “anything that spurs additional demand will create jobs. So if we have a regulation that says you have to do X, Y and Z to reduce emissions, then that will be a net job creator.”
The deal Obama struck takes the current U.S. commitment to cut its greenhouse gas (GHG) emissions 17 percent below their 2005 level by 2020, and extends it to a 26-to-28 percent reduction from that same baseline by 2025. While the nuts and bolts are still being worked out, the mechanism for these reductions will likely be further moves in Obama’s strategy of unilateral executive actions, particularly extending the targets for the Environmental Protection Agency’s (EPA) recent rule making to cut emissions from the nation’s power plants.
No matter what, the U.S. economy will continue building new energy capacity between now and 2025 as the economy continues to grow and new needs arise. Thanks to EPA’s rule, more of that capacity will be renewable than if we weren’t making a push to combat climate change. But we’ll also be building new renewable capacity to replace already-operating fossil fuel capacity, and thus reduce emissions. In an economy that was running at full capacity — where everyone was already working and all the factories were already working — that would mean “pulling money out of people’s pockets to employ more people in the energy sector” Baker explained. “That’s a tougher call. Does it mean more jobs or less jobs? You can’t a priori say which way it will go.”
But in our economy, building that extra renewable capacity and installing all those energy saving efficiencies will employ resources that otherwise wouldn’t be put to use. “In a context where we’re below full employment, it’s a pure positive,” Baker said. Furthermore, the construction sector still has one of the highest rates of unemployment of any in the country, and “people in construction absolutely have the skills to put in solar panels and to add insulation to homes” — all the steps that would be needed to fulfill the menu of options EPA gives the states to meet their emission reduction targets.
Read More at No, the New Climate Deal with China Won’t Hurt the Economy — It May Actually Help
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