UMWA president talks about Biden's energy plans

• By Jackie Whetzel for The Register-Herald
 
• Mar 6, 2021
 

https://www.register-herald.com/news/state_region/umwa-president-talks-about-bidens-energy-plans/article_91496246-6b77-5eb5-b2ec-7bf22050e2c9.html

United Mine Workers of America (UMWA) President Cecil Roberts says he has no doubt America can learn to burn coal in a clean manner, and he's hopeful President Joe Biden will come up with a rapid plan to replace all of the coal-related jobs that will be eliminated under his clean energy plans.

Biden has been vocal about his desire to transition America to 100 percent renewable energy for electricity generation by 2035 and net-zero emissions by 2050.

To do so, fossil fuels will have to be retired.

Biden wants the U.S. to lead when it comes to addressing the world's climate emergency.

While Biden's plans would likely have a positive impact on the environment, they could also be devastating to coal communities in West Virginia and throughout Appalachia – despite the president's talk of wanting to assimilate coal workers into new industries when mining jobs go away.

In a one-on-one phone interview, Roberts told The Register-Herald that Biden's energy plans "concern us greatly."

"We knew based on his campaign what his plans would be with respect to energy," said Roberts. "I know President Biden wants to do the right thing. I don't doubt that at all – that's not the issue."

Roberts said the problem is thousands of workers will be unemployed under net-zero emissions – and there is no concrete strategy to replace the multitude of coal industry jobs that will be lost.

"You see a state like West Virginia and areas like Kentucky, Indiana and Alabama – they're all heavily dependent on coal," Roberts said. "We're talking about doing this in 14 years. Think about that. We're going to change the entire method of producing electricity by eliminating all these jobs. What do we do with the workers?"

It has been said that the Biden administration plans to create millions of jobs in renewable energy fields, but Roberts says he has to see evidence that those jobs are being created before thousands of workers are left unemployed.

"Just think about this for a moment," Roberts said. "The 2035 net zero emissions would eliminate not only coal, but it would also eliminate natural gas.

"The idea that we would be using, as a country, renewable and renewables only – A, I don't think that's possible. B, I don't think that's pragmatic. And C, It would be devastating to the economy in Appalachia where you and I come from," Roberts said, specifically referencing West Virginia.

Many of the union workers Roberts represents have shared their concerns about how they will provide for their families if the coal industry is eliminated.

"We've (already) lost thousands and thousands of jobs across Appalachia, and there hasn't been a plan for helping find jobs that were equivalent to these (coal) jobs. So the question is: What's the plan here? Or is there a plan?" he said.

In a December 2019 Newsweek article, Biden was quoted on the campaign trail saying, "Anyone who can go down 300 to 3,000 feet in a mine can sure as hell learn to program as well," referring to computer-related jobs.

Some Americans dubbed these comments "tone deaf" and "unhelpful."

At the time, American Coal Council CEO Betsy Monseau said it was a "lack of appreciation" for what miners actually do.

When asked about Biden's comments, Roberts said, "I think coal miners can do anything."

However, we're still not talking about union jobs that offer an equivalent wage and benefits, he said.

Former presidential candidate John Kerry has been quoted saying coal miners can be put to work installing solar panels.

"That's fine," Roberts said, "except those aren't union jobs and don't pay much."

Aside from massive job losses, Roberts says transitioning to clean energy is also a hard pill to swallow because it will make America more reliant on China.

"What we're talking about doing here is helping China out economically," Roberts said. "Two-thirds of all solar panels in the world are made in China. Two-thirds of all wind turbines are made in China. If we're going to do this, let's do it in Appalachia and put thousands of people to work and make them union jobs represented by the UMWA."

Also bringing the demise of the steel industry into the conversation, Roberts said, "We don't produce steel in this country and we've just stopped talking about it. Why can't we have a steel industry again in America?"

Roberts was once a miner himself and hails from a family deeply rooted in the mining industry. His father was also a steel employee.

He says he understands the job and has dedicated his life to fighting for the rights of union coal workers.

He plans to continue what he considers an uphill battle.

"We will defend these jobs because we know how hard it is to replace them," he said. "The administration should be working hard to create these high-paying jobs before eliminating them. That doesn't work well in my mind – and I don't think it works well for the people of Appalachia, either."

Roberts recalled the time when coal jobs were abundant across Appalachia.

Those days are long gone – and few industries have moved in to replace many of these old coal communities.

Roberts can recall standing 20 feet away from former president Barack Obama once when he was running for president in 2008.

"He said, 'If we can find a way to put a man on the moon, we can burn clean coal,'" said Roberts. "The only thing we've failed to do here is put the money and resources into this.

"I have no doubt that we can burn coal cleanly. We have people who say to us, 'You don't believe in science and technology.' I believe in both of them," he said. "The question is: Do they believe we can use technology to utilize coal cleanly in a coal-fired power plant?"

A recent CNBC article cited a Bureau of Labor report stating that there were less than 50,000 coal jobs at the end of 2020.

"2020 was the worst year for coal mining," Roberts said. "50,000 is about right, yes. It might even be lower than that. It will be higher at the end of 2021, but the jobs in the coal mining industry will be at risk."

When asked if miners should be concerned for the future of their careers, he said, "Yes."

"For 10 years, I've told myself it's like the fight that never ends," said Roberts, referencing his fight to keep miners' pensions and health care.

Roberts is currently the longest serving president of the UMWA. He could have retired years ago but has elected to continue working.

"I'm not planning on leaving in the middle of this fight. I've met a lot of wonderful people along the way. I've been blessed."

--

John Case
Harpers Ferry, WV

Enlighten Radio

Socialist Economics

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Strengthening workers’ right to organize is 50 years overdue [feedly]

Strengthening workers' right to organize is 50 years overdue
https://www.epi.org/blog/strengthening-workers-right-to-organize-is-50-years-overdue/

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Luxemburg 150 [feedly]

Luxemburg 150

Mike Roberts memorializes Rosa Luxemburg.

I think, in hindsight, they all got parts of Imperialism right, but strayed unnecessarily from Marx's original thesis that capitalism would overtake ALL previous ancestral systems in time throughout the world. That is still happening. "Imperialism -- stronger nations drawing weaker ones into their markets, but not without overrunning institutions and stimulating economic and political instability. The dominance in an economy of primarily inputs or primarily outputs, depending on uneven levels of development, steadily emerges into new states of globalization shaped by global geopolitical struggles.
https://thenextrecession.wordpress.com/2021/03/06/luxemburg-150/

Yesterday, 5 March 2021, was the 150^th anniversary of the birth of Rosa Luxemburg, the great revolutionary socialist of the Polish-German labour movement.  Luxemburg's contribution to socialist ideas and to the struggle to replace capitalism is too manifold for a short blog post to do her justice.  So I won't attempt to do a proper job here.  Instead, I shall offer a few comments on her contribution to Marxist political economy along with some suggestions for some very useful critiques of her work.

Since the 1970s there has been a Collected Works in German. But more recently, there is a new Complete Works in English, edited by Peter Hudis, in fourteen volumes.  As Hudis explained in an article in Solidarity 356 (11/3/15: bit.ly/hudis-rl), "given the amount of time, care, and attention that she gave to developing her major economic works, it makes sense to begin the Complete Works with her contributions to the field of Marxian economics and those fill the 1200 or so pages of the first two volumes."

Luxemburg's four actual books (three published, and a larger one never completed) were all about economic theory: The Industrial Development of Poland, The Accumulation of Capital, the Anti-Critique, and the Introduction to Political Economy.  She was a formidable economist by all standards, and one who reckoned that economics was "her field". Her most famous work was The Accumulation of Capital in which she set out to refute the reformist views of Bernstein and Kautsky, the German Social Democrat leaders, that capitalism would not 'collapse'; and the theory of Rudolf Hilferding, the Austrian Marxist that monopoly and finance capitalism would provide a degree of stability for capitalist accumulation.

As is well known among Marxist circles, Luxemburg attempted to refute these views in her book by arguing that there was an inherent tendency for capitalist accumulation to overreach the market for buying the goods and services being produced.  In her view, that showed that capitalism could and would get into crises; and moreover, it also explained imperialist expansion.  To avoid  crises of overproduction at home, capitalism was forced to search for new markets overseas and find buyers for its goods in the non-capitalist sectors of the world.

She argued that Marx's analysis of crises fell short here.  Marx had failed to see in his reproduction schemas in Volume Two of Capital that this was the ultimate cause of crises: namely the overproduction of capital goods relative to demand (both from capitalists and workers in the imperialist countries), forcing capitalism to find that demand from the colonial non-capitalist peasants.

She was not afraid to take on Marx as well as other leading theorists.  As she concluded in her Anti-Critique: "Marxism does not consist of a dozen persons who have granted each other the right to be the 'experts', before whom the masses are supposed to prostrate themselves in blind obedience, like loyal followers of the true faith of Islam. Marxism is a revolutionary outlook on the world that must always strive toward new knowledge and new discoveries… Its living force is best preserved in the intellectual clash of self-criticism and in the midst of history's thunder and lightning".

There are many effective critiques of Luxemburg's thesis.  I can list a few papers here that go into those critiques in much more detail than this short post.

https://imhojournal.org/articles/henryk-grossmann-vs-rosa-luxemburg-causes-meaning-economic-crises-not-just-history-karel-ludenhoff/

https://thenextrecession.files.wordpress.com/2017/07/henryk_grossman_on_imperialism.pdf

https://www.workersliberty.org/story/2019-01-16/luxemburg-economics-crises-and-national-question

https://thenextrecession.wordpress.com/2016/06/29/modern-imperialism-and-the-working-class/

I think the most effective critique of Luxemburg's crisis theory came from Henryk Grossman.  Grossman acknowledged Luxemburg's work.  He agreed with her that the expansion of imperialism was due to the capitalist system's proneness to economic crises. But he differed from Luxemburg in regarding imperialism as a factor which offset the tendency for the rate of profit to fall, not as the need for capitalism to find markets for over-production. Imperialism was a counteracting factor to the key underlying cause of crises and 'breakdown' in capitalist production, namely the tendency for the rate of profit on capital to fall over time.

Lenin was also critical of Luxemburg's explanation of imperialism.  In his famous book on Imperialism, he argues that imperialism is the result of capitalism's need to export capital which arises "from the fact that in a few countries capitalism has become 'overripe' and (owing to the backward state of agriculture and the poverty of the masses)" and "capital cannot find a field for 'profitable' investment."  Grossman went further than Lenin: "[W]hy," then, "are profitable investments not to be found at home?…..The fact of capital export is as old as modern capitalism itself. The scientific task consists in explaining this fact, hence in demonstrating the role it plays in the mechanism of capitalist production."

Luxemburg knew from reading Marx's Capital about the law of profitability, although Marx's notes on Capital, Grundrisse, were not available to her. But she dismissed the law as irrelevant to capitalist crises.  For her, the law was a long-term thing. Indeed, it was so long-term, as she famously put in Anti-Critique, when answering criticisms of her Accumulation book, that "There is still some time to pass before capitalism collapses because of the falling rate of profit, roughly until the sun burns out".

But Marx did not see the law of profitability as something in geological time but very relevant to human time.  "When Adam Smith explains the fall in the rate of profit from an over-abundance of capital, an accumulation of capital, he is speaking of a permanent effect and this is wrong.  As against this, the transitory over-abundance of capital, over-production and crises are something different.  Permanent crises do not exist." (Theories of Surplus Value).

Peter Hudis has added an interesting anecdote to Luxemburg's rejection of Marx's 'most important law in political economy'. He wrote to me in an email:  "what is less well known, is the person she is responding to" in dismissing the relevance of the law of profitability in crises. "He was an anonymous reviewer of 'The Accumulation of Capital' in 'Dresdener Volkszeitung' of January 1913.  Several years ago, when I was editing 'The Letters of Rosa Luxemburg', I managed to track down that the author was Miran Isaakovich Nakhimson. Born in 1880, he joined the Bundists in 1898 and became known as one of its most prominent political economists. Although virtually forgotten today, he was a considerable presence at the time."

Hudis goes on: "It's fairly clear from Luxemburg's correspondence that she was particularly irritated by Nakhimson's critique–which is interesting, since he was virtually alone among her critics in going after her for neglecting Marx's law of the rate of profit. In a letter to Franz Mehring in February, 1913, she writes, "Too bad that Nackhimson has a slap in the face coming to him, but perhaps in the end this would be too great an honor to give this scoundrel and expert at confusion."  A little harsh, it seems, on the Bundist economist.

Rosa Luxemburg was murdered by the Freikorp troops under the control of the Social Democratic government during the 1919 uprising.  Nakhimson was murdered by Stalin's NKVD in 1938.  Both economists were revolutionary fighters for socialism and suffered a similar fate, if by different hands.

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The ‘$15 minimum wage is too expensive for Peoria’ argument doesn’t hold water: Five reasons why [feedly]

The '$15 minimum wage is too expensive for Peoria' argument doesn't hold water: Five reasons why
https://www.epi.org/blog/the-15-minimum-wage-is-too-expensive-for-peoria-argument-doesnt-hold-water-five-reasons-why/

The one argument made often in the debate over raising the minimum wage to $15 an hour nationwide by 2024, is that you can't expect to pay the same wages in Chicago as you do in Peoria.

Such an increase, critics contend, will bankrupt small businesses, will impact payroll decisions for corporations with operations nationally, will raise wages beyond what folks outside of big cities need to make ends meet—and will ultimately hurt local economies.

Turns out, these arguments are bogus.

Here are five reasons why:

1. $15 anywhere in this country makes cost-of-living sense.

Today, in all areas across the United States, a single adult without children needs at least $31,200—what a full-time worker making $15 an hour earns annually—to achieve a modest but adequate standard of living. By 2025, workers in these areas and those with children will need even more, according to projections based on the Economic Policy Institute's Family Budget Calculator.

For example, in rural Missouri, a single adult without children will need $39,800 (more than $19 per hour for a full-time worker) by 2025 to cover typical rent, food, transportation, and other basic living costs.

In larger metro areas of the South and Southwest—where the majority of the Southern population live—a single adult without children will also need more than $15 an hour by 2025 to get by: $20.03 in Fort Worth, $21.12 in Phoenix, and $20.95 in Miami.

In more expensive regions of the country, a single adult without children will need far more than $15 an hour by 2025 to cover the basics: $28.70 in New York City, $24.06 in Los Angeles, and $23.94 in Washington, D.C.

2. Expensive cities are already at $15 an hour or higher.

Since the Fight for $15 was launched by striking fast-food workers in 2012, nine states (California, Connecticut, Florida, Illinois, Maryland, Massachusetts, New Jersey, New York, Virginia) and the District of Columbia—together representing approximately 40% of the U.S. workforce—have approved raising their minimum wages to $15 an hour.

Additional states—including Washington, Oregon, Colorado, Arizona, New Mexico, Vermont, Missouri, Michigan, and Maine—have approved minimum wages ranging from $12 to $14.75 an hour.

3. Many business owners and corporate executives are realizing the value of a $15 minimum wage.

In states that have already approved $15 minimum wages, business organizations representing thousands of small businesses have endorsed a $15 minimum wage.

Business groups that have endorsed a $15 minimum wage include Business for a Fair Minimum Wage, the American Sustainable Business Council, the Patriotic Millionaires, the Greater New York Chamber of Commerce, the Long Island African American Chamber of Commerce, and others.

Growing numbers of employers have responded to pressure from workers and raised their starting pay scales to $15 or higher. These include retail giants Amazon, Whole Foods (owned by Amazon), Target, Walmart, Wayfair, Costco, Hobby Lobby, and Best Buy; employers in the food service and producing industries, such as Chobani, Starbucks, Sanderson Farms (Mississippi), and the Atlanta-area locations of Lidl grocery stores; health care employers, including Michigan's Henry Ford Health System and Trinity Health System, Ohio's Akron Children's Hospital and Cincinnati Children's Hospital Medical Center, Iowa's Mercy Medical Center and MercyCare Community Physicians, Missouri's North Kansas City Hospital and Meritas Health, and Maryland's LifeBridge Health; insurers and banks such as Amalgamated Bank, Allstate, Wells Fargo, and Franklin Savings Bank in New Hampshire; and tech and communications leaders such as Facebook and Charter Communications.

4. Workers making a higher minimum wage are less likely to be dependent on public assistance, reducing the burden on cash-strapped state and local governments.

In states without laws to raise the minimum wage to $15, nearly half (47%, or 10.5 million) of families of workers who would benefit from the Act rely on public supports programs in part because they do not earn enough at work.

These workers and their families account for nearly one-third of total enrollment in one or more public supports programs.

In states without a $15 minimum wage law, public supports programs for underpaid workers and their families make up 42% of total spending on Medicaid and CHIP (the Children's Health Insurance Program), cash assistance (Temporary Assistance for Needy Families, or TANF), food stamps (Supplemental Nutrition Assistance Program, or SNAP), and the earned income tax credit (EITC), and cost federal and state taxpayers more than $107 billion a year.

5. When low-wage workers get a raise, they're more likely than higher-wage workers to spend every extra dollar they earn on basic necessities—putting that money right back into the economy.

From a general macroeconomic perspective, raising the minimum wage in a period of depressed consumer demand is smart policy (though it is worth keeping in mind that the minimum wage wouldn't go to $15 immediately under the Raise the Wage Act, it would be phase in in five gradual steps, reaching $15 in 2025).

Minimum wage hikes put extra dollars in the pockets of people who are highly likely to spend every additional cent they receive, often just to make ends meet. Workers who benefit from an increased minimum wage disproportionately come from low-income households that spend a larger share of their income than business owners, corporate shareholders, and higher-income households, who are likely to save at least some portion of the dollars that finance a minimum wage hike. As a result, raising the minimum wage boosts overall consumer demand, with research showing that past raises have spurred greater household buying, notably on dining out and automobiles.

(Related post: Why the U.S. needs a $15 minimum wage: How the Raise the Wage Act would benefit U.S. workers and their families.)

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Dean Baker: Environment Versus How Many Jobs? [feedly]

Much as I love Dean, saying energy -- or for that matter, industrial -- workers are a more negligible component of the workforce than in earlier decades wrongly understates their power in the real economy, and in the labor movement. When you imply you can leave energy, manufacturing, construction workers "behind" -- and that iS the implication -- is like inviting the labor movement to a race with one of its legs gone. If labor is not capable of becoming fully engaged, I predict not much progress will be made against reaction. Leaving out -- or leaving in second place --  compensation and transition to these workers in Green New Deal programs is an invitation to defeat.

Environment Versus How Many Jobs?

Dean Baker
http://feedproxy.google.com/~r/beat_the_press/~3/h-8RcGE1bXU/

The Washington Post had an article on concerns among unions about job loss due to various measures from the Biden administration to promote clean energy. The article noted concerns that Biden's agenda may lead to the loss of good-paying jobs in the fossil fuel sector.

It would have been helpful to point out how many jobs are potentially at stake. According to the Bureau of Labor Statistics, fossil fuel powered electric plants and the pipeline industry, the two sectors discussed in the piece employ 78,700 and 48,200 workers, respectively.

The workers employed in fossil fuel power generation are a bit more than 0.05 percent of total employment, while employment in the pipeline industry is just over 0.03 percent. Employment in fossil fuel power generation was already falling rapidly under the Trump administration, declining by 16,800, or 18.0 percent, over the last four years.

It is also worth noting that in a typical (pre—pandemic) month, roughly 1.8 million workers lose their jobs. Over the course of a year, this would come to 27 million. (Some workers lose a job more than once in a year, so this does not mean 27 million workers lose their job.) The job loss in these industries due to the promotion of clean energy would presumably take place over many years, not all at once.

The fact that other workers frequently lose their jobs does not reduce the hardship for workers losing relatively good paying jobs in the fossil fuel industry. But it is important to place the potential size of the job loss in some context. And, in the case of the fossil fuel power generation sector, it is important to note that there was already substantial job loss under Trump, so job loss is not a new problem that will be created by Biden's policies, even if it may be accelerated.

The post Environment Versus How Many Jobs? appeared first on Center for Economic and Policy Research.

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https://equitablegrowth.org/jobs-report-a-year-into-the-coronavirus-recession-employment-losses-have-been-greatest-for-black-women-workers-and-latinx-workers/

https://equitablegrowth.org/jobs-report-a-year-into-the-coronavirus-recession-employment-losses-have-been-greatest-for-black-women-workers-and-latinx-workers/

One year after the onset of the coronavirus recession, the U.S. labor market is still a long way from its February 2020 employment levels, but saw important job gains last month. According to the latest Employment Situation Summary by the U.S. Bureau of Labor Statistics, the U.S. economy in February added 379,000 nonfarm payroll jobs—the greatest month-over-month gain since October of last year.  

Today's release also shows that between mid-January and mid-February the overall unemployment rate fell from 6.3 to 6.2  percent, with 50,000 workers re-entering the U.S. labor force. Across sectors, last month's job gains were concentrated in leisure and hospitality, which added 355,000 jobs. Yet data on employment changes over the entire year show that the downturn remains especially hard for this sector and for service-providing industries in general. (See Figure 1.)

Figure 1

The economic pain brought on by the downturn continues to fall heaviest on some groups. The jobless rate stands at 9.9 percent for Black workers, at  8.5percent for Latinx workers, at 5.1 percent for Asian American workers, and at 5.6 percent for White workers. Disaggregating the data further shows that over the past 12 months, net job losses have been greatest for Black and Hispanic women and men—groups for whom employment declined by  9.7 percent and 8.6 percent, respectively. (See Figure 2.)

Figure 2

Hispanic men's experience during the coronavirus recession

For Hispanic men, overall job losses are less severe than for women workers or Black men. Yet their experience during this recession also highlights important challenges they face in the labor market. For instance, Hispanic men are overrepresented in jobs that cannot be done from home. Despite accounting for about 8 percent of the U.S. workforce, these workers represent about a quarter of the construction workers and about 1 in 5 workers in the mining sector. In part as a result of their industry and occupational distribution, Hispanic men are facing risks associated with in-person work and have been more likely to experience joblessness than their White, non-Hispanic peers—a trend that risks entrenching longstanding inequities between the two groups of workers.

Consequently, as of the last quarter of 2020, Hispanic men were earning the lowest median weekly earnings of any other group of men, and just a bit higher than the weekly earnings than for Hispanic women.

Even though earnings disparities between Hispanic men and their White non-Hispanic peers are often attributed to differences in education, these pay disadvantages persist even among workers with the same level of education. A recent study shows that whereas 6 percent of White men with an advanced degree hold low-wage jobs, 13 percent of Hispanic men do. An analysis by the Economic Policy Institute shows that Hispanic men make about 15 percent less than White men who live in the same geographic region and have the same level of education and work experience. That gap, moreover, remains relatively unchanged since the early 1970s.

Researchers also find evidence that Hispanic men—and especially those who also are immigrants—are more likely to take low-wage and low-quality jobs, since they often lack the private networks and access to social insurance programs that would allow them to engage in longer job-search periods. Consistent with this evidence is that Latinx workers who are part of a labor union experience a particularly large pay boost. On average, workers covered by a union contract are paid 11 percent more than their nonunionized peers. Among Latinx workers, however, the wage premium associated with being represented by a union contract is more than 20 percent.

Yet research by Jake Rosenfeld of the University of Washington-St. Louis and Meredith Kleykamp at the University of Maryland, College Park also finds that Latinx immigrants are less likely to be part of a union than U.S.-born Latinx workers, suggesting that stronger networks and U.S. citizenship might protect workers against hostile responses to unionization efforts.

Conclusion

As the U.S. economy went into a pandemic-driven tailspin one year ago, almost 21 million workers lost their jobs between mid-March and mid-April alone. In February 2021, the U.S. labor market is short 9.5 million jobs relative to February 2020. These losses remain starkest for Black and Latina women, and other vulnerable groups of marginalized workers, highlighting the importance of policy in setting the groundwork for an equitable economic recovery.

Above all, policymakers should prioritize the enforcement of existing labor law. Even though this should be a priority for policymakers during booms as well as contractions, research shows that wage theft rises and falls with the business cycle—as recessions hit and the jobless rate rises, so does the share of workers who suffer a minimum wage violation.

Another way to tackle these U.S. labor market inequities is to lift the federal minimum wage, now frozen at $7.25 an hour for more than a decade. More than 40 percent of U.S. workers make less than $15 dollars per hour. In the food services industry, where Latinx workers make up more than a quarter of all workers, a whopping 78 percent of workers earn less than $15 dollars an hour. A large share of U.S. workers and an even larger share of women workers and workers of color would receive a much-needed pay boost should the federal minimum wage increase, helping drive a faster and more equitable economic recovery.

Tim Taylor: Debt and Deficits: Nostalgia for the 1980s [feedly]

A review of "debt" history in both politics, and ideology, and economics

Debt and Deficits: Nostalgia for the 1980s
https://conversableeconomist.blogspot.com/2021/03/debt-and-deficits-nostalgia-for-1980s.html

Back in the mid-1980s, the federal government under the Reagan administration ran what were widely considered to be excessive and risky budget deficits: from 1983 to 1986, the annual deficit was between 4.7% of GDP and 5.9% of GDP per year. The accumulated federal debt held by the public as a share of GDP rose from 21.2% of GDP in 1981 to 35.2% of GDP by 1987. I cannot exaggerate how much ink was spilled over this problem, some of it by me, back in those innocent and carefree time, before we learned to stop worrying and love the deficit.

The Congressional Budget Office has just released "The 2021 Long-Term Budget Outlook" (March 2021). There's nothing deeply new in it, but it made me think about how attitudes about budget deficits and government debt have evolved. The report notes: 

At an estimated 10.3 percent of gross domestic product (GDP), the deficit in 2021would be the second largest since 1945, exceeded only by the 14.9 percent shortfall recorded last year. ... By the end of 2021, federal debt held by the public is projected to equal 102 percent of GDP. Debt would reach 107 percent of GDP (surpassing its historical high) in 2031 and would almost double to 202 percent of GDP by 2051. Debt that is high and rising as a percentage of GDP boosts federal and private borrowing costs, slows the growth of economic output, and increases interest payments abroad. A growing debt burden could increase the risk of a fiscal crisis and higher inflation as well as undermine confidence in the U.S. dollar, making it more costly to finance public and private activity in international markets.

Here are a few illustrative figures. The first one shows accumulated federal debt over time since 1900. You see the bumps for debt accumulated during World Wars I and II, and during the Great Depression of the 1930s. If you look at the 1980s, you can see the Reagan-era rise in debt/GDP.  But after the debt/GDP ratio had sagged back to 26.5% by 2001, you can see the the big jump for debt incurred during the Great Recession, and then debt incurred during the pandemic recession, and then where the projections under current law would take us.

From an historical point of view, you can think of fiscal policy during the Great Recession and the pandemic recession as similar to what happened during the Great Recession and World War II. In both cases, there were two huge stresses within a period of about 15 years, and the federal government addressed both of them with borrowed money. In historical perspective, those Reagan-era deficits that caused such a fuss were just a minor speed bump. However, what's projected for the future has no US historical equivalent. 

This figure shows projections for annual budget deficits, rather than for accumulated debt. The figure separates out the amount of deficits that are attributable to interest payments in past borrowing (blue area). The "primary deficit" (purple area) is the deficit due to all non-interest spending. You'll notice that the primary deficit doesn't get crazy-high: it steadily grows from about 2.5% of GDP in the mid-2000s to 4.6% of GDP by the late 2040s. The problem is that the federal government gets on what I've called the "interest payments treadmill," where high interest payments are helping to create large annual deficits, and then large annual deficits keep leading to higher future interest payments. 

If the government could take actions to hold down the rise in the primary deficit over time, with some mixture of spending cuts and tax increases (or does it sound better to say spending "restraint" and tax "enhancements"?), then this could also keep the US government from stepping on the interest payments treadmill.  

This figure shows projected trends for spending and taxes, under current law. You can see the sepnding jump during the Great Recession, and then the jump during the pandemic recession. Assuming current law, projected tax revenues as a share of GDP don't change much going forward. However projected outlays do rise.

CBO explains the rise in outlays: 

Larger deficits in the last few years of the decade result from increases in spending that outpace increases in revenues. In particular:

• Mandatory spending increases as a percentage of GDP. Those increases stem both from the aging of the population, which causes the number of participants in Social Security and Medicare to grow faster than the overall population, and from growth in federal health care costs per beneficiary that exceeds the growth in GDP per capita.
• Net spending for interest as a percentage of GDP is projected to increase over the remainder of the decade as interest rates rise and federal debt remains high. 

There's been some talk in recent years about how, in a time of low interest rates, it could be an excellent time for the US government to make long-run investments that would pay off in future productivity. This case has some merit to me, but it's not what is actually happening. Instead, the fundamental purpose of the US government has been shifting. Back in 1970, about one-third of all federal spending was direct payments to individuals: now, direct payments to individuals are 70% of all federal spending. The federal government use to have missions like fighting wars and putting a person on the moon: now, it cuts checks. The CBO has this to say about the agenda of using federal debt to finance investments: 

Moreover, the effects on economic outcomes would depend on the types of policies that generate the higher deficits and debt. For example, increased high-quality and effective federal investment would boost private-sector productivity and output (though it would only partially mitigate the adverse consequences of greater borrowing). However, in CBO's projections, the increasing deficits and debt result primarily from increases in noninvestment spending. Notably, net outlays for interest are a significant component of the increase in spending over the next 30 years. In addition, federal spending for Social Security, Medicare, and Medicaid for people age 65 or older would account for about half

of all federal noninterest spending by 2051, rising from about one-third in 2021.

For decades now, we have known that a combination of the aging of the post-World War II "baby boom" generation combined with rising life expectancies was going to raise the share of elderly Americans. We have also known for decades that primary programs for meeting the needs of this group--like Social Security and Medicare--have made promises that their current funding sources can't support. We have been watching US health care costs rise as a share of GDP For decades.  Meanwhile, the US economy has been experiencing slow productivity growth, which makes addressing all problems closer to a zero-sum game.  

Neither during the Great Recession of 2007-2009 nor during the heart of the pandemic recession in 2020 and early 2021 was an appropriate time to focus on the long-term future of government debt. But averting our eyes from the trajectory of the national debt is not a long-term strategy. 

 -- via my feedly newsfeed