The Biden Administration broke new ground on climate and energy policy in its first two years, passing the Inflation Reduction Act as well as other major legislation with important climate provisions and imposing novel sanctions on Russia, the world’s biggest fossil fuel exporter. President Biden himself described the climate provisions of the Inflation Reduction Act as “the most aggressive action ever, ever, ever to confront the climate crisis.” In this talk, I will describe my experience as the Deputy Assistant Secretary for Climate and Energy Economics at Treasury in the first 20 months of the Biden Administration. Somewhat uncharacteristically, Treasury was ground zero for many of the important energy and environmental policy developments.
At the same time, some commentators have raised questions about the role of economists in solving important problems, including climate change. For example, after IRA passed, climate scientist Bob Kopp commented on Twitter that, “Environmental economists should probably take a moment of humble reflection to ask whether the discipline’s focus on first-best carbon pricing mechanism contributed to how long it has taken to get US climate legislation.” Beyond climate policy, economists have been criticized for downplaying the perils of globalization, not preventing the financial crisis and other missteps. For example, a former chief of staff to Senator Warren was quoted as saying, “the Obama economic team focused too much on trying to placate elites and too little on trying to understand the economic pain and anger coursing through the country, and that combination helped fuel right-wing populism.”
I will draw on my experience in government and as an academic economist to comment on how much economists might be to blame; steps economists can take to improve their relevance; and lessons that I think economists uniquely bring to public policy discussions.