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Your guide to what Trump’s second term means for Washington, business and the world
The writer is US programme director of Common Wealth, a think-tank
The Trump administration has functionally repealed former president Joe Biden’s Inflation Reduction Act. This is not only an immediate blow to US emissions reductions and global Paris agreement targets. It has collapsed the political economic project of the Biden era: building a new pro-green growth agenda with an industrial policy that sought to de-risk climate investment and a fiscal policy aimed at promoting fuller employment.
The lesson to take from this is that the Green New Deal movement was right to advocate for a far more ambitious political economy of comprehensive decarbonisation and the guarantee of fundamental economic rights through public provisioning of universal healthcare, housing, education and dignity for all workers.
Progressive policymakers will not have another chance to attempt a grand programme of decarbonisation until the end of President Donald Trump’s second term. And they will only have a chance to do so if they can lay the groundwork now by setting an ambitious agenda and defining the political economic project of the post-Trump era.
In the future, the US must deliver even more aggressive decarbonisation. This means envisioning a new era of green economic planning: direct public investment, co-ordination and provisioning in key sectors including but not limited to energy and electricity. This is necessary not only for the energy transition, but to ensure universal high quality and affordable provision of life’s essentials, and to maintain macroeconomic stability through an economy-wide restructuring process.
The green boom was not technically adequate to deliver decarbonisation. IRA subsidies attempted to bribe generalised private green investment. They were stymied by supply chain snarls, interest rate increases and under-investment in the privately-controlled electricity transmission system.
Instead of reviving the IRA’s clean energy tax credits, the US should redesign its power sector by building publicly owned energy infrastructure. As climate writer Robinson Meyer recently noted, it is already clear in the face of electricity inflation that states with publicly owned power authorities such as the New York Power Authority “are able to intervene more forcefully in their own power markets than states that lack such capability . . . because the state itself can act to build its own large-scale power plants”. Their dramatic expansion should be the centrepiece of future power sector policy.
Planning is also the prism through which to pursue building progressive macroeconomic policy and decarbonisation governance frameworks. The Biden administration was right to use fiscal spending to pursue a strong labour market recovery post-Covid. But, the experience of supply-side-induced inflation has demonstrated the political limits of uncoordinated growth.
The solution is to co-ordinate growth and economic restructuring to prevent price instability, whether from real bottlenecks or what economist Isabella Weber has called “sellers’ inflation”. The US must build a stronger national macroeconomic planning apparatus from the revival of the Office of Price Administration to a National Investment Authority and a National Economic Planning Board to co-ordinate investment and govern prices.
The Green New Deal movement argued that change would not come from a single piece of legislation, but a decade of political contestation. The era of Bidenomics may be over but the fight must continue under Trump. With a president hostile to decarbonisation in the White House, now is the time to shape a future green economic agenda that can protect the environment and guarantee economic security for working people.
