However, funded with debt.
This is where most objections will come from. There is, however, a serious lack of understanding of how our government finances itself, especially large scale undertakings.
With a sovereign fiat currency debt is entirely optional. If one thinks about the role a government has as the monopoly issuer of the currency it becomes obvious that it can’t really fund anything with borrowing, as it would first have to create the currency to be borrowed. Congress holds the purse strings and appropriates money out of thin air on demand whenever it spends. It, contrary to popular belief, neither needs nor uses “revenue” from taxation or borrowing and both are simply deleted into thin air from whence they came.
The mandate to issue Treasury bonds for any “deficit” spending is a relic of the gold standard that was self-imposed by Congress in the Federal Reserve Act (1913) to defend a now-defunct gold reserve. It was retained after we left the gold standard to provide leverage for the Fed to set interest rates by buying and selling bonds on the secondary market and to give investors a floor for their portfolios. Considering the extensive political damage the rule has caused in misrepresenting our monetary system’s functions it probably isn’t worth keeping, especially now that a need for large scale funding is imminent.
Congress has always had the ability to spend without issuing Treasuries in cases of war or disasters. In fact, it has done so since 2000 to the tune of $21 Trillion (yes, with a T) of off spreadsheet funding of war and natural disaster relief. That was from a 2015 audit, at which time it surpassed the “national debt” that lights every conservative’s hair on fire. I don’t see any grand leap of logic involved with using the provisional “out” to get ahead of natural disaster, but I’m sure that Republicans and establishment Dems will fight hard to keep their covert funding covert and will misrepresent the process, even more, to do so.
As long as the real resources and labor exist to accomplish the ambitious goal now made imperative by climate change no inflation will result beyond levels that the Fed shoots for anyway with monetary policy. Whatever logic may exist for adding interest to our government’s spending certainly doesn’t apply to spending required to mitigate the damage of climate change that is mostly the result of profit-seeking to begin with. We will face resource or labor constraints as we encounter them, but there is no restraint imposed by funding any spending by our government. If we survive this very real emergency it will serve as a civics lesson that will surely embarrass politicians as the public comes to realize that “ALL” previous suffering in this economy that can be mitigated with federal dollar creation is, and always has been, a political decision, not economics.
