That surplus is important for another reason as well. Like much of the rest of the world, California is already experiencing the direct effects of climate change. Wildfires and droughts have become annual events, as have hurricanes and floods in other parts of the country. A combination of drought conditions and record-breaking temperatures caused extensive fires throughout the state in 2020, and the dangers are even greater this year, which is why Newsom has proposed significant increases in fire prevention and forest resilience measures in the 2021 budget.
Unlike many other parts of the country, California has taken the lead in adopting policies to reduce carbon dioxide emissions and build a more resilient infrastructure. Through strict emissions and air-quality standards, carbon pricing, and public support for electric vehicles (the state’s largest export product in 2020), high-speed rail, and clean energy, the state is increasingly decoupling its growth from a carbon-based economy.
The Biden administration wants to pursue similar actions nationally. America has rejoined the Paris climate agreement and Biden is seeking congressional approval for billions of dollars in investments in clean power, electrification of transport and buildings, low-carbon manufacturing, public transit, and other key features of a green economy.
Moreover, Biden’s $2.3 trillion American Jobs Plan and $1.8 trillion American Families Plan include substantial investments in the country’s social infrastructure. These investments promise to scale up efforts, already underway in California, to strengthen the social safety net, open a path to a $15 minimum hourly wage, expand the earned-income and child tax credits, support paid family leave, and broaden health coverage.
The early public response to Bidenomics is extremely positive. With the exception of some Republican voters, many of whom still believe the 2020 election was stolen from Donald Trump, supermajorities of citizens (including Republicans) support key elements of the American Jobs Plan and the American Families Plan. Around 68% of Americans support the Biden administration’s infrastructure proposal, and 64% support its plan to expand health care, childcare, and other family programs.
Members of Congress should listen to their constituents and take a page from California’s playbook. A new era of sustainable, inclusive growth awaits.
Laura Tyson, former chair of the U.S. President's Council of Economic Advisers, is professor of the Graduate School at the Haas School of Business and Chair of the Blum Center Board of Trustees at the University of California, Berkeley. Lenny Mendonca, senior partner emeritus at McKinsey & Company, is a former chief economic and business adviser to Governor Gavin Newsom of California and chair of the California High-Speed Rail Authority.