Numbers are important, they’re part of how we make sense of the world. Sadly, journalists, as with NowThis News here, often fail to grasp numbers.
“The Biden administration’s Office of Management and Budget (OMB) released a new assessment finding that by the end of the century, the U.S. could be losing up to 7.1% in federal revenue per year from environmental and climate change-related disasters. That is equal to $2 trillion today,” according to NowThis.
But it’s not equal to $2 trillion today.
In 2021, the federal government collected $4.05 trillion in tax revenues. So, dropping any spurious accuracy, $2 trillion is 50% of revenues. But as the quotation says, the losses from climate change-related disasters might be 7.1% of federal revenues. As 7.1% is not 50% then it cannot be equal to $2 trillion today.
The actual calculation, from the original source, is this:
“The new Budget analyses found that, at the upper end of that range, climate change could lead to an annual Federal revenue loss at the end of the century of 7.1 percent, which in today’s dollars would equal $2 trillion per year.”
That’s equal to $2 trillion of today’s dollars, not equal to $2 trillion today.
The underlying point that has been forgotten – or is not known perhaps – here is that all these models about the future assume that the American economy will continue to grow. It will be larger in 2100 than it is in 2022 that is. Somewhere between 4 and 10 times larger in fact, depending upon which exact model is used. This really is true of all those climate change models used by the IPCC and so on.
So, when folks say that the damage could be 10% of GDP, they mean 10% off the four or ten times the size of the economy we have now. And when people talk about 7.1% losses in federal revenue they mean off the 4 to 10 times that revenue will rise over the century.
This is why $2 trillion in today’s dollars is not at all the same as $2 trillion today. The first number adjusts for inflation, but we also have to adjust for economic growth over that period of time.
NowThis News gains some half a million visits a month and is indeed a part of the media landscape. It’s much more important in video news than it is in simple web pages. This is what makes misunderstandings like this more important. It’s much more difficult for readers to catch this sort of mistake if it merely flashes by on a screen.