I just finished reading this article and I felt that it was important to pass on to our “family” I say this because I believe that it is critical that we completely understand what the “other side” has in mind regard the “civil war” or extreme divisiveness that exists in our country.
ETE
MAROVICH NYT file
Rep.
Alexandria Ocasio-Cortez, D-N.Y., at a news conference about the Green New Deal
in Washington on Thursday.
Skeptics
of Rep. Alexandria Ocasio-Cortez’s promise of a Green New Deal were worried
that the plan would be a Trojan Horse for unrealistic and ruinously expensive
economic proposals that have little to do with stopping climate change. The
unveiling of the plan gives them more reason for worry. Ocasio-Cortez’s Green
New Deal appears to take every big spending idea that has emerged on the
political left in recent years and combine them into one large package deal,
with little notion of how to pay for them all.
The
Green New Deal as introduced to Congress is in the form of a non-binding
resolution laying out a series of goals. The wording of the resolution is
ambitious, but vague. More concerning are the details of an online FAQ that
appeared on Ocasio-Cortez’s website but was later taken down. The FAQ contained
important details that are not included in the resolution itself. On Twitter,
Ocasio-Cortez’s chief of staff, Saikat Chakrabarti, referred to the FAQ as a
“bad copy,” and promised to release a revised version.
But
the original FAQ may give insight into the Ocasio-Cortez camp’s true goals. And
it shows that although the Green New Deal bills itself primarily as an
environmental policy and jobs program, the most expensive items are enormous
new entitlements paid for by unlimited deficit spending.
First,
to be fair, it’s important to discuss the good ideas in the plan. The Green New
Deal would retrofit all American buildings and factories to be carbon-neutral,
electrify all transportation, and switch the entire electrical grid to
carbon-neutral energy sources. These goals are highly ambitious, but they’re
good targets. Ocasio-Cortez’s plan correctly recognizes that carbon taxes
wouldn’t be enough to prompt private companies to do all these things on their
own, and that large-scale government-funded infrastructure is required.
Furthermore, a focus on scaling up clean energy would push the technology
forward. That would help other countries – where most of the world’s carbon
emissions are produced – to follow in the U.S’s footsteps.
But
these environmental policies, as sweeping as they would be, wouldn’t be the
most costly items on the list. Among other things, the now-removed FAQ
stipulates that every American would be guaranteed the following:
1.
“a job with family-sustaining wages, family and medical leave, vacations, and
retirement security”
2.
“high-quality education, including higher education and trade schools”
3.
“high-quality health care”
4.
“safe, affordable, adequate housing”
5.
“economic security to all who are unable or unwilling to work”
The
plan thus appears to combine a federal job guarantee, free college and
single-payer health care. Depending on how one interprets the guarantee of
“economic security” to all those who are “unwilling to work,” it might also
include a universal basic income – something that was mentioned in an earlier
Green New Deal proposal. The guarantee of universal affordable housing is, to
my knowledge, new.
How
much would these proposals cost? It’s hard to know. Senator Bernie Sanders’
Medicare for All proposal was predicted to cost about $3.2 trillion a year.
Switching to renewable energy would conservatively cost more than $400 billion
annually. Even though the cost is coming down as technology improves, net-zero
emissions retrofits of every building in the country would be expensive –
optimistically, perhaps $88,000 for a townhouse, and presumably much more for
free-standing homes. Assuming $100,000 per home, that comes to about $1.4
trillion a year over a decade. Factories, office buildings, stores, etc. would
cost much more per building, but there are far fewer of them – about 5.6
million. If each one costs $500,000 to retrofit, that’s about $300 billion more
per year.
For
universal basic income, the cost has been estimated at $3.8 trillion a year. A
narrower program that only covered, say, out of three Americans who are “unable
or unwilling” to work, it would cost about $1.3 trillion. By comparison, free
college would be cheap at about $47 billion a year. Affordable housing for the
entire nation could cost a lot, depending on that means, but let’s ignore that
for now.
So
this quick, rough cost estimate – which doesn’t include all of the promises
listed in the FAQ – adds up to about $6.6 trillion a year. That’s more than
three times as much as the federal government collects in tax revenue, and
equal to about 34 percent of the U.S.’s entire gross domestic product. And
that’s assuming no cost overruns – infrastructure projects, especially in the
U.S., are subject to cost bloat. Total government spending already accounts for
about 38 percent of the economy, so if no other programs were cut to pay for
the Green New Deal, it could mean that almost three-quarters of the economy
would be spent via the government.
And
all this is assuming that repurposing essentially all of the nation’s economic
resources doesn’t cause any loss in economic efficiency. History and the
experiences of other countries suggest that this wouldn’t be the case.
Most
troubling, the Green New Deal’s FAQ sidesteps the question of how to pay for
the plan. It simply links to two op-eds explaining so-called modern monetary
theory, or MMT, which posits that deficits don’t matter all the much in the
absence of inflation for those countries that issue their own currency.This
suggests that the Green New Deal will be paid for with soaring deficits, which
could be quite dangerous. The plan’s environmental spending proposals would be
temporary, but the new entitlement programs would be permanent. If MMT is
wrong, and if ever-expanding deficits cause runaway inflation, the result would
be a devastating collapse of the nation’s economy. Hyperinflation has never
happened in the U.S., but then again, neither has anything like the Green New
Deal. A wholesale breakdown of the U.S. economy wouldn’t do much to arrest
climate change, nor would it provide an enviable example to the rest of the
world, upon whose emissions reductions the planet’s future actually depends.
So
although a big push for renewable energy is needed, the Green New Deal’s vast
program for economic egalitarianism could make it unworkable. Let’s hope the
FAQ doesn’t represent the final version of the plan, and the sweeping proposals
for economic restructuring – especially basic income – can be dropped in favor
of a tighter focus on reducing carbon emissions. But if the now-deleted FAQ
represents Ocasio-Cortez’s true plans, the answer to the question of “Do you
support the Green New Deal?” will have to be “No.”
Noah Smith is a Bloomberg Opinion columnist. He was an assistant
professor of finance at Stony Brook University, and he blogs at Noahpinion.