Basically, the Green New Deal Costs All the Money

 

The econ team at American Action Forum, led by former CBO Director Douglas Holtz-Eakin, take a shot at looking how pricey a Green New Deal might be. And, you know, it’s pricey. From the report:

From Holtz-Eakin:

For me, a way to think about the GND is that it is simultaneously a radical overhaul of the production and use of energy in the United States (the “Green” part) and a sweeping revision of the nature of economic relationships in the society (the “New Deal” part). As the table clearly demonstrates, both are quite expensive. The green agenda — electricity grid, transportation system, guaranteed energy-efficient housing — adds up to $8.3 to $12.3 trillion over the next 10 years. The economic agenda — jobs, health care, food security — accounts for another $42.8 to $80.6 trillion.

The first cut at a grand total runs from $51.1 to $92.9 trillion between 2020 and 2029. Even if the estimates are 5 to 10 times too high (and I suspect they are more likely too low), it is hard to wrap one’s head around numbers these large. But if you manage to do so, be aware that the likely social upheaval would be even larger.

Wow, I remember when writing about Candidate Trump’s $12 trillion tax cut seemed pretty wild. Of course the GND enthusiasts don’t like to get bogged down with numbers. For them, it’s all about action and energy and signaling and direction. Well, from this analysis, maybe numbers should fit in there somewhere, too. Again the GND’s fatal flaw is that it doesn’t take climate change seriously, not to mention budgets.

Published in Economics, Environment
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There are 12 comments.

  1. DonG Coolidge

    I was thinking about this after hearing some dopey economist touting the GND. As if you could borrow all available money and have no adverse affect on the economy. The greater cost is probably the economic impact of stopping the current fossil fuel businesses and beef/dairy/poulty/swine businesses and the auto and air businesses. It is going to be really hard to service $100T of debt at 8% real interest, when the economy shrinks by 50%.

    • #1
    • February 25, 2019, at 5:51 PM PDT
    • 4 likes
  2. barbara lydick Coolidge

    Does the $1.3-2.7 T include the bridge to Europe (never mind the one to Asia)?

    • #2
    • February 25, 2019, at 10:45 PM PDT
    • 1 like
  3. Chris Campion Coolidge

    The problem with the table is that the estimated cost per household is all the households (I think; I checked the article but couldn’t find the detes on it). That number will go up spectacularly, on a per household basis, when only the people who actually pay taxes have to pay for it.

    • #3
    • February 26, 2019, at 3:04 AM PDT
    • 6 likes
  4. Front Seat Cat Member

    what is the universal healthcare number based on?

    • #4
    • February 26, 2019, at 6:12 AM PDT
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  5. Pony Convertible Member

    Lets face it. Out of 535 sitting in the House and Senate, only about 5 are concerned about spending. I get it that the Green Deal is unaffordable, but we have been on an unaffordable track for decades. It will only end when we are like Venezuela.

     

    • #5
    • February 26, 2019, at 6:19 AM PDT
    • 1 like
  6. Profile Photo Member

    Bernanke’s Quantitative Easing boondoggle left many in Congress, including far too many RINO’s, with the impression that the FED could print it’s way out of any debt no matter how gigantic, without acknowledging the huge incredibly destructive problems that it spawned:

    A. Because interest rates went to near zero for the connected Corporate Princes, many free market functions ceased to work creating a managed economy controlled by among other things the FED’s purchase of stock to give the illusion that the stock market was working fine, except that certain market sectors like Pension Funds and Insurance companies that lived and died on the income from real market interest rates took it in the shorts bigly.

    B. Congress in it’s infinite corrupt Crony Corporate wisdom, bailed out only the top twenty banks, leaving the rest including many banks that were the principal lenders to small business to fail. In turn, the Big Banks were encouraged to take over these failed banks and take over their loans. But because of the perverse lending incentives initiated again by Congress and the FED, the Big Banks called many of these small bank loans, particularly on commercial properties, instead of renewing them, causing a huge amount of foreclosures. Many of these foreclosures appear to have never come back on the market and appear to being held still by the Big Banks. This situation if true rivals the situation in Greece and Cyprus where the predatory lending schemes of the Foreign Big Banks allowed them to gain control of those countries most productive assets and have created a situation where those countries may never be able to get back on their feet.

    C. Creating the illusion of rising asset values in the stock market was the FED’s goal to create the illusion that all was well. Part of the FED’s Stock Value Asset pumping scheme was to encourage Corporate buy backs of stock using the incredibly cheap and easy money given those entities which then accumulated huge amounts of debt buying back stock to jack up the price of their stock. The problem is that when interest rates rise back to normal competitive levels as the FED is trying to do now, tons of publicly traded Corporations will not be able to fund the massive amount of debt they took on. 

    D. QE became an unbelievably destructive wealth transfer scheme for the Big banks , Large Corporations and the connected 1% who were given access at the Discount Window to trillions in almost interest free loans that they used to buy out their competition and gain an overwhelming market advantage. The huge growth in wealth caused by this wealth transfer scheme for the 1% so decried by Bernie and AOC did really happen and it is a tremendous problem , but it happened as a result of again the ill-conceived policies of Obama, the FED and the Left, not the workings of the free market.

    continued

    • #6
    • February 26, 2019, at 8:02 AM PDT
    • Like
  7. James Gawron Thatcher

    JimP,

    Aside from the fact that the average environmentalist doesn’t have enough engineering smarts to change the batteries in a flashlight, there is the problem of cost.

    Luckily, the Greenies, AOC, & Paul Krugman have discovered a wormhole to the next universe over. Realizing that the Green New Deal would cost more money than the entire known universe contained, they figure they can travel through the wormhole and borrow money over there.

    When sanity isn’t a consideration you can rationalize your way into anything.

    Regards,

    Jim

    • #7
    • February 26, 2019, at 8:28 AM PDT
    • Like
  8. Profile Photo Member

    Continued from prior comment.

    E. The enormously expensive due diligence required by Dodd Frank for new loans coupled with the FED’s granting of easy and really cheap money has led the Big Banks to lend to only for mega-million deals here in America and to instead focus on the bountiful state protected loans that could be had overseas in Europe and the Emerging Markets. These incentives have led lending to dry up here at home for all but the big deal, decimating small business. The Big Banks made mega mega billions on these foreign loans, while skewing investment in those countries btw. Furthermore, as the FED has tightened in QT and raised interest rates, those same emerging markets have been hit by the double whammy of rising interest rate costs and a dollar dominated debt that has risen greatly in value due to the rising value of the dollar. This double whammy effect has caused many emerging market currencies to come close to failing and has caused great pain in those countries abroad. 

    F. Bernanke’s QE opened the door for a mega QE by China that was roughly 15 times the size of Bernanke’s. China has used this mega QE without fear of market consequences to “loan”huge amounts of nearly free cash to its exporting tech giants to gain huge competitive advantages in order to gain market domination and to buy out foreign competition. This predatory scheme has purposely wreaked havoc here in America and Europe wiping our many of our industries and forcing millions out of work. Furthermore, this Chinese QE has given them the cash to offer multi-billion dollar “low interest” predatory loans to places like Sri Lanka and Africa , where China has bought out strategic ports, airports and essential raw materials producing entities to cement their market dominance. 

    • #8
    • February 26, 2019, at 8:28 AM PDT
    • Like
  9. Old Bathos Member

    Don’t overthink it. We print oodles of dollars because we can because we are the boss. We then give those dollars to those who deserve it (non-white, non-male etc) but once we do, those individuals will then be in the tippy top bracket so we can then just take the money away as taxes. Cha-ching! Max govt. revenues, GND all paid for. Take that, Fox News and old white dudes who do math!

    • #9
    • February 26, 2019, at 8:52 AM PDT
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  10. ToryWarWriter Thatcher

    The only way to do all this will be to install a communist state. Cause the GND reminds me most of the Soviet Constitution.

    • #10
    • February 26, 2019, at 10:09 AM PDT
    • Like
  11. tigerlily Member

    Front Seat Cat (View Comment):

    what is the universal healthcare number based on?

    Not sure. I thought it was from the cost estimate the Mercatus Center prepared based on Bernie Sanders’ “Medicare for All”; but that study came in at $32.6 billion.

    • #11
    • February 26, 2019, at 10:24 AM PDT
    • Like
  12. Mark Camp Member

    Is GND a good idea?

    In this article, James attempts to convince the lay audience that he has selected a good criterion for answering that question (“Will there be enough money?”).

    James has failed to convince me. He has, as far as I can tell by the Comments, convinced everyone else.

    The democratic socialists also accept James’s methodology, so it should be one happy party for the next few years.

    They are eager to show that, if it is just a question of “Will there be enough money?” the answer is “Yes!”

    They have already amassed enough centralized regulatory, fiscal, financial, and monetary power, either manifest or lying in reserve having been previously granted in legal principle, that they could have fun winning this argument. 

    “Well, now that we’ve shown you Republicans that there will be enough money even if your estimates are too low by a factor of five, we want to let you up off the mat and give you a fair chance.

    “Pick a cost. 1B? 1M? $256? A buck?

    “If you agree to give government the political responsibility to attain the six goals, and thus the corresponding power needed to achieve them*, we will deliver the whole package, all at the dollar price you name.”

    *Over

    • the determination of what kinds, qualities, and quantities of goods will be delivered when, where, after how long in queue, and to whom in order to satisfy our definition of universal free green everything
    • the money supply
    • interest rates
    • deficits
    • taxes
    • issuance of credit
    • prices
    • and private rights to produce or not produce, sell or not sell, buy or not buy, and hire or not hire
    • #12
    • February 26, 2019, at 12:38 PM PDT
    • Like