What (Actually) is the Green New Deal?
By: Rohan Upadhyay
Tags: Politics, Infrastructure, Bernie Sanders, Green New Deal, Climate Change

You may have heard of the “Green New Deal.” If so, you may be aware of the criticism that it’s a “socialist takeover” — the US will be burdened by high taxes and rampant spending, and you won’t be able to drive a car or eat meat.

But some see the Green New Deal as America’s last hope to avoid environmental destruction, and as a golden ticket towards transforming the economy.

But before we can decide into which category it falls, we have to understand what the Green New Deal is.

What is the Green New Deal?

First, where does the name “Green New Deal” come from? The “green” part is obviously a reference to “going green.” But what about the “New Deal” part?

The Original New Deal

The original “New Deal” was a long list of programs and reforms enacted by President Franklin Roosevelt’s administration to help the country through the Great Depression in the 1930s. The legislation included:

Banking regulations to protect people’s money and investments. The introduction of Social Security. The introduction of minimum wage and labor standards (e.g. maximum hours). Public works projects to employ people and rebuild the country’s infrastructure.

The goal was to improve the standard of living for the working class by expanding the social safety net, protecting investments and job security, and expanding public infrastructure (e.g. electrical power grids) to benefit people. Whether you agree with these policies, these were Roosevelt’s intentions.

Enter the Green New Deal

The Green New Deal is the New Deal 2.0. The people behind it — left-wing Democrats like Alexandria Ocasio-Cortez and Bernie Sanders along with the Green Party — want to raise wages and improve job security for the working class while simultaneously making the United States go green.

The general idea is for the government to invest in lots of large projects to transform America’s energy industry. In the process, millions of people would be employed to carry out these projects, thus improving our economic situation (in theory, at least).

To be clear, the “Green New Deal” was introduced in Congress. However, that was just a resolution — not even a bill. All that document said was that the US must transition to green energy quickly. The resolution only gave goals, not actions or policies.

So what does the Green New Deal attempt to do?

The Green New Deal — According to Bernie Sanders

As I said, left-wing Democrats — like Senator Bernie Sanders — along with the Green Party (a separate political party from the Democrat and Republican parties) support a Green New Deal.

As it happens, Bernie Sanders’ Green New Deal plan is the most specific outline that I can find, so I’m going to use Sanders’ plan. Let’s go over it.

Overall Goals

The plan calls for the US to do the following:

Transition to 100% green energy by 2030. Build a smart power grid. Expand energy storage. Nationalize the energy industry. Energy should be publicly managed by government agencies. Establish a nationwide materials recycling program in which companies can buy unwanted materials from the public — the government could also dismantle planes or other excess military technology to harness materials. Create 20 million jobs. Restore the country’s infrastructure. That includes weatherizing homes and buildings, expanding public transportation, and restoring public land.

The Costs

Sanders’ outline acknowledges the cost of this proposal, stating that the plan will cost $16.3 trillion over the entire course of its implementation. It does not specify how many years this plan will take to be carried out, but the implication is that it would take 10 years (2020–2030) as the Green New Deal calls for a complete transition by 2030. This would translate to $1.63 trillion in government spending per year.

The proposal argues that it will pay for itself over 15 years in several ways:

Fossil fuel companies will pay in litigation (for knowingly damaging the environment), taxes, and other fees (such as federal fossil fuel risk bonds). The government will also save money by eliminating subsidies to oil companies. In general, taxes for wealthy people will be raised. No more wars for oil. Oil reserves are scarce (finite). However, something like solar power is virtually limitless (the sun never stops shining) and something like water (hydroelectric energy) is much less scarce than fossil fuels. Thus, we can end conflicts for natural resources, saving money. By creating 20 million high-paying jobs, the government will have more taxable income (and the government could potentially save money in welfare benefits, for example, as people will be better off financially and thus will not be as dependent on the social safety net). The government will generate revenue from the wholesale of energy (remember the energy would be nationalized). Ideally, energy costs would become very cheap by 2035.

Whether these avenues will pay for the Green New Deal is a conversation for another time. I’ll mention that this proposal doesn’t get too specific into how the money will be raised. It doesn’t outline the exact taxes that will be levied or the specific budget cuts to the military, for example.

The main focus of the proposal is how it intends to achieve its goals. Let’s talk about that.

Building up Green Energy and America’s Infrastructure

The first part of the Green New Deal is expanding renewable energy capabilities. In doing so, the Deal calls for renovating infrastructure to make our buildings and transportation more compatible with green energy.

Our infrastructure gets a grade of D+ from the American Society of Civil Engineers. Thus, Sanders wants to rebuild it, putting people to work in the process. Here’s the specific breakdown of his spending plans:

The specific breakdown of government investments and public infrastructure projects. The intention is to put millions of people to work on these projects, which mainly comprise direct government investment. Source of information: Bernie Sanders’ Green New Deal page. Table created by Rohan Upadhyay.

Infrastructure spending comprises the vast majority of the Green New Deal, as infrastructure is the foundation for a green economy and for employing people through public works projects.

Stop Supporting the Fossil Fuel Industry

Sanders’s plan intends to terminate federal assistance to the fossil fuel industry. On top of that, Sanders supports penalizing fossil fuel companies for polluting, and he calls for holding companies accountable. Here’s the rundown:

The breakdown of actions that will be taken against the fossil fuel industry. These actions mainly comprise regulations and mandates, along with methods of raising money for the Deal from these companies. Source of information: Bernie Sanders Green New Deal page. Table created by Rohan Upadhyay.

As I mentioned above, the Green New Deal would raise money from fossil fuel companies through taxes, bonds, and other fees. However, the proposal doesn’t give many specifics on the exact funds that would be raised. Furthermore, the Green New Deal proposes enforcing strict regulations (such as pressuring investors not to invest in fossil fuels). However, the Deal doesn’t specify how the government would enforce such regulations, let alone how the government would have the teeth to enforce these regulations.

International Action

The Green New Deal calls for the US to contribute more to the global green energy effort. The US should:

Contribute $200 billion to the Green Climate Fund. This can go towards investing in green technology and helping developing countries transition to green energy. Renegotiate trade deals to include environmental and labor standards. Current trade deals (such as NAFTA) don’t have many protections for the environment. Terminate foreign investments in fossil fuels (e.g. in OPEC and through the World Bank). Lead the de-militarization effort to end wars for oil and save money.

These points all warrant separate discussions (and this proposal doesn’t give many specifics on them anyway). The gist is that the US should use its influence and resources to lead the global transition to green energy.

Protect Workers while Transitioning the Economy

Something very important to proponents of the Green New Deal is reducing income inequality. The Deal addresses the fact that people transitioning towards green energy jobs (a new industry) could struggle initially in the transition, so the plan attempts to make this transition easier while raising wages, protecting union rights, and expanding the social safety net.

The breakdown of how the government would support workers and make living conditions safer. Source of information: Bernie Sanders Green New Deal page. Table created by Rohan Upadhyay.

The plan also addresses disaster relief and decontamination efforts. To keep workers working and the economy going, people have to be safe. This section also revolves around direct government investment.

Transitioning the Agricultural Sector

On the note of helping workers, the Green New Deal has an entire section just for farmers. Because farmers are the backbone of the food supply chain, the Deal gives the agricultural sector more attention. The intention is to make agriculture more environmentally friendly while helping smaller farmers compete with larger farms.

The specific breakdown of initiatives and funds for the agricultural sector. Source of information: Bernie Sanders Green New Deal page. Table created by Rohan Upadhyay.

The proposals focus on providing funds to smaller farmers to help them out while changing regulations to help beginning farmers gain a foothold in the industry. Like with the other sections, these proposals center around direct government investment.

What’s the Rundown?

So, what do I think about the Green New Deal? (Keep in mind that this last part is going to be my opinion of this plan).

Well, the plan comes to about $16.5 trillion in total — that’s a bit higher than Sanders’ $16.3 trillion estimate (there may be some discrepancies, as some dollar amounts may have overlapped in separate categories, so some numbers could have been double-counted based on the details that Sanders presented). But regardless, you get the general ballpark.

And it’s a pretty steep ballpark. Assuming this plan was to be executed over a 10-year period, we’d be looking at over $1.6 trillion spent a year. Even if it was executed over 15 years, we’d still be looking at about $1.1 trillion a year.

For context, our annual federal budget in 2019 was about $4.4 trillion. Furthermore, the government only collected $3.5 trillion in tax revenue. We’re spending $984 billion more than we’re bringing in (a $984 billion deficit). So the Green New Deal will certainly have an effect on our spending.

Now I’m not saying that it’s impossible. If the government raised the necessary taxes, it could potentially pay off these receipts. Also, Sanders provided some arguments for how the plan would pay for itself. However, these arguments are pretty broad right now — the proposal doesn’t get into the specific taxes that will be raised, the specific budget cuts in other areas, etc. But that stuff can — and should — be ironed out in the future.

Regardless, I think the main issue with this proposal — though it means well — is that it over-relies on government spending. Think about this. If the government is funding the construction of roads (for example) and putting people to work this way, then the project will eventually finish, work will run out, and people will be back to where they started in several years (without a high-paying job). Not to mention that the government would rack up higher debts in the process.

Instead of taking a brute-force approach in which all investments are done through the government, the federal government should take a more finessed and clever approach. Namely, it should combine some direct public investment with market solutions. For example, the government could give loans to burgeoning companies in green energy. These companies can grow and provide people with long-term jobs, and then pay the government back in the future. This way, the government’s losses are covered.

That’s just one example — there are plenty of other possibilities, and we need to be creative if we want to take a market-based approach. The point is that, while the Green New Deal means well, I think that it could take a more strategic approach. The current proposal would rack up debts, inflate our bloated bureaucracy, and could potentially end up creating only short-term jobs rather than long-lasting private-sector careers.

I hope this gave you a good idea of what the Green New Deal is actually about, and I hope my thoughts put into perspective the potential effectiveness of this kind of proposal.

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