The “Green New Deal” as introduced to Congress is in the form of a non-binding resolution laying out a series of goals that are ambitious and somewhat vague. The plan appears to combine a solution to stop or limit Global Warming, with a federal job guarantee, free college, and a single-payer health care system – all into one big package – to be accomplished over the next decade.
For sake of understanding, we will assume that the guarantee of “economic security” to all those who are “unwilling to work” is interpreted to mean a universal basic income – something that has been mentioned before in an earlier Green Deal proposal, and its costs calculated by economic experts. However, in the new deal plan – universal affordable housing is included, and this required extensive research to gather but below is the best information we could find on this specific part of the plan.
So, if the Green New Deal were implemented… How Can We Afford to Do It? It’s hard to know, there are few specifics within the plan, but here is a rough stab at it. (We looked over as many articles as we could find in the financial world to gather these results – this is our best estimate.)
- The Bernie Sanders “Medicare for All” proposal was previously predicted to cost about $3.2 trillion a year.
- Switching to renewable energy has been conservatively estimated at $400 billion annually. One recent change to the plan seems to realize that nuclear plants are going to be needed to reduce carbon emissions during the ten-year transition to total renewables.
- Net-zero emissions retrofits for every building in the country would be very expensive – roughly $1.7 trillion per year.
- Optimistically, $88,000 for a townhouse, and $100,000 per home for a total $1.4 trillion a year.
- 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.
- To provide a universal basic income @ $12,000/year per American citizen, has been estimated to cost $3.8 trillion a year. A narrower program that only covered, say, one out of three Americans who are “unable or unwilling” to work, it would cost about $1.3 trillion.
- Free college (in comparison to a universal basic income would be much less) about $47 billion a year.
- Affordable housing for the entire nation could cost a lot, depending on what would define “affordable housing”, but we will ignore that for now.
So, based on the above — which doesn’t include all the promises listed in the FAQ’s for the Green New Deal — adds up to about $6.6 trillion a year and this plan is for an entire decade.
Just one year is more than three times the federal government tax revenue – about 34% of the U.S. gross domestic product. And that’s assuming no cost overruns — imagine that – no cost overruns when the government is in charge.
The current total government spending is ~38% of the gross domestic product, so if no other programs were cut to help pay for the Green New Deal, almost 75% of the economy would be spent by the government.
All of this assumes that repurposing the nation’s economic resources would not result in any loss in economic efficiency. However, history and the experiences of other countries suggest that this wouldn’t be the case.
In addition, the Green New Deal sidesteps how to pay for it. Instead… it links to two op-eds explaining a “modern monetary theory” or MMT, which posits that deficits don’t matter all that 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. Similar to what we have been witnessing in Venezuela, and if that happens how will we solve the issue of Global Warming and prevent a temperature increase of 1.5°C by 2050.