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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.

Noah Smith mug

Noah Smith | Bloomberg View

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. Sen. 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.

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Noah Smith is a Bloomberg Opinion columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.

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(52) comments

Jobaba

This column is right out of outer space. Really? A fiscal warning after what Trump and the republicans have done? Spare me, according to the GOP there is money growing on trees.

PhysicsIsFun

I'll tell you something else that could drive our country and the world into oblivion - climate change. I know the fact that nearly 100% of the scientific community, that knows anything about the climate, says we are in trouble is seen as some sort of liberal plot to destroy America, but just consider the same kind of people who put us on the moon and created the miracle that is our advanced technological and knowledge based economy are nearly certain that we and our way of life is threatening the world we live in. Maybe, just maybe, we should get busy dealing with it instead of listening to those who profit from doing nothing about it.

oldhomey

amen.

DMoney

Deal with it how? Green New Deal? Anarchy. Sell it to me. I want an improved environment. I want my participation in such a plan to benefit me economically, physically and spiritually. I want zero government coercion. Make a plan that accomplishes all, and I'll support it. GO!

martian2

Dmoney you don't want to be sold anything, you just want to pursue a political agenda. To clean up the environment all players, government and private sector must do their part. You call it government coercion, the rest of us call it regulation. And regulations must have some bite to it, incentives and punishments, if they are to work. That is how government . You keep wanting to kiss the behind of corporations, when they are the main source of our problems ( pollution, destruction, poisoning) in the first place. Your zero government coercion is just another talking point from talk radio and republican do nothing platform, drilled into your head from fox news. Its a non starter.

DMoney

There exists ample government regulation. Has for many years. Somewhat recently, it's been discovered there's a lot of money to be made in industries that are environment-centric. Tesla is an example. People receive tax credits for purchasing their vehicles. Individuals receive a tax break for purchasing an expensive vehicle that is environmentally friendly. The Ocean Cleanup project--NPO that relies primarily on private sources to fund it's efforts to clean up major ocean garbage patches. There are others--even UBER--reducing need for individual transportation. These are not government organizations. These are mostly for-profite businesses that provide jobs while also indirectly positively impacting the environment. I'm sure they receive grants, tax credits, etc. which is taxpayer funded--I'm comfortable with that. The solution is to create a hybrid system that harnesses business efficiency and motivations to solve our common problem.

PhysicsIsFun

Without any government coercion is pretty ridiculous. Our society is a society of laws. You can not expect people to do certain things without laws. A society without laws has a name - anarchy. It is not a good thing. I know you always make good choices (?), but not everyone does. Ayn Rand was a novelist. Her ideas were pretty insane. Her books are interesting, but they are also ridiculous. A libertarian government would never work. Those of you who think it would are misinformed.

DMoney

Well then maybe we should reap what we sow? Because people can't be regulated into alignment, long term. It's never worked in history.

oldhomey

Thank you martian. Thank you Physics. D, who is bidding to become our resident philosopher on governance and history, once again reveals he is more than slightly uninformed for the job. You exposed him well.

DMoney

Oh believe me, I knew there were environmental regulations. Deal with them daily. Most of them are reasonable and logical. Some are preposterous. If the idea is to multiply them by many times, as suggested by this proposal, it's going to create absolute turmoil. As far my opinions, I'm really not trying to convince you or your leftist comrades. I do hope that neutral folks read all opinions and form opinions on their own.

new2Lax

You can criticize AOC all you want, these proposals are being supported by all the folks running in 2020 on the Democrat side, I guess the cats out of the bag. The left may be forced to turn to Pelosi to run. To think the left thought building a wall for security was outlandish, what must they be thinking now.

johnnybragatti

Exlax attempting a comeback?Ya'll lack genuine intelligence. You are so right, however ,as President Pelosi has a nice ring, particularly with the Orange Carcass keeping everything in schambles.
You know it ....
God knows it.

oldhomey

Where you been, new2? Certainly haven't visited reality recently, I see, judging by your 3:28pm post. The "left", if you mean liberals, right now are thinking building a wall for security is an empty political gesture aimed at dunderheads who support Trump. Any more questions?

A Veteran

old phony---Your 2:41 pm post shows you are the one who needs some help on your read as the post you made a fool of yourself was not even addressed to you---old fool maybe if you could comprehend what is going on you would not trip yourself of so often ,as I have seen you having to correct yourself quite often.In the future try to keep up you old windbag!!!!!!!!!!!!!!!-just for you old fool!!!!!!!!!

oldhomey

Well, A Veteran (of no known military unit), let me put it this way. Like you I am wrong both with my facts and opinions at times. Not like you, when I discover that I am wrong, I try to publicly acknowledge my errors and, if I have wronged another individual because of my carelessness, try to apologize as best I can. It isn'e enough, I know, but at least I try. I wish you would, too.

oldhomey

P.S. A Veteran (of no know military organization), it is pretty much impossible, so far as I can see, who your 8:32am comment was aimed at. But if it wasn't me, you have my sincerest apology that I thought it was aimed at me.

A Veteran Feb 13, 2019 8:32am

funny---Do you support paying people unwilling to work,getting rid of cows and airplane travel.Is this thinking your REALITY???????

Rick Czeczok

The democratic party is slowly becoming a socialist party. This is so dangerous and people need to take notice.

PhysicsIsFun

And you Ricky are the new face of the Republican party - the raving know nothing. The denial of reality and ignorance are an extremely dangerous combination, and you've got that in abundance.

Climatehoax

‘The denial of reality and ignorance are an extremely dangerous combination’
you’ve described AOC, YOUR liberal senator to a tee! You need to clean your house before criticizing someone else’s.

oldhomey

Climate, allow me to give you a basic lesson in current politics. I am assuming Physics is not a citizen and voter residing in the New York congressional district that Ocasio-Cortez represents, so she does not represent Physics. Secondly, She is a Congresswoman, a member of the House of Representatives, which is not the Senate. There are two houses in our bicameral form of government. It is so good of you to provide us with an example of the truth of the statement that "the denial of reality and ignorance are an extremely dangerous combination". But that is what we have come to expect from somebody who has chosen Climatehoax as his screen name.

A Veteran

funny---Do you support paying people unwilling to work,getting rid of cows and airplane travel.Is this thinking your REALITY???????

oldhomey

No, A Veteran (of no known military service), I do not support the ideas of paying people unwilling to work, getting rid of cows and getting rid of airplane travel. Where did you get the idea that I was in favor of those things? Perhaps you should become a more careful reader, and you would't trip yourself up like this so often.

PhysicsIsFun

Veteran and ClimateDope, what a combination of ignorance and denial of reality. The face of the Republican Party. I personally think that AOC is pretty smart. She represents the people who put her in office. She is not beholden to any corporations or interest group. She is democracy in actions. She is everything that the Republican Party is not. She is young, intelligent, female, non Caucasian, and working to improve our country not maintain it for the status quo. She might get a little ahead of herself, but better than being in the pocket of big oil, big pharma, the military industrial complex, and idiots like you. Now go back to Fox News. Hannity is on and you guys need your daily dose of propaganda.

PhysicsIsFun

Ricky I assume you will not accept Social Security or Medicare. I also assume you have never collected unemployment insurance or driven on public roads. A dyed in the wool individualist like you must not partake in any of the aspects of the socialism that you so despise. Put your money where your mouth is. Show us your rugged individualism.

A Veteran

funny---The way you carry on about fox you must watch it far more than I do.You still did not answer if you think people unwilling to work should be supported by the taxpayer.What do you think of the liberals running for president endorsing this ill conceived plan before they had even read it.Looks like some real winners do they not!!!!!!!

martian2

oh ricky boy what am I to do!! that socialists snow plow kept going past my house the last two days! when will this tyranny end!!! I'm sure you removed the snow from the road in front of your house so you wouldn't have to see that darn socialist plow do it. Way to go!

martian2

If all those things are true in Noah's column, then it would be too much for this nation to absorb. As he said it is a non binding resolution so it is just a wish list, nothing more. But I do believe the green solution, reducing carbon fuel use and using renewable energies are doable and necessary for this country. The Pentagon says climate change is a high national security threat. Despite what Trump says, it is happening and must be addressed. Leaving our planet in better shape when we leave it for future generations is a noble and worthwhile effort. We seem to afford wars, very long never ending wars. We seem to afford more tax breaks for wealthy and corporations. We seem to afford corporate welfare that is out of control. That is what is being fed to the populous. Certainly we can clean up our environment in a way that is sustainable and responsible and totally necessary.

DMoney

I'm for it, as long as all programs, incentives, expenditures and actions are voluntary and not mandated by the federal government.

martian2

sometimes Dmoney gov't needs to add incentives to steer the free market economy in a direction that is sustainable and necessary. Like tax breaks if you put solar panels on your property. Or taxing heavy polluters as an incentive for them to curtail their impact on the environment. Sometimes government needs to mandate reforms for the good of the country. that's just the way reality has been and always will be. That philosophy of letting the free market do whatever it wants without gov't interference has brought us to where we are now. Extreme economic disparity, high levels of pollution in our water and air and land, and a health care system with the highest costs in the world. We can do better, much better.

mamasboy

"High levels of pollution in our water, air and land". What nonsense, U.S. companies have been bending over backwards to comply with new standards. If they weren't, we'd be hearing about lawsuit after lawsuit against them. "Taxing heavy polluters as an incentive for them to curtail their impact on the environment" That's called "cap and trade". Paying our "carbon debt" while upping the price on all of the goods and services we enjoy, as well as hurting our quality of life, over something humans play an insignificant part in.

martian2

"high levels" is apparent if you look on the impact man has had. There is a huge island of plastic waste the size of Rhode Island in the ocean harming wildlife, and it keeps getting bigger. And yes thanks to the government standards companies are now forced to comply with the regulations. Dmoney wants no government involvement, in which case nothing would get cleaned up. We still have a ways to go, from our drinking water with high chromium levels (a cancer causer) to mercury pollution( another carcinogen) in our rivers to the destruction of the bee population(necessary for a large food supply). I could go on and on. We humans play a huge role on our environment, and our quality of life depends on a sustainable practices and renewable resources that minimize our impact on the planet. Don't know what you planet you come from mamasboy, but those are the facts whether you admit it or not!

DMoney

Incentives? Great! Tax heavy polluters? Bad. Coercion, injustice. If the incentives are good enough, and these ideas become popular, what taxes are needed?

DMoney

Also Martian, I'm pretty sure that ball of plastic is the size of Texas now. And it does really suck. I believe, but am not certain, that the best solution currently for the issue was created by a young entrepreneur. Not a government or international body.

oldhomey

So, D, I take it you think it is an injustice to tax and coerce industries that pollute our water sources and air. But it is no injustice on their part to cause illness in the general public with their pollution? We should "incentivize" them to stop polluting by paying them to stop poisoning us? What taxes are needed? Well, for one thing, government incentives cost money. The government gets its money to pay out those incentives through taxes that you and I pay. Those are taxes that are needed for incentives. If the government taxes the polluters, we are not taxed, but the polluters are, adding to our tax base. The pain of paying those taxes incentivizes the polluters to find ways of not polluting to escape the taxes.

How is your reading going so far this week? Already finished a couple of books? I suggest your next book not be a WWII thriller, but one about basic operations of the federal government.

oldhomey

I believe, D, but I am not certain, that you saw some snippet of television that featured the young entrepreneur you are speaking about has had some major failures with the gigantic sea-going collection boom he is trying to assemble. That is not to say he ultimately will fail with his idea, but at this point it doesn't look good.

You certainly hang a lot of hope on one story you see on television, but you need to follow through more on these things and not base a sermon on free market trumping government efforts on the basis of nothing.

martian2

the best solution for that island of plastic in the ocean is not to create it in the first place. And why is there sooo much plastic in society anyway. You go to Menards and get a few nails and guess what, its wrapped in plastic. Every little thing you buy these days is, and its the type of plastic that does not break down quickly into simple organic waste. Yes hopefully someone comes up wit a solution to the problem soon. Maybe we as a society can "coerce" manufacturers into using less plastic , and government can have a role in that. Just like it does in many states where cans and bottles have deposits on them which can be redeemed when turned in.

DMoney

Taxing a business does not result in the owner/executives just saying "oh darn, well I guess we're making less". It results in costs being passed all the way through the consumer. Raise business costs, raise your purchasing costs. It's really that simple.

Shape the situation so there's more profit in changing, and you can accomplish both goals. When the day comes where major energy companies can make more money using renewable s, that's the day a massive conversion of energy takes place. To simply apply extra regulation and tax will result in each of us paying more for heat, fuel, etc.

DMoney

Regarding the young entrepreneur who's actively working to solve the problem, of course there are issues. Just like any business ever created or operating. What government is doing more? There's no jurisdiction over the open ocean.

I actually did a little more research on them--they still hold to their estimate that they will reduce the great pacific patch by 50% in 5 years. That's a massive amount of plastic in a very short time. That's the result of people, using their own will and energy to accomplish almost impossible results.

oldhomey

Okay, D, we will revisit this in five years. Hope I am around to find out that he was successful.

DMoney

Vote Republican, independent or moderate Democrat. Don't give these socialists an inch. This is beyond the wildest dreams of Marx, Lenin, or any historical socialist. It's dangerous even to plant this seed. If this ever took hold and came close to fruition, there'd be anarchy and civil war. Everyone must unite to kill this idea.

LaCrosseCampers

Couldn't agree more, DMoney!

oldhomey

My oh my! Ocasio-Cortez is beyond the wildest dreams of Marx, Lenin or any historical socialist? We already know your grasp of history is so weak as to be nearly nil, given your very strange ideas about World War II and post-war geopolitcal history, D.

But be that as it may, this column is just the sort of opening round of how the Republicans are going to try to emerge them from the wreckage that Donald Trump caused for them. They are going to cry "socialism!" from here until mid-November 2020. The Democrats, I would hope, recognize this, and it is imperative that they begin to guide Ms. Ocasio-Cortez into a position where she sees that she is 29 years old, inexperienced, and needs to learn some basic lessons of governance before telling the rest of us how she is going to lead us into the future.

In the meantime, the Democrats need to buckle into what is doable now, what will move us into a more livable, equitable society and future, and that begins with healthcare. This columnist seems gob-smacked that Bernie Sanders' estimate for Medicare for all would amount to $3.2 trillion a year. Ahem. Mr. Smith, before you go to Washington with that awful reality, you need to know that we already spend more than that on a much inferior healthcare system which cost us in 2017 $3.7 trillion. I would hope the Democrat's can disengage from Ocasio-Cortez' star power and her pie in the sky pronouncements and do something valuable and doable right now. It is how we will assure the defeat of Donald Trump and the Tea Party movement.

Rick Czeczok

Don't forget about Omar, and Waters and others. Democratic party is slowly loosing what they once were. Wrong move putting Pelosi in charge, she lost it once and the dem's handed it right back to her. History will show that to be a major error.

johnnybragatti

Loose as a Goose says the zerocock, with out no cause,
but she"s right , President Pelosi may be closer than ya"ll think.
We as Americans could ,should,would, be so lucky.

oldhomey

Well, Ricky, I will risk "loosing" with a House majority leader who finally and firmly put Trump in his place, revealing him to be the fool that he is. It is for "loosers" like you think the Democrats, who swamped the Republicans just three months ago, have made a major error. Hang on to your hat, because the Republicans aren't going to be able to hang on to their seats in 2020, especially in the Senate.

DMoney

So you essentially agree with me. Thanks.

oldhomey

Well, D, we will essentially agree if you agree that the most pressing issue that the Democrats should run on in 2020 is getting us as a nation over the hump and finally on a national healthcare plan. If we can get that done, the Democrats will have crafted something the rest of the nation will be eternally grateful for, like Social Security, Medicare, the Food and Drug Administration and other great government services that make us a community as well as a nation. Are you with me on this? If not, we are not essentially in agreement, I assure you.

DMoney

No I meant the lack of feasibility of the Green New Deal and the harm it will cause Democrat hopes during next election. Social Security is projected to run out of its reserves in about 15 short years according to most sources. After that, recipients can expect to earn at least 80% of their benefits. That represents a huge loss for millennials, who now represent the largest labor and consumer group in the country. Despite many millennials being liberals, 80% are very worried about it, according the New York Post study. What a "great government service". But I'm sure the much more massive healthcare will go better--why wouldn't it?

DMoney

*at most

oldhomey

Well you certainly are quick to scoff at the feasibility of this green plan while accepting at face value that the young business entrepreneur's plan to remove plastic garbage from the ocean is already proving free enterprise to be superior to government action on environmental problems. I am skeptical of both at this point. I told you how we can assure you will get your SS benefits. You, more than me, will decide that, and you seem determined to kill the program rather than find a workable remedy for it. You face a future with no nose, in that case.

A Veteran

old phony----Yes the young congresswoman is a half wit,what about the U.S. senator who cosponsored this foolish resolution and may I add I believe all of the declared liberal candidates for president endorsing it some of them before they had even read it.Is this the type of person we want leading this nation,as Pelose said (we will have to pass it to see whats in it

martian2

well gee poor veteran, its well known that Trump doesn't read, he doesn't like to at all. so advocating for a resolution or a law without reading it is par for the course for him. Just taking a cue from your dear leader. What you are talking about is a non binding resolution, so it means about as much as one of your posts.

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