THE GREEN NEW DEAL AND THE COST OF VIRTUE – Estimated cost of $2.5 trillion a year
Just six of AOC’s long list of aspirations would roughly cost some $2.5 trillion a year.
A recent post looked at the dramatic tax hikes associated with Alexandria Ocasio Cortez’s (AOC) so-called “Green New Deal.” But tax hikes constitute only part of what needs to be said about this proposal. It contains so much ambition – on climate as well as social issues – that it will cost a bundle, a lot more money than any extra taxes on the wealthy can raise. Those costs need the attention of Washington, certainly, but also of every citizen, whatever his or her political persuasion.
As yet, AOC has offered nothing definite enough to support precise cost calculations. In point of fact, her “Green New Deal” involves little definite beyond a list of aspirations. One could not even properly describe it as a proposal. The only planning for the future involves off loading to what she calls a “select committee” the “how’s” and “when’s” of meeting her goals. Until that committee forms and puts specifics to AOC’s dreams, if it ever does, none of the usual government services have a way to estimate costs. Still, There is enough to attach broad estimates on the expenses involved in AOC’s “Green New Deal.” Here are figures for just some of its goals:
- The proposed expansion of renewables to provide 100% of the nation’s power needs would, according to respected physicist Christopher Clark, cost about $2.0 trillion or approximately $200 billion a year for ten years.
- The Deal’s desire to build a “smart power grid” for the entire country, would, according to the Electric Power Institute, cost some $400 billion or $40 billion a year for ten years.
- According to a McKinsey study, AOC’s aspiration to “draw down greenhouse gases” would cost $11 trillion or about $110 billion a year for ten years.
- The Deal’s goal to upgrade every home and industrial building in the country to state-of-the-art safety and energy efficiency would run some $2.5 trillion over ten years or about $250 billion a year. This figure may well understate. Consider that there are 136 million dwellings in the United States. An upgrade of each would conservatively cost $10,000 a unit on average or near $1.4 trillion, and this does not even include the industrial and commercial structures. Nor does it include upkeep.
- The Green New Deal also aspires to provide jobs guarantees at a “living wage.” A government assessment of a similar proposal by Sen. Cory Booker (D-NJ) puts the cost of such a program at $543 billion in its first year. Though the costs thereafter would fall, the cumulative expense over ten years would come to some $2.5 trillion.
- The goal of developing a universal, single payer health-care system would, according to an MIT-Amherst study of a similar plan put forward by Sen. Bernie Sanders (I-VT), come to about $1.4 trillion a year.
Just these six of AOC’s long list of aspirations would then roughly cost some $2.5 trillion a year. Since Washington’s 2018 budget put spending at $4.5 trillion, the Deal would effectively increase federal spending by a touch over half again. That is a hefty price tag, considerably more than the estimated $700 billion a year that would emerge from AOC’s proposal to raise the maximum tax rate to 70%. To her credit, she has admitted as much, indicating that her “plan” would also require more debt and “printing money” as well. That much debt would, of course, have its own ill effects, while “printing” money at the necessary rate would invite inflation. AOC also seems to consider government equity in these ventures a financing alternative. She shows some confusion here. Equity ownership hardly constitutes an alternative-financing plan. To take an equity stake, Washington would still need money to buy in, either from taxes or debt or “printing money.” (Surely, AOC does not envision confiscation.) Aside from financing vagaries, some might otherwise balk at a move for Washington to own so much of the nation’s means of production.