Green New Deal: Realistic or a Fiction?

Since December 2018, several Democratic Party presidential contenders and others have come up with a socialistic banners: the “Green New Deal.” This is copied term from former U.S. President Franklin D. Roosevelt (in 1932), who took immediate actions to reform finance, industry, agriculture, electricity, and housing to bring economic relief to people. This created a major centralization of power, vastly increasing the federal governmental control, scope and its spending. Although few beneficial outcomes manifested immediately because of splurging, the New Deal increased government size and spending and added to the budget deficit. 

President Roosevelt capitalized on the failures of President Herbert Hoover’s administration in the midst of the Great Depression. Because no other alternative was presented, American voters overwhelmingly supported the New Deal then. However, it was (and is also true for today) based on the idea of a government-regulated economy (i.e., government knows better) in balancing between conflicting economic interests (at least in theory). 

The Green New Deal:

The Green New Deal proposed at the end of 2018 is a “dressed-up” concept borrowed not only from President Roosevelt but also from the Green Party (in the 2012 presidential election, candidate Jill Stein proposed a Green New Deal, which was her campaign priority). The Green Party continues to push its own Green New Deal but in a modest way. Thus, no credit could or should be given to the current Democratic Party led Congress for coming up with the current Green New Deal. 

Is it coming from the heart of the socialistic extreme left, a fantasy (a pie in the sky), or a planted bomb to destroy the Democratic Party? If implemented as proposed, it will cost the tax payers’ more than $9.0 trillion, “extra money” a year. It will destroy the economy and the wealth, prosperity of America, and tremendously increase the inflation. It could eventually even erode the democracy of the United States, leading to one-party ruling. None of the politicians of the Democratic Party who embracing the Green New Deal have come up a realistic plan to pay for it.

At the minimum, the plan is estimated to cost more than $3.0 trillion per year, which needs new money. Printing money (quantitative easing; QE4) is not the answer. Although there is a limit to taxation, proponents say that “we will tax the wealthy (70% tax) to pay for it.” This seems a totally unrealistic plan with no reasonable basis to stand on. These “progressive proposals” will cost the country enormously. While fewer than half of American adults pay income taxes, approximately, $9.0 trillion additional funds are needed to implement this Green New Deal; money that must be paid by taxpayers (i.e., across the board massive tax increases).

Drastic actions to halt climate change:

The degree and the effects of the ongoing climate change are matters of debate. It is crucial to protect the environment, prevent air, water and soil pollution, and preserve nature and the fauna and flora for generations to come. The Environmental Protection Agency (EPA), Department of Agriculture, the Forest Service, and others have the fiduciary responsibility for this. Sustainable actions taken to accomplish the mentioned goals would have tangible benefits for all living beings, now and in the future. But not what is described in the hypothetical, politically motivated Green New Deal. Politicians have the fiduciary and moral responsibility to come up with realistic policies and laws and implement what is longer term cost-effective and good for the country and its constituents.

We have not seen the calculations (or at least estimates) of “cost–benefits” of the proposed Green New Deal and its timeline. Can those who propose it justify the proposed programs, such as eliminating air transport, fossil fuels, cows (i.e., the beef industry), the beer industry, downgrading the military, rebuilding all existing large building in the United States, and so forth?  Many government interventions end up in mess and negative consequences, in part due to associated exuberant expenses and political motives.

The goal of this Green New Deal, as stated seems to reach net-zero greenhouse gas emissions globally in a decade. About 9% of the greenhouse gases generated in America come from agricultural activities, including the release of nitrous oxide from soil and methane from livestock (cows in particular). For example, would the extreme measures and restrictions proposed for agriculture through this Green New Deal, have a measurable and meaningful footprint in reducing carbon emission or global warming?

However, the Green New Deal does not include the elimination of nuclear power or carbon capture yet (perhaps, forgotten to add). According to the EPA, electricity generation accounts for about 28% of the greenhouse gas emissions in the United States. The current Green New Deal, proposed as an economic stimulus programs in the United States, aims to address climate change and economic inequality at a cost of more than $90 trillion over a 10-year period. None of those who proposing this address the question, who will pay for this exuberant cost, especially when the budget deficit continues to rise and has already exceeded $22 trillion. The GDP to budget deficit ratio has exceeded sustainable level; the option is to reduce spending and increase growth; not printing money (QE4).  

Countries such as China and India (and collectively several European nations) each sector producing more greenhouse gases and carbon emissions than United States. It is estimated that even a 50% reduction of emission of carbon and greenhouse gases by the United States at a cost of trillions, will have only a marginal global effect. To achieve net-zero greenhouse gas emissions, globally, all countries must work together. 

Wealth tax:

As a part of the payment for the Green New Deal, Democratic politicians have proposed introducing a wealth tax. This would make the rich poor, incentivized the government waste more money, and the poor poorer. Such socialistic ideas with a tinge of Marxist philosophy, with big-governments-driven macro policies would not redistribute money equally across different sectors. In fact, it could make rich become richer, poor become poorer. 

Government is not expected to create jobs; its job is to facilities industries to do so by providing incentives, infrastructure facilities, and less taxation and regulation. Such would allow the wealthy and the corporate sector to generate jobs and contribute immensely to the economy by positive economic cycle. Overly taxing the wealthy and/or corporations could reverse the prosperity cycle of the United States, and even create a prolonged recession that could be worse than the Great Depression. 

Free University and College Education:

Based on the current economic model of higher education in the United States, provision of free tuition likely to make the outcomes worse. Free tuition would remove the key incentive for the majority of students to “learn and do well.” In addition, if implemented, at a cost of over $4.2 trillion per year, free education is likely to increase college dropout rates. 

Do the politicians of the Democratic Party themselves going to pay this over $4.0 trillion a year needed to cover the cost of tuition-free college? The student subsidies (as currently in place) should depend on the ability to pay. What is the inherent and perceived value when higher education is provided to all, including children of the wealthy, totally free? 

Reducing the costs of universities and colleges should be achieved through cutting expenses and wastage, not by raising tuition or providing free tuition. Both modes are counterproductive and will not improve the needed educational outcomes. Other key issues affecting universities and colleges are the waste of materials, misuse of funds, and top-heavy administration-related costs (i.e., too many higher-end administrators and management staff, creating jobs for themselves by duplicating systems and tripling costs). 

Others issues include wasteful research funds; overly high university “indirect costs;” aimless research programs that are designed to attract funds, elevate the individual’s status, as increasing number of publications, rather than producing “outcomes that benefit the community or the country”. Neither increasing tuition fees nor making college education free is the answer to waste: proper utilization of money and minimizing wastage (i.e., responsible use of funds) by universities will do that.

Extremism is not good for anyone. In most circumstances, taking the middle-path is the right option. It is important to give best possible opportunities to economically disadvantaged families for them to become self-sufficient. In fact, that is one of the purposes of having a graduated taxation system in a country. Taxed funds should be utilized not only to facilitate creating jobs opportunities, protect the country, keeping the law and order, etc., but also for environment protection, education, and provision of clean water, etc., for all communities.   

-----------------------------------------------------------------------------------------

Professor Sunil J. Wimalawansa, MD, PhD, MBA, DSc, is a physician-scientist, an educator, social entrepreneur, and a process consultant. He is a philanthropist with experience in long-term strategic planning, cost-effective investment and interventions globally for preventing non-communicable diseases. For recent charitable work: The author has no conflicts of interest; he has received no funding for this work.