We at CleanTechnica have been looking at the various 2020 US Democratic candidates for president (here, here, and here) and their funding plans for a clean energy future. We (and they) have learned a lot about what it will take to not only usher in an energy future devoid of fossil fuels but also to pay for such a transition. Maybe it’s time, though, to put at least some of the politics aside and see what economists and researchers out there are saying about investing in clean energy, including the Green New Deal (GND).
Economists & Researchers Say: Assess Resource Availability
“Our decision about energy will test the character of the American people and the ability of the President and the Congress to govern this Nation. This difficult effort will be the moral equivalent of war, except that we will be uniting our efforts to build and not to destroy.”
– President Jimmy Carter
Calling the GND the Moral Equivalent of War, researchers at the Levy Institute outline that, instead of simply adding up estimates of the government spending that would be required, they propose assessing resource availability that can be devoted to implementing GND projects. This would include mobilizing unutilized and underutilized resources, as well as shifting resources from current destructive and inefficient uses to GND projects.
They argue that financial affordability cannot be an issue for the sovereign US government. Rather, “the problem will be inflation if sufficient resources cannot be diverted to the GND.” Anti-inflationary measures, such as well-targeted taxes, wage and price controls, rationing, and voluntary saving would be necessary. These researchers recommend deferred consumption as the first choice should inflation pressures arise and conclude deferring a small amount of consumption will be sufficient to attenuate them.
With reminders that even very small increases of average global temperatures will generate large financial and human costs — just a half of one degree of warming above today’s average will increase the costs of global damages by $54 trillion — to delay action only means rapidly mounting costs, and the “chances of survival diminish… The costs of extinction of the human species— from the point of view of humans, at least—is beyond measure.” Even if, “as one hysterical estimate puts it,” the cost of the GND would add up to $93 trillion over the next decade, that is a cost worth paying “in comparison with the discounted cost of total destruction of human life on planet Earth.”
Don’t Fear Bigger Deficits
Economist Stephanie Kelton argues the words “debt” and “deficit” have been “weaponized for political ends.” Kelton is a professor of public policy and economics at Stony Brook University and former chief economist for the Senate Budget Committee Democratic staff. She wrote an article in the New York Times titled “How We Think About the Deficit Is Mostly Wrong,” and it caught the eye of Alexandria Ocasio-Cortez, among others.
In a framework called Modern Monetary Theory, she argues that “bigger deficits wouldn’t wreck the nation’s finances.” Instead of a mindset that says “anything ambitious requires a score from the Congressional Budget Office,” she says that we should “we should think of the government’s spending as self-financing since it pays its bills by sending new money into the economy.” Instead of “fruitless battles over the debt ceiling,” the US could use the deficit against the climate crisis and the associated social perils of inequality, poverty, and economic stagnation.
Kelton insists that’s not a blank check for unlimited government spending. “Too often, people get a whiff of MMT, they don’t read the literature, and they somehow arrive at the takeaway that MMT is about printing prosperity,” Kelton told NPR. Kelton argues that runaway prices are only a danger when demand outstrips the real resources in an economy — the people, machines, and raw materials. If there’s idle capacity, MMT maintains that additional government spending does not trigger inflation.
— Stephanie Kelton (@StephanieKelton) September 25, 2017
It’s Simple: Make the Fossil Fuel Companies Pay for the Havoc They’ve Wreaked
An interesting opinion piece on The Hill suggests that the question of funding has been raised by those who are invested in the status quo, “particularly those who stand to gain the most from our current fossil fuel economy, including the Koch brothers, other billionaire CEOs, and the politicians in their corner.” Patti Lynn, the executive director of Corporate Accountability, writes that since the fossil fuel industry knowingly contributed to climate change and its devastating impacts, “the entities that have knowingly brought us this planetary disaster (and profited greatly from it) should foot the bill for reversing course.”
Radical? Not really, when you consider that the 1998 Master Settlement Agreement was the result of action taken by state attorneys general of 46 states, 5 US territories, and the District of Columbia against Big Tobacco and required the industry to pay billions of dollars each year to the settling states. Lynn argues:
“It’s overdue that we focus on the real culprit — fossil fuels” – Jane Fonda #firedrillfriday
— #ExxonKnew (@Exxon_Knew) January 3, 2020
Maybe we should just put all the angst aside and suggest, as Robert Hockett does in Forbes, that “we’ll pay for it just as we pay for all else: Congress will authorize necessary spending, and Treasury will spend. This is how we do it – always has been, always will be.” Rather than thinking of it as money that the US holds first, then spends later, federal spending is what brings that money into existence. Hockett asks, “The relevant question, rather, is what limits, if any, there are on the promises we can make and fulfill?”
The promises our elected leaders make to us as our representatives in government is to keep us safe from harm and to use our tax dollars in ways that are measured, accountable, and prudent. “If instead you are frightened, financially untutored, or cavalier about our economy or our planet,” Hocket asks, and I agree, “please buck up, wise up, and suit up. It is time to say game on for the Green New Deal.”