Why the Green New Deal Is Financially Lethal

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Much attention has been paid to the extravagant goals of the Green New Deal, now endorsed by a large portion of the declared Democratic presidential hopefuls. Much of the reaction of non-candidates has fallen at one of two extremes: (1) it’s aspirational but a starting point for serious discussion; or (2) much of it is ludicrous on its face. (Almost no one seems to think it’s a serious proposal, except maybe a group of petulant schoolchildren who were rebuffed by Sen. Dianne Feinstein.) Largely ignored has been what the costs will be, how our society can pay for it, and its negative impacts on Americans’ health and longevity. 

Even allowing for some moderation in the blueprint that would reduce the costs from impossible to astronomical-but-manageable through contortions in our economy, the numbers are staggering and in the multiple trillions, according to estimates by the American Action Forum. 

It is, therefore, unfeasible for the top 1% or 10% or even 25% of our income earners to finance the GND. There just isn’t enough income to tax short of total confiscation. (And maybe not even then.) 

As of the most recent available data, the top 50% of all earners account for about $8 trillion-$9 trillion in Americans’ income and produce somewhere between $1.5 trillion and $2 trillion in tax receipts (excluding Social Security and Medicare taxes). The top 10% account for only half of this income but 70% of the taxes. The lower half contribute a mere 2.7% of income taxes. Thus, to raise multiple trillions would require tapping fully half of the U.S. population, which when coupled with Social Security, Medicare, and state and local taxes would impose a huge loss of wealth on everybody with assets and significant earning power. The “rich” simply do not have enough income to tax. 

This table, from the American Action Forum’s analysis, says it all: 

SUMMARY TABLE (2020-2029)
Goal Estimated Cost Estimated Cost Per Household
·      Low-Carbon Electricity Grid $5.4 trillion $39,000
·      Net Zero Emissions Transportation System $1.3 trillion to $2.7 trillion $9,000 to $20,000
·      Guaranteed Jobs $6.8 trillion to $44.6 trillion $49,000 to $322,000
·      Universal Health Care $36 trillion $260,000
·      Guaranteed Green Housing $1.6 trillion to $4.2 trillion $4,000 to $12,000
·      Food Security $1.5 billion $10

 

These data are not only daunting but literally a matter of life and death. Simply put, the numbers – in particular those in the last column, cost per household — tell us that GND will lead to what has been dubbed “statistical murder,” because the diversion of resources to fund the GND would exert a so-called “income effect” on health and longevity that reflects the correlation between wealth and health. 

Let us explain. It is no coincidence that richer societies or segments of the population have lower mortality rates than poorer ones. This is demonstrable in places such as California’s Marin County, just north of San Francisco, which ranks No. 1 in both health and per capita income, while the poorer parts of the state, such as the Central Valley, score poorly on measures of health. 

To deprive communities of wealth via taxes to fund the GND, therefore, is to enhance their health risks because the deprivation of income itself has adverse health effects — for example, an increased incidence of stress-related problems, including ulcers, hypertension, heart attacks, depression, and suicides. 

The GND aims to remedy the problem (almost certainly without making the connection) by offering universal health care. However, those costs, too, would run into the trillions of dollars, and single-payer health care has been thoroughly and meticulously debunked and discredited — to take one example, in health care reform expert Sally Pipes’ “The False Promise of Single-Payer Health Care.” 

Moreover, virtually every nationalized health care system imposes rationing, and almost all allow for a parallel private medical system. Depressing provider fees will lead to fewer participating providers by driving them to the private side, exacerbating the need for rationing. So, unless we are to become a Soviet-style society with indentured medical providers, an overall depressed economy, and a largely depleted middle class, it is not at all obvious that we can tax our way out of the income effect. 

To make matters even worse, the costs — and mortality — associated with the income effect will be felt up front, because the GND programs cannot begin without funding. Yet, by contrast, the benefits, which will surely fall short of the GND’s predictions, can be realized only in the very long term. 

The “Green” in the Green New Deal refers, of course, to lowering greenhouse gas emissions to slow the progression of global warming, but the United States cannot ameliorate it alone; and we are already far ahead of huge emitters China and India in moderating our carbon footprint. Nor, arguably, do we have the right to dictate to them, because carbon emitting in those countries and other poorer nations saves lives in many ways (again, related to wealth). And they certainly don’t have the resources to focus on being green. 

In many ways, the GND would impact our society much like excessive regulation, in the sense that the poorest and most vulnerable in society disproportionately bear the costs and impacts of excess regulation, while they enjoy relatively few benefits. In her study, “Regressive Effects of Regulation,” Creighton University economist Diana Thomas described the harm caused by regulation that fails to consider the real-world impacts on consumers of inflated costs of goods and services and/or diminished wages. 

In the same way, “progressive” proposals like the GND substitute government choices and preferences for those of individuals, and they are often wrong-headed, idiosyncratic, or involve self-dealing. The newly impoverished class, albeit large, will have the least control over what is done. 

The bottom line is that siphoning off vast amounts of wealth from a significant fraction of the nation’s population to achieve the GND’s goals will cost lives today, with uncertain benefits far in the future. And providing a health care framework to mitigate the damage would escalate the cost of the GND to the point of near (or actual) economic and social collapse, creating a downward spiral. 

How do such ideas gain any traction at all?  As the widely published Grace-Marie Turner wrote recently, Ocasio-Cortez “leads a generation of young people to take pride in their ignorance — of the laws of nature, of history, of the Constitution, of the eternal battle for freedom — and still succeed.” Those crusaders include clueless, exploited children who have been skipping school to call for adoption of the GND.  

Clearly, we need some adults with sound judgment, who will step back and consider the much darker effects of the plan. This is a feel-good, let’s-believe-in-the-tooth-fairy moment we simply cannot afford. 

Andrew I. Fillat has spent his career in technology venture capital and information technology companies. He is also the co-inventor of relational databases.

Henry I. Miller, a physician and molecular biologist, is a senior fellow at the Pacific Research Institute.

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