When it comes to environmental policies, the Green New Deal, introduced by Representative Alexandria Ocasio-Cortez of New York and Senator Edward J. Markey of Massachusetts, both Democrats, is possibly the most controversial one. While there is an overwhelming support from the Democratic Party towards this climate change resolution, the Republican Party accuse the deal to be part of the Democrat’s socialist takeover and is far from a feasible solution to global warming.
WHAT IS THE GREEN NEW DEAL
In a nutshell, the aim of the Green New Deal is to completely transform how the economy operates, by bringing down greenhouse gas emissions to zero and meet 100% of the power demand using only clean, renewable, and zero-emission energy sources by 2030. In 2018, the special report by the Intergovernmental Panel on Climate Change found that:
1. Human activity was the most dominant cause of climate change over the past century
2. Consequences such as rising sea levels, wildfires, severe storms, droughts and other extreme weather conditions are being felt across the world as a result of global warming.
3. If global warming reaches or exceeds +2C, then the consequences would become much more severe, and potentially irreversible.
4. Global temperature rises must be kept below +1.5C to avoid the more severe impacts, for which it is essential to:
a. Reduce greenhouse gas emissions by human sources to 2010 levels by 2030.
b. Bring global gas emissions to net zero by 2050.
Historically, the United States has been has been responsible for a disproportionate amount of greenhouse gas emissions, contributing to around 20 percent of total emissions in 2014. However, by effectively utilising its technological capacity, America has the scope of taking a leading role in reducing emissions through economic transformation. Climate change acts as a direct threat to the world:
· By impacting the economic, environmental and social stability of many countries and communities around the world.
· Acting as a threat multiplier.
Furthermore, the impact of climate change is being felt disproportionately affects communities of colour, migrants, deindustrialised communities, low income households, women, the elderly and the unhoused.
The Green New Deal’s main objectives are to:
1. Achieve net zero emissions though an equitable transition, such that no communities are disproportionately impacted by the economic transformation.
2. The creation of new, high paying jobs, that promote sustainability and ensure economic prosperity and security for all people.
3. to invest in the infrastructure and industry of the United States to sustainably meet the challenges of the 21st century
4. To secure the following for all the people of the United States:
a. Clean air and water
b. Climate and community resiliency
c. Healthy food
d. Access to nature
e. A sustainable environment
5. To promote justice and equity.
But how feasible is such an economic transition? Many experts on climate change agree that aggressive action is very crucial to be able to tackle the disastrous effects of global warming. Some critics worry that this deal is too socialist or too impractical. The United States currently meets 80 percent of its total energy demand through fossil fuels. Needless to say, transitioning from the current status quo to one where all energy is derived from renewable sources is an enormously expensive and time consuming process. In fact, the centre-right American Action Forum estimates the cost at $93 trillion.
FINANCING AND THE MODERN MONETARY THEORY
While the Green New Deal has outlined its ambitious objectives within its resolution, how it would be paid for was not addressed. Representative Ocasio-Cortes addressed that the deal could be paid for through deficit spending, while also highlighting an unconventional economic theory known as Modern Monetary Theory (MMT). Essentially, Modern Monetary Theory is a macroeconomic theory that stipulates that for countries like the USA, which have control over their currency, government expenditure need not be funded solely through taxes or borrowing. Instead, the Federal reserve can simply print more money into existence to fulfil the expenditure requirements.
Traditional economists may believe that printing money to finance deficit spending is fiscally irresponsible due to its implications on inflation, potentially leading to hyperinflation, rendering the local currency worthless. MMT proponents suggest that inflation is an unlikely outcome of the Modern Monetary Theory, as long as there remains unused capacity in the economy. It is only when the economy reaches barriers on its productivity such as reaching full employment, that inflation would rise, because the supply is not able to keep up with the demand. Hence, resulting in price rises. While supporters of the theory acknowledge that inflation is theoretically a possible outcome from such spending, they say it is highly unlikely and can be fought with policy decisions in the future if required.
An example that MMT proponents usually cite is the case of Japan, which has been running a very high debt-to-GDP ratio (2.4:1). This would mean that Japan has spent significantly great sum, larger than the value of its entire economy, but has not been able to collect sufficient tax revenue to cover that expenditure. Yet, the inflation rate in japan is actually negative! At -0.29%.
WILL THE GREEN NEW DEAL BE IMPLEMENTED?
The Green New Deal offers a very radical approach to tackling climate change. Hence, politicians are divided on their support for this proposition. Nearly every initial Democratic candidate for the 2020 presidential election endorsed the deal. The Republican party, on the other hand, seems to be opposed on the implementation of the Green New Deal. So for the time being, the future of the deal remains unknown. However, despite the controversy surrounding it, the Green New Deal is forcing politicians to address climate change and promoting a shift towards a greater importance for climate policy, which is a much needed change in the modern political landscape as adverse climate conditions are becoming more and more common.
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