Conference Report: The Green New Deal

Panelists:

• Matthew Continetti, Founding Editor, The Washington Free Beacon
• Ioana Marinescu, Assistant Professor, University of Pennsylvania School of Social Policy and Practice
• Albert Wenger, Managing Partner, Union Square Ventures
• Moderated by Robert Smith, Host, NPR’s Planet Money

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While the overarching theme of the Green New Deal resolution is climate change, it also addresses issues of poverty and income inequality. The resolution states that not only have wages stagnated since the 1970s, contributing to a widening wealth divide, but also that climate change will likely exacerbate existing inequality. In addition, the resolution contends that the mass mobilization needed to combat climate change requires an engaged work force and economically secure population.

The concept of a universal basic income (UBI) has existed for centuries, but the idea has gained traction recently, with some politicians and business leaders from across the ideological spectrum touting UBI as a cure for the wealth gap. UBI could take many forms, but the panel discussed it mainly in the same terms as Andrew Yang, a Democratic presidential candidate at the time—namely, that every American adult, independent of employment status or income, would receive an unconditional monthly cash benefit of $1,000.

The panelists agreed that the current welfare system is rife with problems: fraud, disincentives, and overly complicated transfer programs. But one of the main concerns with UBI is that, unlike welfare, it does not require recipients to actively seek employment. Ioana Marinescu, assistant professor at the University of Pennsylvania School of Social Policy and Practice, pointed out that when UBI has been tested in smaller-scale economies like Alaska, the average level of employment did not change compared to states similar to Alaska. In fact, UBI has the potential to create more jobs, as people spend the extra money, which leads businesses to hire. In trials, UBI has been correlated with a variety of positive social changes, such as improved health outcomes, and could improve some gaps in the welfare system. However, Marinescu noted that trials have been limited to date. “It’s a bit of a guessing game on what would happen if you put UBI on a huge scale,” she said.

Albert Wenger, a managing partner at Union Square Ventures, supported the idea of UBI. But he noted that the typical framing of the policy—a cash handout to compensate for all the jobs disappearing due to automation—is flawed. He argued that policy leaders should move away from the defensive “mitigation” framing and think of UBI as a proactive mechanism to boost individual freedom in the technology age. “We fundamentally have to get away from trying to pin UBI as either left or right,” Mr. Wenger said. “Trying to characterize it as a cheap handout flies in the face of all the evidence from all the trials,” he added, referring to studies that show that UBI has significant social benefits. These studies have shown that UBI can enable a recipient to leave an abusive partner, leave a job, relocate, participate in civic affairs, spend more time with family, or care for elderly dependents. In response to the concern that UBI could disincentivize labor force participation, Wenger pointed out that the US welfare system already has disincentives, as unemployment entitles some recipients to more benefits than a low-wage job does.

Matthew Continetti, a writer and founding editor of The Washington Free Beacon, was much more skeptical of UBI—both the merits of the policy and also its chances of approval in the Senate. He argued that the current welfare system, though flawed, has means-tested incentives for people to actively seek work, which a UBI plan lacks. He expressed concern that labor disincentives have social consequences as well as economic ones, noting that employment is a means of dignity, connection to a community, and a sense of purpose. The United States is already experiencing social erosion and a breakdown of trust in institutions, and in Continetti’s view, UBI could exacerbate these issues. “UBI is not just a quantitative difference in the American welfare state. It would be a qualitative one,” he said.

Panelists:

• Robert Bryce, Author and Filmmaker
• Dan Carol, Director, Center for Financial Markets, Milken Institute
• Jonathan Elkind, Senior Research Scholar, Center on Global Energy Policy
• Moderated by Alexis Crow, Senior Fellow, Richard Paul Richman Center, and Geopolitical Investing Lead, PwC

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The Green New Deal resolution argues that because the United States is responsible for a disproportionate 20 percent of global greenhouse emissions and given the country’s technological capacity, it must “take a leading role in reducing emissions through economic transformation.” The resolution envisions achieving net-zero emissions by 2050 through “clean, renewable, and zero-emission energy sources.” The deal proposes several initiatives—such as upgrading buildings to be more energy-efficient and investing in electric cars and high-speed rail systems—but it neither endorses nor rejects specific energy sources or technologies.

The panelists agreed that the idea of net-zero emissions made sense as an aspirational paradigm, but that renewable energy sources alone are unlikely to lead to net-zero by 2050, keep pace with the country’s energy demands, or keep global warming below the scientific target of 1.5 degrees Celsius. Jonathan Elkind, a senior research scholar at the Center on Global Energy Policy, said, “To respond effectively to climate change, we need approaches that combine speed, scale, and durability of policy solutions. We are painting ourselves into a corner if we think we can solve 100 percent of our climate problems with wind and solar.” He emphasized that the United States needs oil and gas today, and that demand for these energy sources will continue for some time in the future, especially in hard-to-abate sectors like heavy industry and heavy transport. Innovation is essential to develop and commercialize reduced-carbon and zero-carbon solutions that can address energy needs in these areas.

Robert Bryce, author and filmmaker, claimed that although output from wind and solar may be on the rise as prices drop, those sources only provide a fraction of the output produced by domestic oil and natural gas, and may never come close to replacing hydrocarbons. “Renewables aren’t even keeping pace with existing demand growth,” he said. “A lot of this talk about 100 percent renewables is, in fact, deeply misguided.” Bryce argued that progress should be “laser-focused on electricity,” and supported exploiting low-carbon energy sources like natural gas and nuclear, which have smaller footprints. “If we are serious about reducing CO2 emissions, we have to be serious about nuclear energy,” he said. Bryce also stressed that land-use conflicts, particularly involving the siting of wind-energy projects and transmission lines, are already thwarting the expansion of renewable-energy capacity across the United States and Europe.

Dan Carol, director of the Center for Financial Markets at the Milken Institute, expressed confidence that existing low-carbon generation and efficiency technologies, coupled with developing energy storage solutions, can get the United States close to the aspirational goals outlined in the Green New Deal. But Carol remained wary about the country’s ability to deploy solutions at scale. “If we are going to solve this problem, it’s going to take top-down and bottom-up [effort],” he said. Carol expressed certainty that many of the technologies needed to turn things around either already exist or will exist soon—innovation is thriving, he noted, and there are research and tax incentives to encourage investment in new technologies. For instance, there are efforts to build more resilient micro-grids—small-scale power grids that do not rely on long transmission lines from a central station. These grids can function independently and maintain service through natural disaster disruptions. Resilient infrastructure—whether for storms in Louisiana or wildfires in California—is a bipartisan effort, and it could save billions of dollars over the next several decades, Carol argued. Another technological priority is developing better storage systems that harness energy from intermittent sources—like wind and solar—so that stored energy could eventually meet a community’s peak power demand.

Panelists:

• Jared Bernstein, Senior Fellow, Center on Budget and Policy Priorities
• Douglas Holtz-Eakin, President, American Action Forum
• Stephanie Kelton, Professor of Public Policy and Economics, Stony Brook University
• Moderated by Kate Davidson, Economic Policy Reporter

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Estimates for the cost of the Green New Deal vary, but the resolution undoubtedly calls for large-scale projects requiring considerable resources. Given the rising federal deficit and mounting debt, can the United States afford it?  

The total government debt exceeds $22 trillion. The deficit was $984 billion for the fiscal year 2019, a 26 percent jump from the previous year, according to the Treasury Department. Businesses have continued borrowing, and interest rates are relatively low. But if the deficit (relative to GDP) grows too large, it could crowd out other borrowers, and there is an underlying fear of what will happen if governments go bankrupt or run into serious financial jeopardy. At what point does total debt start to crowd out borrowing?

The panelists agreed that, if there is a budget constraint, we simply do not know what it is. But they expressed varying degrees of concern over the current figures. Douglas Holtz-Eakin, president of American Action Forum and a former director of the Congressional Budget Office, stated that the deficit “merits some concern” because it is not on a sustainable trajectory. “When do we come to terms with it, and what costs do we incur in the interim?” he asked.  

Stephanie Kelton, a professor of public policy and economics at Stony Brook University, said that she does not view the debt as an immediate or long-term problem. She argued that debt matters, but not in the way that is typically understood. “I think it’s really unfortunate that [debt] bears this name,” she said. “It’s more appropriate to think of it as part of the net money supply.” A fiscal deficit can represent a financial surplus floating around the American economy, dollars the government spent but did not tax back; in other words, spending today becomes financial assets tomorrow. The right policy goal would be to have a balanced economy with a combination of full employment and precautionary measures against inflation risk, Kelton said. She added that the mass mobilization of people and resources called for in the Green New Deal would not devastate the US economy—but that the climate crisis would.

It is impossible to state how much debt is too much. In Japan, for instance, the debt-to-GDP ratio is 240 percent, whereas in the United States, the ratio is 105 percent. Japan has no inflation, and interest rates in the country are close to zero. “The answer is quite clear in our case that if there is a constraint, nobody knows what it is,” said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities. For some, the budget constraint is inflation, which the United States seems to be avoiding. Another constraint would be interest rates, Bernstein added. The panelists all agreed: The question is not if we can afford the Green New Deal, but if we want to afford it. “How you spend money matters enormously,” Holtz-Eakin emphasized.

Panelists:

• James C. Capretta, Resident Fellow, American Enterprise Institute
• Sherry Glied, Dean and Professor of Public Service, Robert F. Wagner Graduate School of Public Service, NYU
• Steffie Woolhandler, Distinguished Professor of Public Health, City University of New York at Hunter College
• Moderated by Margot Sanger-Katz, Correspondent, New York Times

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An overhaul of the healthcare system is another policy goal addressed in the Green New Deal. Medicare for All, a single-payer system in which every citizen is insured by the government, has been one of the most intensely debated policy proposals in the United States. The panelists expressed distinctly different views about the costs and benefits of a single-payer healthcare system, illustrating why the issue has become one of the most contentious in the political arena.

National healthcare spending stood at $3.5 trillion in 2017—or 18 percent as a portion of GDP, roughly double the expenditure in other developed countries. According recent estimates, there are as many as 30 million uninsured people in the United States.

Steffie Woolhandler, a professor of public health at Hunter College, argued in favor of Medicare for All, pointing out that such a system would increase coverage and reduce costs by eliminating insurance middlemen. Woolhandler reminded the audience that hospital administrative costs, such as billing and paperwork, are burdensome. By some estimates, a single-payer reform could save more than $500 billion annually on insurance overhead and providers’ billing costs, Woolhandler added.

James Capretta, a resident fellow at the American Enterprise Institute, was opposed to Medicare for All, arguing that efforts should be focused on cost discipline based on stronger market-driven competition. “The number one organizing problem here is the lack of cost discipline,” he said. Currently, there is no single entity responsible for costs, so the healthcare system generates significant waste, high pricing, and abusive practices. Capretta recommended that the government create the conditions that would intensify market-driven cost discipline. He stated that Medicare for All would double the current healthcare budget and increase taxes, which would raise a distributional question—subsidizing healthcare for people with lower incomes would mean that higher income earners would pay twice, Capretta said. Woolhandler drew a different picture of this issue, stating that money currently paid to premiums and deductibles would simply shift under Medicare for All and be paid as a tax instead.

Capretta also brought up the existence of alternatives. He noted that many of the 30 million uninsured Americans are eligible for Medicaid (3 million live in a state where Medicaid had not been expanded.) About half of the US population receives employer-sponsored health insurance, which Medicare for All would eliminate. “The idea of a ‘nirvana’ single-payer…defies all experience in our current political process,” he said, emphasizing his support for a diverse, decentralized, and market-driven approach.

Sherry Glied, dean and professor of public service at NYU’s Graduate School of Public Service, was also skeptical of Medicare for All: “[Single payer health insurance] is a question best addressed not in terms of health policy but in terms of public policy or progressive policy. And I think, in those two terms, single-payer would be a disaster for the United States.” She argued that a more pragmatic and effective approach would be to expand Medicaid in the 17 states that have yet to do so. In the case of Medicare for All, “the United States government, the Congress, the executive branch of the United States will be a giant health insurance company,” Glied warned. She suggested a system where citizens would be automatically entitled to government insurance, but would also have the option to select private insurance as a supplement to basic coverage. She concluded, “You can’t fix the problems of income inequality in the United States through the healthcare system.”  

Panelists:

• Sandy Baum, Senior Fellow, The Urban Institute
• David Bergeron, Senior Fellow for Postsecondary Education Policy, Center for American Progress
• Max Eden, Senior Fellow, Manhattan Institute
• Moderated by Erik German, Senior Fellow, Richard Paul Richman Center, and Producer, Retro Report

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The Green New Deal emphasizes higher education access for all, and especially for vulnerable groups. Higher education policy is the topic of heated debate in the United States. More recently, Senators Elizabeth Warren and Bernie Sanders have proposed student loan forgiveness and tuition-free college.

The aggregate amount of student loan debt in the United States stands at $1.6 trillion, and one in five US adults has student loan debt, according to most estimates. More than three quarters of borrowers owe less than $50,000. More than a third of Americans age 25 and up have a college degree—a shift from 1940, when this number was less than 5 percent, according to Census Bureau data. The average student loan for a bachelor’s degree stands at $27,000. Research shows that a college degree leads to better job prospects and higher living standards.

Sandy Baum, a senior fellow at the Urban Institute, argued that making college free would not fix more pressing underlying problems. “We have a society that is so unequal that many students don’t graduate from high school,” she said. “Making college free is not going to solve their problems,” she added, referring to the fact that individuals without high school education experience high levels of unemployment, insufficient healthcare, and poor housing conditions. Baum added that “[free college] is not a progressive policy.” As no-cost community college is already an option for low-income students, a free college policy would mean government spending for the education of higher-income individuals, she noted. For Baum, the government’s priority should not be making college free, but rather ensuring that low-income students can access opportunity, and that their education serves them well in the professional world.

David Bergeron, a senior fellow for postsecondary education policy at the Center for American Progress, emphasized the significance of a major employment trend—that there are increasingly fewer jobs in the United States that do not require a college education. Bergeron expressed strong support for loan forgiveness in a number of cases, including for those who have defaulted, could not graduate, or whose circumstances led to unemployment. He also supported education access and options: “I believe that every student graduating from high school today should have a free public option,” Bergeron said—that is, an associate, bachelor’s, or occupational degree. “The public system should be free, and that is very different from what we have today but very similar to what we had historically.”

Max Eden, a senior fellow at the Manhattan Institute, echoed Baum’s sentiment that the government’s focus should be on creating high-quality higher education opportunities that pay off in the long term. In Eden’s view, cost is not the main obstacle to obtaining a degree, as low-income students in the United States already have no-cost options but exhibit low graduation rates. Making college free simply shifts the cost of education to taxpayers without addressing underlying problems, Max noted. He also warned that if a university’s costs outpace the amount of incoming taxpayer funds, the quality of education at the institution could suffer. Instead, Eden suggested incentivizing higher education institutions to focus on graduation rates and job market preparedness.

On the topic of loan forgiveness, Baum noted that a large share of the debt is held by graduate students who have high economic prospects, like law and medical students. She argued that the policy focus should be on people for whom higher education has not been beneficial. Eden agreed: rather than focusing on assistance for people who can already repay costs, policymakers should consider how to make college a less risky proposition for those from lower economic means.