Update – Apparently the FAQ mentioned in this piece was said to be “Conservative propaganda” before later being correctly referred to as a mistake by the AOC camp. This does not make its supporters look very good. Clearly, the conclusions in my initial piece were dead accurate. This resolution was not well thought out and the rollout of it looks like a dumpster fire.
The idea of a “Green New Deal” is all the rage on the left these days. This is a huge, bold plan to transform the US economy. Here are some highlights from the proposal:
- Net zero greenhouse gas emissions within 10 years by replacing “all existing buildings in the USA” to achieve maximal energy efficiency.
- “High quality health care”.
- “High quality education, including higher education”.
- “Affordable housing”.
- “Guaranteeing a job with a family sustaining wage” and full benefits.
- Save the animals, the environment, you get the point….
I’ll cut to the chase. This resolution is ridiculous. It is so void of detail and so broad in scope that it is hard to take seriously. Has anyone even tried to calculate the costs here? All the FAQ says is that the cost would be “massive”. We know AOC is a MMT advocate and they have never seen a deficit they didn’t love, but let’s be real. This program would almost certainly cost trillions, perhaps tens of trillions per year. Would this cause sky high inflation? We have no idea.¹
But I’ll be more blunt though – the thing I really don’t like about this resolution is that it leads off using the same dirty tricks that Conservatives often use by trying to instill fear into all of us to sell an economic agenda. In this case, the first two pages of the bill imply that the world is on the verge of climate failure. Look, I’ve been vocal about this in the past. I think climate change is real and it’s something we should be doing more about. But why are Democrats trying to sell a health care and job guarantee plan wrapped in the premise that the climate is being destroyed?
It’s disappointing to be honest. There are parts of the bill that are excellent and necessary, but I don’t think there’s a chance in the world that a bill like this passes. It certainly isn’t getting signed by Donald Trump. So what we have here is a huge case of overreach and complexity on an item that could have been much more limited in scope and practical. Honestly, I think it discredits its supporters more than it builds support for them because the plan is so obviously void of careful thought. And that’s disappointing because something ambitious, but less ambitious than this, could have been taken seriously. For instance, I’ve said that a trillion dollar infrastructure plan is a “no-brainer” for a long time. But I also know how hard that is to pass. Perhaps impossible in this political climate. So why did we just say “let’s not put a man on Mars, let’s go straight to Pluto!”? It makes no sense.²
Don’t get me wrong. I like the big, bold thinking. But pragmatism and reality have to come to the negotiating table here. This plan cannot be taken seriously in its current form. And unfortunately, it could undermine the credibility of the people supporting it.
¹ – Update: Noah Smith ran the figures here. His conservative estimate is $6.6 trillion per year. Six point six trillion. Every. Single. Year.
² – Perhaps the goal here is a bit like the ridiculous notion of “the wall” with the intent to move the Overton Window a bit. I don’t know. I feel like the left is discrediting itself with parts of this. Maybe I am wrong.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.