JEFFREY SACHS. Green New Deal is feasible and affordable. (CNN online, 26.2.2019)Mar 8, 2019
There are three main ideas of the Green New Deal Resolution introduced by Congresswoman Alexandria Ocasio-Cortez and Senator Ed Markey.
The first is to decarbonize the US energy system — that is, to end the emissions of carbon dioxide (CO2) from burning coal, oil and natural gas, in order to stop global warming.
The second is to guarantee lower-cost, high-quality health coverage for all.
The third is to ensure decent jobs and living standards for all Americans, in part by making colleges and vocational schools affordable for all.
The right wing and corporate lobbies are already hyperventilating: It is unachievable; it will bankrupt us; it will make us into Venezuela.
These claims are dead wrong. The Green New Deal agenda is both feasible and affordable. This will become clear as the agenda is turned into specific legislation for energy, health care, higher education, and more.
The Green New Deal combines ideas across several parts of the economy because the ultimate goal is sustainable development. That means an economy that delivers a package deal: good incomes, social fairness, and environmental sustainability. Around the world, governments are aiming for the same end — a “triple-bottom line” of economic, social, and environmental objectives.
In the US, the economy is feeding the wealth of billionaires while leaving tens of millions of households with no financial cushion at all. Meanwhile, the fossil-fuel lobby continues to endanger the planet by promoting the use of fuels that contribute to climate change, raising the risk of mega-floods, droughts, hurricanes, and heat waves, claiming many lives and costing the US more than $450 billion during 2016-18, or more than $150 billion per year on average.
The key ideas of the Green New Deal — decarbonization, lower-cost health care, and decent living standards for the working class — have been studied for years. The Green New Deal Resolution is the opportunity, finally, to put that vast knowledge into effect.
What is absolutely clear is that the Green New Deal is affordable. The claims about the unaffordability of these goals are pure hype. The detailed plans that will emerge in the coming months will expose the bluster.
Consider the challenge of decarbonizing the energy system. As noted in the Green New Deal resolution, the recent report of the Inter-Governmental Panel on Climate Change calls for global decarbonization by 2050, an achievable goal that requires coherent and accelerated actions by the US and other nations.
The Green New Deal is the occasion to put America’s utilities, builders, and automakers to the challenge of accelerating their technological overhauls to complete decarbonization by 2050 or earlier. The resolution calls for a 10-year mobilization effort to achieve “net-zero greenhouse gas emissions” but not for a precise timeline for completing decarbonization. The timing will depend on the pace of new zero-carbon investments and the phase-out of existing fossil fuel-based technologies.
Decarbonization will include the following measures. Electricity generation will shift from coal and natural gas to wind, solar, hydro, and other zero-carbon technologies. Cars and trucks will shift from gasoline to electricity, using batteries or fuel cells (with hydrogen manufactured by electrolysis). Planes will use electricity for short flights and advanced zero-carbon fuels for longer flights. Buildings will be heated by electricity (such as heat pumps) rather than boilers and furnaces.
The costs of renewable energy are plummeting, making decarbonization eminently feasible. Detailed estimates put the costs of substantial decarbonization (80% or more by 2050) at around 1% of GDP per year or less. (See here for one recent study). In many cases, renewable energy is already at “grid parity,” meaning that it is at a cost point comparable to fossil fuels. Most of the modest costs of decarbonization will never hit the federal budget, as they will be absorbed by the utility industry, the automobile producers, and other parts of the private economy.
Decarbonization is already underway in the US, just not yet with the pace and scale required. US utilities are no longer building coal-fired power plants; many are now scrapping plans for gas-fired plants in favor of renewable energy. Investors and in-house lawyers are warning companies not to invest in fossil fuels, as these investments would be stranded in future years. Automobile companies are rapidly shifting to electric vehicles. New buildings are going electric, with tough efficiency codes. These transformations are being driven mainly by environmental regulations, integrated resource planning by utilities, and market forces, not by federal outlays.
Medicare for all
Lower-cost, high-quality health care for all, for example through Medicare for All, is also within reach. As with decarbonization, the right wing and corporate lobbies are using scare tactics to hide the basic fact: Health care costs in the US can be cut considerably, while improving services.
The US spends around 17% of its gross domestic product (GDP) on health care coverage, while other countries spend 10-12%. The main difference lies with the high prices of US health care, for drugs, hospital stays, medical procedures, and other goods and services, rather than with greater utilization of health services. These high prices have resulted in part from the rising concentration and market power of health care providers at the metropolitan level. The result is outlandish salaries, bloated administration, heavy costs of advertising, and other inefficiencies that result in high incomes for the health care industry and exorbitant costs for taxpayers and for workers paying for private health care plans.
The question is therefore not whether we can afford Medicare for All, but whether we will get there before the private health care industry bankrupts us. As one approach, the private insurance premiums now flowing to private health insurers could be re-directed to a Medicare account that would reimburse the health providers at Medicare rates, with much lower management salaries and administrative costs. The nationwide cost savings of Medicare for All — hundreds of billions of dollars per year — could be remitted to taxpayers or used to reduce the federal budget deficit.
College for all
Similar budget analyses demonstrate the feasibility of other parts of the Green New Deal. Can debt-free higher education for all be achieved? The other rich countries all accomplish it. One proposal for “College for All,” presented by Senator Bernie Sanders, would cost around one-quarter of 1% of GDP, a price point that is tiny compared with the burdens of a society weighed down by student debts that create lifelong anxieties until retirement years.
The Green New Deal proponents are absolutely correct on the merits. Decarbonization, Medicare for All, debt-free higher education, and other social benefits are feasible, affordable, and smart. They will deliver great savings in the case of health care, environmental benefits in the case of decarbonization, and renewed social mobility in the case of debt-free higher education.
As a next step, the Green New Deal ideas should be turned into legislation, plans and budgets. When the Federal Interstate Highway System was being debated in 1955, every Congressman received a booklet with detailed maps showing how their district would benefit from an interstate highway system. It’s now important to provide a roadmap of the Green New Deal, showing for each part of the country how the Green New Deal package can be accomplished at low cost and with enormous economic, social and environmental benefits.