Greenbacks for the Green New Deal
52 Pages Posted: 26 Sep 2019 Last revised: 22 Dec 2020
Date Written: September 8, 2019
The Green New Deal calls for the overhaul of our nation’s energy, transportation and manufacturing infrastructure to support the transition to a green economy, the adaptation of the built environment to climate change, the remediation of polluted areas, the conservation of fragile and threatened ecosystems, and the encouragement of sustainable farming practices. While Green New Deal proposals have been criticized as an example of “big government spending,” the U.S. has a history of huge investments when economic transformation has been required for national security and long-term prosperity. This article makes four contributions. First, it summarizes the features of the Green New Deal as first proposed and as envisioned by the four leading Democratic candidates for President, including details about revenue sources and funding mechanisms to the extent provided by the candidates. Second, it provides an economic analysis of each of the candidates’ plans to address climate change. Third, it contextualizes public investment in energy, transportation, manufacturing infrastructure, ecosystems and biodiversity, explains why private markets fail to provide these needed goods, and examines the array of federal structures the federal government has used to encourage private investment and state and local support. Finally, it clarifies the types of funding mechanisms that are likely to limit economic waste and encourage efficient and equitable outcomes as the country moves toward a carbon-neutral future.
Keywords: Green New Deal, choice of instrument, financing, funding, green taxation, carbon tax, tax-and-dividend
JEL Classification: K34, K32, Q21, Q54
Suggested Citation: Suggested Citation