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Price of Green New Deal Is Named: $600,000 for Every American Household
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Price of Green New Deal Is Named: $600,000 for Every American Household

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WASHINGTON, DC – March 4, 2019

Last week there was a serious aggravation in the struggle around the Green New Deal, which has become the Democratic Party’s platform for the 2020 presidential elections. Because of globalization, the result of this struggle will surely affect the world economy in a very sensitive way.

The global financial system is tied to the US, ranging from the predominant use of the dollar in world trade to the US’s serious influence on world financial markets and key international financial structures, such as the IMF.

The struggle around the fate of the Green New Deal is, in fact, the struggle of two parts of the American elite, one of which wants to preserve the existing system at any cost, and the other, on the contrary, is ready to take the path that guarantees the quick onset of a very acute crisis in both the American and world economy.  By and large, now there is a division among elites precisely on this issue, and at the moment the configuration is as follows: Mainly politicians on the “revolution” side, and mostly bankers on the side of preserving the existing system.

It is worth recalling briefly what the essence of the megaproject is. The rising star of the Democratic Party, the favorite of the American media and youth, Congresswoman Alexandria Ocasio-Cortes and her team have published an ambitious program that involves a radical reformatting of the economy: the introduction of state-guaranteed jobs for all residents of the country, providing all free and decent housing, education and medicine, ensuring “economic security” for all those who are unable or unwilling to work, refusing to use oil, gas and nuclear energy (in the name of combating global warming), the transition to "green energy," a radical reduction in the number of private cars and air travel (also in the name of combating global warming), as well as the repair of all buildings in the US with a view to improving energy efficiency.

Against this background, the desire of the program’s drafters to reduce the number of cows looks quite understandable -- it is clear that the program was written in order to appeal to literally everyone ranging from vegans-the voters, and ending with the millionaires-entrepreneurs who have massively invested in startups, promising delicious "organic steaks" from synthetic fibers and food additives. For these last, the Green New Deal will literally become the saving grace.

In the event that the Green New Deal wins in the US, taking into account the fact that supporters of this radical reformatting of the American and, in the long run, the world economy, sincerely consider oil, coal, and gas a source of evil and factors that will lead to the imminent destruction of the planet, the main enemy of the United States, in this case, will again be China, which actively uses oil, gas, and coal energy. The slogan "Destroy the Chinese industry and energy system to save the planet!" could find broad support in the US.

For obvious reasons, the ideas set out in the Green New Deal will seem crazy, but inside the US, as Sean Hannity aptly stated, “I get terrified of how influential Democrats and the media support Ocasio Cortes.” Many likely candidates for the presidency of the Democratic Party have already expressed support for the course designated by Ocasio-Cortez.

It is significant that the discussion about this program has moved from that of the absurdity of its essence to the debate about how to pay for its implementation. The NGO led by Douglas Holtz-Eakin, the former head of the Congressional Budget Office, counted the funds needed to implement the Green New Deal and came to the following conclusion: To implement all the “ideas” will require $90 trillion, or $600,000 for every American household. For comparison: The nominal US GDP in 2017 is $19.39 trillion. It is obvious that there are not and will not be $90 trillion in the US budget, because now the country is living in debt, which recently reached a record level of $22 trillion.

The solution that is offered here (including by high-ranking representatives of the Democratic Party) is that if the US government pays for everything in dollars and the Fed can print dollars, then the budget deficits literally do not matter. Moreover, in their opinion, the economy, in which each gas station will be replaced by solar power plants, and each resident will be provided with work or at least a decent allowance instead of work, will show such miracles of growth that the question will not be how to finance the reforms, but how to spend the money earned.

The enthusiasm of American politicians for the prospects that had opened up turned out to be so overwhelming that on Wednesday the congressmen demanded that Jerome Powell, president of the US Federal Reserve, answer the question: can the budget deficit increase indefinitely, since the Fed can endlessly print dollars and keep interest rates near zero? Jerome Powell, perhaps the most influential financier of the planet, decided to upset the congressmen who wanted to finance the American Green Reconstruction.

“The idea that (budget and trade] deficits do not matter for countries that can borrow money in their own currency — it’s just wrong, I think so,” he said.

Moreover, the main banker reminded the congressmen that the financial prospects of the US, even without extravagant spending, are, to put it mildly, problematic:

“The US public debt is quite high in relation to GDP and, more importantly, it is growing faster than GDP. We will have to spend less or find more income,” he stressed.

However, this tough performance of Powell is unlikely to stop politicians who are eager to be able to distribute $90 trillion (even if depreciating) to their voters and sponsors, despite the fact that hyperinflation and the economic crisis will undermine the “unipolar American world.”

But there is a nuance: The example of Weimar Germany shows that severe economic crises contribute to the coming to power of deeply unbalanced and really dangerous political leaders, and in this case, the economic risks emanating from the US can very quickly turn into military risks. And it's very frightening.

Author: USA Really