0% of Economists Agree with AOC’s Idea to Fund Green New Deal
It’s no secret that Alexandria Ocasio-Cortez’s desired economic policies would cost more money than there is physical currency currently in circulation, and far eclipses our current national debt. Her proposed Green New Deal would cost at least $93 trillion according to a report from the American Action Forum – $36 trillion for universal healthcare, up to $44.6 trillion for guaranteed union jobs with wages high enough to support a family, $5.4 trillion to transition to a “low carbon electricity grid,” $1.3-$2.7 trillion for a net zero emissions transportation system, $1.6-4.2 trillion for guaranteed green housing, and $6.8-$44.6 trillion for a guaranteed job program.
|Goal||Est. Cost||Est. Cost Per Household|
|Low-carbon Electricity Grid||$5.4 trillion||$39,000|
|Net Zero Emissions Transportation System (Rail)||$1.3-2.7 trillion||$9,000-20,000|
|Federal Jobs Guarantee||$6.8-44.6 trillion||$49,000-322,000|
|Universal Health Care||$36 trillion||$260,000|
|Guaranteed Green Housing||$1.6-4.2 trillion||$12,000-30,000|
|Food Security||$1.5 billion||$10|
Her food security plan will only cost $10 per household, so there’s that, I guess.
When it comes to paying for her programs, while she’s floated the idea of taxing top income earners at 70% (which would bring in only enough money to fund the federal government for less than a week at current levels of spending), she has another idea, simply printing money. Admittedly, this was once also my idea to pay for the government back when I was in the fifth grade.
In an interview with Business Insider, Ocasio endorsed Modern Monetary Theory (MMT), an economic theory that deficits don’t matter since money can also be printed to pay off that debt. Because the government can print at will, not only do deficits not matter according to MTT, the only purpose of maintaining a level of taxation relative to government spending is simply to regulate inflation and unemployment. While not noted by advocates of MMT, I imagine ignoring the existence of countries like Zimbabwe and Venezuela is required to adhere to the theory.
She [Cortez] said she was open to Modern Monetary Theory, a burgeoning theory among some economists positing that the federal debt is not an economic restraint for the US. She said the idea, which holds that the government doesn’t need to balance the budget and that budget surpluses actually hurt the economy, “absolutely” needed to be “a larger part of our conversation.
So in her world, the deficit is only something we should be worrying about when it’s shrinking, apparently.
If it sounds bonkers, that’s because it is. The University of Chicago’s Booth School of Business’ IGM Poll asked a panel of top economists two questions about MMT; one regarding whether it’s true that countries shouldn’t have to worry about deficits because they can always print more money, and the second on whether or not money printing enables endless government spending.
Zero percent of economists agreed.
Some economists added their own commentary along with their responses:
- Markus Brunnermeier, Princeton University; “See numerous historical examples: Germany in 1920s, Latin America, …”
- Darrell Duffie, Stanford University; “The present value of debt issuances is equal to the present value of debt payments. So, borrowing more now means paying more later.”
- Aaron Edlin, U.C. Berkeley; “Less worry is not the same as no worry.”
- Ray Flair, Yale University; “Surely inflation might be a problem.”
- Austan Goolsbee, University of Chicago, “‘Always’ makes an ass out of you and me.”
- Robert Hall, Stanford University; “Governments cannot create money under current monetary institutions, because the central bank keeps reserves and currency at par.”
- Oliver Hart, Harvard University; “This kind of behavior can quickly lead to inflation or even hyperinflation once the economy is close to full capacity.”
- Kenneth Judd, Stanford University; “A government may be able to do this once but doing this systematically will make it impossible to sell bonds in the future.”
- Steven Kaplan, University of Chicago; “At some point it becomes untenable and the country becomes Venezuela or Zimbabwe.”
- Eric Maskin, Harvard University; “Printing money causes its own problems, e.g., the risk of inflation.”
- William Nordhaus, Yale University; “Obviously, they should worry.”
- Larry Samuelson, Yale University; “Deficits can be financed by creating money, but still have disadvantages as well as advantages that should be carefully considered.”
- Robert Shimer, University of Chicago; “The real value of the money supply is bounded above. At some point, this must create inflation.”
Aside from economists Cortez may have met at a Pink Floyd concert, there is no mainstream support for this idea of hers.