Cash grants to the poor are better than many traditional forms of aid when it comes to reducing poverty. They are considered one of the fairest, most cost-effective and most impactful ways to alleviate poverty and stimulate economic growth. Cash transfers given directly to poor families will enable them to decide on the most effective ways for them to escape poverty.
While the coverage of state sponsored social security is extending its footprint in India through the introduction of extensive healthcare coverage, several income schemes for the farmers and poor, and while even discussions of Universal Basic Income (UBI) are on the roll, New York Congresswoman Democrat Alexandria Ocasio-Cortez, along with Massachusetts Senator Ed Markey, is trying to sell these and much more in a package called ‘Green New Deal’ (GND).
The term ‘Green New Deal’ is purposefully reminiscent of Franklin Roosevelt’s original ‘New Deal’ of 1932 which, in many ways, was a “green” New Deal that included a significant social justice component and also sustainable ways to shape the nation’s waterways and agriculture. The idea is also not new – New York Times’ columnist Thomas Friedman used the term ‘GND’ in a 2007 column as a kind of green globalism. Barack Obama in his 2008 platform and Bernie Sanders in his 2016 campaign took up GND, while the UN also took up global GND in 2009. And now, Ocasio-Cortez has embraced the green mobilisation plan and begun using the GND branding in an all-out effort to sell the dream to the Americans, which has potential to redefine the relationship between State and society.
Ocasio-Cortez staged the biggest political upset of 2018 when the Democratic Socialist beat the incumbent Democratic Representative Joseph Crowley in New York City in the midterm election primaries. Her proposed GND aims at fighting climate change by eliminating all US greenhouse gas emissions by 2030, spurring economic growth, improving social welfare, including UBI simultaneously. It proposes that each American should have a federal job guarantee, free college, single-payer health care, affordable housing, and economic security to all who are unable or unwilling to work. The GND has some highly ambitious but good targets like retrofitting all American buildings and factories to be carbon- neutral, electrifying all transportation, and switching the entire electrical grid to carbon-neutral energy sources. However, the guarantee of “economic security” to all those who are “unwilling to work” created a huge uproar.
There is no clarity on how its programmes would be funded. Also, it is not quite easy to calculate the exact financial implications of the proposed GND. According to some estimates, about $6.6 trillion per year would be needed for this, which sum is about three times higher than what the federal government collects annually in tax revenue, and equal to about onethird of the GDP of the US. And without any other source of money for the GND, most of the deal would possibly be funded by deficit spending. As the US already has a national debt of over $22 trillion, many believe that the promised Deal might turn up to be a Trojan horse for unrealistic and ruinously expensive economic proposals. Carbon taxes wouldn’t be enough to prompt private companies to do all these things on their own, and large-scale government-funded infrastructure is required. Some experts believe that the Washington “planners” would take over the energy business, transportation business and health care, due to this GND. However, many doubt whether the government is capable of handling all these. In contrast, there are people who believe that no cost is too much as the potential cost of ignoring climate change resulting storms, fires, droughts, destruction and displacement “will have an infinity sign next to them”.
Polls indicate that a majority of prospective 2020 voters favour most clauses of the GND, and young people are moved by the dual commitment to environmental and social justice. This might have prompted leading Democratic presidential candidates like Bernie Sanders, Kirsten Gillibrand, Elizabeth Warren, Cory Booker and Amy Klobuchar to support the GND. And, David Brooks, New York Times’ oped columnist and centreright political commentator, thinks that Democrats are taking the position “somewhere to the left of Che Guevara”.
Well, would GND become a law in the US? Very unlikely, at least in the near future, for it would need to pass the House and Senate and be signed by the president. These are almost impossible due to its controversial clauses for Medicare for all and a federal job guarantee. This might be so even if a Democrat takes the charge of the Oval Office after the next presidential election.
To implement the GND, millions of people are to be hired, and they are to be trained. This might be an opportunity to transform the economy, specially low-income communities, and thus politically savvy. However, the idea would become a progressive litmus test for Ocasio-Cortez and Green New Deal backers. GND would certainly emerge as a major campaign issue for the next year’s Presidential election. It is not yet clear whether it would pay short-term political dividend to the Democrats or lead to their loss, for it might be attempting to destabilise the society by doing too much change at once. Will it turn into a ladder for young Alexandria Ocasio- Cortez for her political journey? Will she become the first Hispanic president of the US in future? Will it eventually win a Nobel Peace Prize for her? Too early to predict. And the green new dream would likely remain largely unfulfilled in the near future. But the dream that she unveiled and is now trying to sell to the American people might change the mindset of society – people’s aspirations and expectation from the State are bound to reach a new height. Whether that is technologically, politically and economically feasible or not is completely a separate question.
(The writer is Professor of Statistics, Indian Statistical Institute, Kolkata)