Financing the Green New Deal

JohnfrmClevelan said:

If you understood federal finance, you would know that the government does not borrow from the public. The government simply creates liabilities and spends them into the economy. No private sector assets are borrowed, or even tied up, when the government deficit spends. Treasury issues bonds, public buys bonds, treasury spends the proceeds right back into the economy. The net result is simply an increase in bonds held by the private sector as assets.

After the war, the U.S. government did NOT run balanced budgets. In fact, they continued to deficit spend, albeit at a much slower pace. There was a short recession; most economists expected a depression. There was no paying down of the national debt, either. There never is. So it seems that you are pulling your data straight out of your backside.

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I am not sure there is much benefit in dialog with someone utters claptrap that if said by a fellow student my Econ 101 classroom, I'd think he/she was the class idiot. Your rejoinder is so painfully moronic it makes me wonder if you are a uneducated troll (and a bad one at that.). Yes, massive borrowing from the public by tapping their savings WAS the primary of the two major sources of WWII funding, the other being raising taxes ("the Victory Tax").

How did America pay for World War II? - Marginal REVOLUTION

...savings, which was the War's primary source of funding. During the War, Americans purchased approximately $186 billion worth of war bonds, accounting for nearly three quarters of total federal spending from 1941-1945. Today, we don't have the savings to pay for our current spending, let alone any significant expansions. Even if we could convince the Chinese to loan us a large chunk of the $20 trillion (on top of the $1 trillion we already owe them), how could we ever pay them back?

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Moreover, yes the government essentially had balanced budget since WWII until 1974, at which point the WWII debt had declined in size from 120% to 30% of the annual budget (Reagan was the last President to have paid off WWII debt).






So yes, the economic conditions prior and during WWII were vastly different in that they had underutilized capital, used funding by massive borrowing from the public in the form of war bonds made possible by deferring current consumer income to extreme domestic rationing and the necessary privation on behalf of arms production and employment of soldiers. And once the war was over, and after a sharp recession, the US government had essentially balanced budgets and slowly paid down debt owed to the public...ending the payback decades after the war was over. All of which made more manageable in that the US was the only great manufacturing economy left unscathed by the war's destruction.

That 90% threshold is a fairy tale, borne of bad reasoning and faulty data. Reinhart & Rogoff's paper has since been roundly criticized and thoroughly debunked.

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Wrong again friend. Had you read the results and findings of the paper AFTER the data error was corrected, you'd know the results are essentially the same. In other words, whatever the criticism of the error made in original computations, upon correction the findings proved robust. As such, there was no retraction or need to withdraw the paper. Your hope that it was somehow debunked is rooted in uninformed hope, which by now is not surprising.

From what you have written, you are the one who needs to learn economics.

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LOL...the data and links provided is there for all to ponder - even for those who did not minor in economics (as I did).

JohnfrmClevelan said:

The Green New Deal: How We Will Pay For It Isn't 'A Thing' - And Inflation Isn't Either



The rest of the article makes a pretty convincing case that the GND is very feasible.

The author of this piece, Robert Hockett, is a respected professor of law who has previously worked for the IMF and the NY Fed. You may have seen him making the rounds on the news shows lately.

So if anybody would like to argue against the Green New Deal, here is your chance. (Please take the time to read the article first.)

Good luck, and leave your strawmen at home.

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At this point, no one is arguing about the cost. There is simply too much stupid **** in the resolution that no one is willing to touch it.

Keridan said:

I admit, I got about 80% of the way through the linked article in the OP before I started glazing over and skimming a bit. I get the idea. I was raised by a very liberal PhD professor in econ, specializing in macro. There is even some validity to a point in parts. Of course we don't raise the money first (as if anyone believed this) and some would work like infrastructure spending in stirring the economy.

The article enjoyed getting into inflation vs. deflation and comparisons like WW2 as if there was any relation.

Of course, it completely dodges the how we pay for it in real terms. It's all theoretical. It's based on utopian visions of the effects of the whole plan and people's work ethics.

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Do you think that the U.S. is running at full productive capacity? Does Ford produce as many cars as it is able, or are they limited by demand? If you are talking about the viability of any economic expansion, especially one where the government is going to provide most of the demand, that is the question you should be asking. And I think it's pretty clear that we are nowhere near our productive capacity.

I don't know why you think that people's work ethic has anything to do with it.

Keridan said:

I would dodge it too if most estimates put it between 35 and 50 TRILLION dollars in ten years. Deficit spending in a down economy can be a good thing within reason. A few billion dollars to get people to work and improve conditions in the country. Even a trillion. Up to 2.5 times the GDP is a whole different story.

This is not a few billion dollars. This is insane levels. Cut it in half and we are still well over GDP for the entirety of the US!

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Over the course of how many years?

From 1940-42, government spending quadrupled over a two-year period. Again, money isn't the issue. The issue is, does our economy have the productive resources to do these things? Do we have enough engineers, enough energy, enough metal and concrete, enough labor, etc.

Keridan said:

Raise taxes, borrow, and print more money. That's what we have. Tax increases wouldn't' touch a down payment. If we confiscated the entire wealth of all the billionaires in the US and we have about 0.2% of the cost. Borrow the money with this as a blue print and our Standards & poor, fitch and moody etc ratings drop through the floor maximizing our interest rate. Print more money and you devalue the dollar to the point where pesos look pretty damn good.

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How much did our interest rates go up the last time our ratings went down? Zero. The Fed controls those interest rates, not the market.

We have been deficit spending for most of our 200+ years in existence. And in 2008, we "printed money" like crazy. Yet inflation is almost nonexistent. So you might want to check your theories and take another look at Mr. Hockett's explanations.

Keridan said:

At best, most items in this plan take about 8 years to produce a ROI. Many of the proposed items don't have the technology in existence yet to make it possible, much less affordable. High-speed railways would take many years to develop a system worth buying tickets for and we hope that and advertising will help offset the cost. There is no viable alternative to the power supplies to be replaced in 10 years. All the while, we are paying people not to do the labor to move forward on these things!

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The government doesn't need to make a profit. What's the ROI on a park?

And who is being paid not to do labor? What kind of arguments are you inventing here?

Keridan said:

85 billion to get to the moon even with inflation was a drop in the bucket. 341 billion even in 1945 for WWII is nothing. 50 trillion dollars.

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First of all, where are you getting your numbers? Second, GDP at the start of WWII was about $100 billion. At the end, it was a bit over $200 billion. But it continued to climb - even though spending money on tanks and planes was hardly what you could call "investment" in the country - it was more akin to building stuff and dumping it into the ocean. GND spending, on the other hand, will show, and it will have lasting positive effects.

washunut said:

Well it was not like you were off by 5% or even 50%. More like 500% or 1000%. Perhaps your numbers were B.S. on purpose.

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My numbers were just fine for the purpose. They certainly weren't off by 5-10x, but nice try. Are you ever going to come up with an economic argument?

JohnfrmClevelan said:

My numbers were just fine for the purpose. They certainly weren't off by 5-10x, but nice try. Are you ever going to come up with an economic argument?

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Labor participation rate is in the low 60s so to pay the remaining potential workers be about 50 million men/women not ten million. Living wage of $15/hour is about 30K per year not your 20K. So simple math, don't have to get to economics to call out your estimate. Economics would be when will the rest of the world decide the fiat currency called the dollar is not worthy of being the world's reserve currency. Lucky for us other fiat currencies are in no better shape.

But s the saying goes: If someone can't go on forever it will stop. When is anyone's guess. Bernanke did not know if the risk he took with QE would work. We know it worked on the front end. We don't know how or if it will work when the Fed tries to unwind.

maxparrish said:

I am not sure there is much benefit in dialog with someone utters claptrap that if said by a fellow student my Econ 101 classroom, I'd think he/she was the class idiot. Your rejoinder is so painfully moronic it makes me wonder if you are a uneducated troll (and a bad one at that.). Yes, massive borrowing from the public by tapping their savings WAS the primary of the two major sources of WWII funding, the other being raising taxes ("the Victory Tax").

How did America pay for World War II? - Marginal REVOLUTION

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Don't ever quote a George Mason professor, especially one who is quoting Peter Schiff - and call anybody else's economic theories "claptrap." You are knee-deep in garbage economics and you don't even know it.

Governments sovereign in their own currency do NOT borrow in order to spend. A simple look at the mechanics should enlighten you on that. War bonds were simply to keep people from spending some of their money. It was done to create fiscal space for the government to buy more production than normal.

maxparrish said:

Moreover, yes the government essentially had balanced budget since WWII until 1974, at which point the WWII debt had declined in size from 120% to 30% of the annual budget (Reagan was the last President to have paid off WWII debt).

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We only had seven years out of 30 where we didn't run a deficit. And each time we did, we ended up in a recession. source

maxparrish said:

So yes, the economic conditions prior and during WWII were vastly different in that they had underutilized capital, used funding by massive borrowing from the public in the form of war bonds made possible by deferring current consumer income to extreme domestic rationing and the necessary privation on behalf of arms production and employment of soldiers. And once the war was over, and after a sharp recession, the US government had essentially balanced budgets and slowly paid down debt owed to the public...ending the payback decades after the war was over. All of which made more manageable in that the US was the only great manufacturing economy left unscathed by the war's destruction.

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You think we don't have underutilized capital today???

Also - you seriously don't understand what "payback" means when it comes to government bonds. "Payback" doesn't lower total government liabilities one bit.

maxparrish said:

Wrong again friend. Had you read the results and findings of the paper AFTER the data error was corrected, you'd know the results are essentially the same. In other words, whatever the criticism of the error made in original computations, upon correction the findings proved robust. As such, there was no retraction or need to withdraw the paper. Your hope that it was somehow debunked is rooted in uninformed hope, which by now is not surprising.

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You have to live in an echo chamber to still believe the findings of that paper. Increased debt/deficits follow slow growth, not the other way around.

maxparrish said:

...the data and links provided is there for all to ponder - even for those who did not minor in economics (as I did).

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Very minor, I'm guessing. Your grasp of economics is nothing to brag about. That you spent money buying that grasp should be even more embarrassing.

Hedgology said:

At this point, no one is arguing about the cost. There is simply too much stupid **** in the resolution that no one is willing to touch it.

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That's kind of the way I feel about responding to these posts.

washunut said:

Labor participation rate is in the low 60s so to pay the remaining potential workers be about 50 million men/women not ten million. Living wage of $15/hour is about 30K per year not your 20K. So simple math, don't have to get to economics to call out your estimate. Economics would be when will the rest of the world decide the fiat currency called the dollar is not worthy of being the world's reserve currency. Lucky for us other fiat currencies are in no better shape.

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Even if I used your numbers, it still only comes out to $1.5 trillion. Minus all of the other payments that would no longer be needed, plus the benefit of the increased aggregate demand.

How much did we spend on Trump's last tax cut?

washunut said:

But s the saying goes: If someone can't go on forever it will stop. When is anyone's guess. Bernanke did not know if the risk he took with QE would work. We know it worked on the front end. We don't know how or if it will work when the Fed tries to unwind.

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There is no need to unwind.

JohnfrmClevelan said:

Even if I used your numbers, it still only comes out to $1.5 trillion. Minus all of the other payments that would no longer be needed, plus the benefit of the increased aggregate demand.

How much did we spend on Trump's last tax cut?

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Not a penny.

Bullseye said:

Not a penny.

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OK. How much did the government forego in tax receipts when they changed the tax code?

JohnfrmClevelan said:

Even if I used your numbers, it still only comes out to $1.5 trillion. Minus all of the other payments that would no longer be needed, plus the benefit of the increased aggregate demand.

How much did we spend on Trump's last tax cut?



There is no need to unwind.

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If you use CBO numbers the tax cut would cost about 1.5 trillion over TEN years,not per year. Their assumption says there would be no added growth which we now know was a lie, even if the higher GDP numbers don't last for many years. You would also have to agree that increasing the standard deduction and the EITC does not increase aggregate demand. You would also have to believe that increasing profits on factories in the U.S. has no impact on where companies,not just U.S. based companies will site manufacturing to support the world's largest consumer market.

Hatred of Trump does not change basic realities on business/finance/economics.

JohnfrmClevelan said:

The Green New Deal: How We Will Pay For It Isn't 'A Thing' - And Inflation Isn't Either



The rest of the article makes a pretty convincing case that the GND is very feasible.

The author of this piece, Robert Hockett, is a respected professor of law who has previously worked for the IMF and the NY Fed. You may have seen him making the rounds on the news shows lately.

So if anybody would like to argue against the Green New Deal, here is your chance. (Please take the time to read the article first.)

Good luck, and leave your strawmen at home.

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The article is laughable at best. "We wasted $5B on Iraq therefore we can spend a few trillion just to get the GND started.



Here's a real breakdown on the costs

Bullseye said:

The article is laughable at best. "We wasted $5B on Iraq therefore we can spend a few trillion just to get the GND started.



Here's a real breakdown on the costs

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Ooooh, an article on American Thinker!

But I think I'll stick with my Cornell law professor who worked at the IMF and the NY Fed.

washunut said:

If you use CBO numbers the tax cut would cost about 1.5 trillion over TEN years,not per year. Their assumption says there would be no added growth which we now know was a lie, even if the higher GDP numbers don't last for many years. You would also have to agree that increasing the standard deduction and the EITC does not increase aggregate demand. You would also have to believe that increasing profits on factories in the U.S. has no impact on where companies,not just U.S. based companies will site manufacturing to support the world's largest consumer market.

Hatred of Trump does not change basic realities on business/finance/economics.

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You can't demonstrate that those tax cuts had any effect on growth. The numbers get too convoluted. But that's not the point. The point was that Republicans routinely increase the deficit, whether it's on wars or tax cuts, and there is never any noticeable effect on the economy, inflation, interest rates, etc. Also, nobody ever asks where the money is going to come from.

JohnfrmClevelan said:

You can't demonstrate that those tax cuts had any effect on growth. The numbers get too convoluted. But that's not the point. The point was that Republicans routinely increase the deficit, whether it's on wars or tax cuts, and there is never any noticeable effect on the economy, inflation, interest rates, etc. Also, nobody ever asks where the money is going to come from.

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BS, every President has increased the deficit. Clinton got luck on a couple of years and had six deficits. AND the increased economic activity from tax cuts has been documented over and over, as it is being demonstrated as we speak. Google it.

JohnfrmClevelan said:

Ooooh, an article on American Thinker!

But I think I'll stick with my Cornell law professor who worked at the IMF and the NY Fed.

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Suit yourself - numbers from AT or mumbo-jumbo from the IMF. .

JohnfrmClevelan said:

Ooooh, an article on American Thinker!

But I think I'll stick with my Cornell law professor who worked at the IMF and the NY Fed.

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There are easier ways of dismissing bad arguments than committing two intellectual fallacies...

JohnfrmClevelan said:

That's kind of the way I feel about responding to these posts.

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You wanted someone to argue against the Green New Deal proposed, that is what you got. Not sure how it's anyone's fault that the resolution is indefensible and that your arguments supporting it are terrible.

"Upgrade or replace every building in US for state-of-the-art energy efficiency."

Yes, every building. There are over 5 million commercial buildings in the U.S. Add that to the approximately 127 million households, which is to say nothing of all the schools and churches and hospitals.

Isn't that like 30,000 buildings a day for 10 years? (well 36,165 per day actually). Somehow this math doesn't add up as being neither feasible nor realistic, much like the rest of the NGD.

Form the FAQ: "We set a goal to get to net-zero, rather than zero emissions, in 10 years because we aren’t sure that we’ll be able to fully get rid of farting cows and airplanes that fast"

Is there even Beano for cows? Or is the plan just to kill off all the cows? And replace that protein source to feed people with what? Exactly?

Anyway, I've heard that the NGD was pulled down from AOC's congressional web site (Pelosi?), so here's a link where its still available:
https://assets.documentcloud.org/documents/5731895/Green-New-Deal-Resolution.pdf

sangha said:

If you do not understand why we have taxes, I suspect this discussion will be far above your head.

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sangha said:

We are not spending 10x what we bring in through taxation.

And no, that is not the point of the article

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Well just give AOC some time and we'll be hitting that number pretty quick.

sangha said:

I believe we would end up saving money as well as human civilization

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Human civilization will continue to flourish, not end, if we do not adopt the Green New Deal. in fact considering the track record of total socialism adopting the Green New Deal will end civilization.

There is absolutely zero threat to civilization from the threats the liberals are using to justify it. Climate has continually changed throughout history and as long as we have a largely free market we will quickly adapt to any change in the environment.

JohnfrmClevelan said:

So you think that the New Deal and the Great Society - legislation passed by a democratically elected government - is "involuntary Utopianism"? I suppose that the only legislation that you would consider OK is that which strips the country of all rules and regulations so people are "free" to live, and pollute, as they please.

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Sounds good to me. The industrial revolution was the single greatest advancement in human standard of living to have ever occured. The industrial revolution raised life expectancy and wealth.

Also the New Deal and Great Society were both objective failures, most of the New Deal ended up repealed, the pieces that remain like social security and the farm regulation schemes are universally known by the educated to be in terrible condition but remain only because of politics. The Great Society caused an entire generation of children born without fathers which lead to massive increaes in crime and minority incarceration.

And nobody is seizing any material or labor. They are buying it, in voluntary transactions.

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I guess if I have a gun to your head you can still choose not to open a cash register. That's not really voluntary though. the GND proposing outlawing the operation of gasoline cars and replacing ALL buildings in America in ten years. That most certainly will NOT be voluntary, if it were then we're not even speaking the same language.

This is the kind of loony exaggeration that makes people roll their eyes when you libertarians get on your soapboxes.

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This is not an argument.

It is a necessary (at some point in the near future) call to cut way back on emissions, due to global warming - something 99.9% of scientists agree on.

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No, that is not correct. 99.9% of scientists do not say we need to impose socialism and restrict carbon emissions. That is simply not true.

eohrnberger said:

"Upgrade or replace every building in US for state-of-the-art energy efficiency."

Yes, every building. There are over 5 million commercial buildings in the U.S. Add that to the approximately 127 million households, which is to say nothing of all the schools and churches and hospitals.

Isn't that like 30,000 buildings a day for 10 years? (well 36,165 per day actually). Somehow this math doesn't add up as being neither feasible nor realistic, much like the rest of the NGD.

Form the FAQ: "We set a goal to get to net-zero, rather than zero emissions, in 10 years because we aren’t sure that we’ll be able to fully get rid of farting cows and airplanes that fast"

Is there even Beano for cows? Or is the plan just to kill off all the cows? And replace that protein source to feed people with what? Exactly?

Anyway, I've heard that the NGD was pulled down from AOC's congressional web site (Pelosi?), so here's a link where its still available:
https://assets.documentcloud.org/documents/5731895/Green-New-Deal-Resolution.pdf

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You know what's hilarious about this is that liberal cities have for years under the guise of "historical preservation" been prohibiting just this. No crap a friend of mine lives in an apartment in a house built in 1921 in Olympia WA and the city (run by democrats) will not allow him to put new triple-pane windows in the bay window overlooking the street because it wouldn't be "historic" he has to eat high heating costs and waste energy because the city will not allow him to put modern windows in. If you own or live in an old building in many cities you can't upgrade a damn thing without committee approval and they almost never give it.
Also if a developer buys an old house and wants to put three super efficient small houses on the lot these are opposed by "community groups"

So I guess Cortez is going to abolish all city planning boards in the process of this?

eohrnberger said:

"Upgrade or replace every building in US for state-of-the-art energy efficiency."

Yes, every building. There are over 5 million commercial buildings in the U.S. Add that to the approximately 127 million households, which is to say nothing of all the schools and churches and hospitals.

Isn't that like 30,000 buildings a day for 10 years? (well 36,165 per day actually). Somehow this math doesn't add up as being neither feasible nor realistic, much like the rest of the NGD.

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Buildings (and homes) get remodeled, upgraded, and renovated all the time. And not all buildings will need instant attention, either. What they are really talking about is very sensible, the kinds of things that people and businesses do all the time. You have old windows? At some point, they are worth replacing. If the government gives you some incentive, that point is moved up.

eohrnberger said:

Form the FAQ: "We set a goal to get to net-zero, rather than zero emissions, in 10 years because we aren’t sure that we’ll be able to fully get rid of farting cows and airplanes that fast"

Is there even Beano for cows? Or is the plan just to kill off all the cows? And replace that protein source to feed people with what? Exactly?

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Goals are aspirational. Which, when it comes to global warming, is a whole lot better than doing nothing.

JohnfrmClevelan said:

Buildings (and homes) get remodeled, upgraded, and renovated all the time. And not all buildings will need instant attention, either. What they are really talking about is very sensible, the kinds of things that people and businesses do all the time. You have old windows? At some point, they are worth replacing. If the government gives you some incentive, that point is moved up.



Goals are aspirational. Which, when it comes to global warming, is a whole lot better than doing nothing.

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No it's not. There is simply no way the "Green New Deal" is less expensive then "doing nothing" in actuality almost all the effects of climate change would fall on industries and people who have been publicly subsidized. The federal government's flood insurance program is one example, many areas in danger of flooding would never have been built if the insurance wasn't subsidized. That's only one example. so we can actually just let the market adapt to climate change and be much better off. This fire and brimstone AGW religion has no history of accurately predicting fire and brimstone. The Sun Monster gives us life, he's not a bad guy.

JohnfrmClevelan said:

Even if I used your numbers, it still only comes out to $1.5 trillion. Minus all of the other payments that would no longer be needed, plus the benefit of the increased aggregate demand.

How much did we spend on Trump's last tax cut?



There is no need to unwind.

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This is replacing spending with more spending. Your premise is flawed

providing everyone with massive base cash subsidies will only lead to massive inflation. There will be no increased demand. In Chile a dollar is 600 pesos and all the products we pay $10 for they pay $8000 pesos for. If everyone's a millionaire then a cheeseburger will be 1000 dollars. There will be no actual benefit. If you were renting out your house you wouldn't accept 1000 dollars a month if everyone made 10,000 a month. Again you know nothing of economics.