Recovery from the COVID-19 economic meltdown will require additional response from the federal government. New Deal-style subsidies in employment and infrastructure are coming and will accelerate in 2021. The political movement for a Green New Deal is gathering momentum, and not a moment too soon. In America, as in most parts of the world, the rich do all they can to protect themselves from the negative impacts of environmental degradation. Unless they own a spaceship (and a couple do), they can’t run away from climate change, but climate impacts are more deeply felt in the South Bronx than in Scarsdale. On the other hand, sea level rise will come to both Rockaway and the Hamptons, so you can run, but you really can’t hide.
Energy, water supply and waste management infrastructure tend to be better in rich communities than in poor communities. Which is not to say infrastructure is particularly state-of-the-art anywhere in an America. For decades, Americans have refused to pay the taxes needed to fund sufficient capital investment in infrastructure. The dire need for reconstruction of our aging infrastructure provides an opportunity to shape the post-COVID-19 economy in a way that improves environmental quality in all neighborhoods, not just those with rich people. Just as FDR brought electricity to rural America, a Green New Deal could build a clean and efficient American electrical grid. It could also modernize transportation systems, water supply facilities, sewage treatment plants and systems of solid waste management. An American infrastructure revitalization program could put people to work while improving the efficiency and quality of our communities and economy. The good news about most infrastructure investment is that it tends to have a multiplier effect by making the economy more efficient. A rehabilitated energy or water system can reduce wasted energy and water. A new port can save time and money when shipping goods. Better mass transit can reduce the cost of moving people from place to place.
Last week, the Democrats in Congress released a far-ranging climate action plan. It is a little less aggressive than the Green New Deal in that it provides an extra decade or two to transition to a carbon-free economy, but it clearly articulates the priority of climate change. Reporting in the Financial Times last week, Myles McCormick and Courtney Weaver wrote that:
“Democratic lawmakers unveiled a climate action plan that would require the US to bring its net greenhouse gas emissions to zero by the year 2050, in a move that aims to make climate policy a core issue in the November elections. The wide-ranging set of proposals released on Tuesday would also require power producers to achieve net zero emissions by 2040, US carmakers to produce only electric cars by 2035, and force oil and gas producers to phase out routine flaring, where drillers burn off the less valuable gas found alongside the oil, by 2030.”
In contrast, the Trump Administration is not concerned about climate change and the few Republicans in Congress who are concerned are more focused on carbon capture and storage than decarbonization. Some conservatives are coming to recognize the importance of climate change, but many remain wedded to fossil fuels. The Democratic proposal includes a carbon tax coupled with a scheme to return some of those fees to poor and moderate-income Americans. I think that the parts of the proposal that fund and stimulate technology development and infrastructure will do better politically than any proposal that raises the cost of energy. But my economist colleagues remain enamored of the carbon tax and I suspect it will continue to appear in proposed but failed pieces of legislation until we are well on the way to a decarbonized economy. I oppose carbon taxes and think decarbonization will be more politically attractive if its goal is to lower the cost of renewable energy rather than raising the price of fossil fuels. In any case, it seems clear that Democrats have decided that climate change policy needs to be a key point of differentiation between their approach to governance and that promoted by Republicans. As Christopher Flavelle reported in the New York Times last week:
“Few of the proposals are likely to go anywhere this year because they would require support from the Republican-led Senate as well as President Trump, who has called climate change a hoax. But as a political statement the package is notable because it presents what Democrats call a comprehensive legislative agenda for climate change at a time when public support is on the rise. In 2016, only 38 percent of adults in the United States said dealing with global climate change should be “a top priority for the president and Congress,” according to the Pew Research Center. By this year, that number had jumped to 52 percent.”
While I am optimistic that a new administration in Washington may well decide to invest in green infrastructure to help lift us out of economic stagnation, I remain concerned about the ability of our government to target that investment to impoverished communities. The Democrats say that minority communities should be prioritized for green infrastructure, but it is less clear on how that will be accomplished. One idea in the Green New Deal is to target employment on infrastructure projects to minority communities and possibly minority-owned businesses. Another might be to target infrastructure grants to those cities with the highest number of unemployed workers. That would not focus on minorities but poverty. The two criteria overlap and are not mutually exclusive — in other words, you could do both.
The federal government has a particularly bad record in recent years in distributing capital funding to states on any criteria other than partisan political advantage. While investing in infrastructure almost always facilitates economic development, all investments are not created equal. Population-based grant criteria favor growing states and may accelerate their growth at the expense of older states that have a greater need to revitalize older infrastructure but may be losing population.
The economic slowdown caused by the pandemic is having its greatest impact on poor people and people of color. Providing educational and employment opportunities to those most impacted by the downturn and designing, constructing and managing infrastructure to serve the communities of those most impacted is the core logic of the Green New Deal. Growing popular concern about racism and climate change along with the need for massive infusions of public capital to stimulate economic recovery create a perfect political storm for many elements of the Green New Deal. While I believe that the political winds are shifting in a direction that favors these policies, I am mindful of the counterforce represented by President Trump last weekend at Mount Rushmore. As Annie Karni reported in this past Sunday’s New York Times:
“Standing in a packed amphitheater in front of Mount Rushmore for an Independence Day celebration, President Trump delivered a dark and divisive speech on Friday that cast his struggling effort to win a second term as a battle against a “new far-left fascism” seeking to wipe out the nation’s values and history. With the coronavirus pandemic raging and his campaign faltering in the polls, his appearance amounted to a fiery reboot of his re-election effort, using the holiday and an official presidential address to mount a full-on culture war against a straw-man version of the left that he portrayed as inciting mayhem and moving the country toward totalitarianism.”
Trump’s racist appeals are nothing new. Past Republican presidential candidates including Richard Nixon, Ronald Reagan, and George H.W. Bush have ridden race-based appeals into the White House. However, public opinion data appears to support the idea that Americans are finally moving in a different direction. Millions of Americans have been engaged in peaceful protests, and those looting stores are a tiny proportion of those in the streets. Our culture has changed, and racism, sexism and homophobia are less pervasive than before. And the physical facts of the pandemic and climate change cannot be blamed on immigrants or minorities. The pandemic and sea level rise don’t respond to national borders or race. So, while I recognize the political force that Donald Trump is mobilizing, I believe that the force behind some version of a Green New Deal is greater. Although the events of November 2016 impaired my confidence in my ability to understand political trends, America in the summer of 2020 gives me hope and is starting to remind me of the evening of November 4, 2008…
