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The Next Economic Stimulus Must Include Green New Deal Measures

Green New Deal measures are more important than ever to assuage the economic impacts of COVID-19.

Senate Minority Leader Chuck Schumer speaks as Rep. Alexandria Ocasio-Cortez listens during a press conference in the neighborhood of Queens on April 14, 2020, in New York City.

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Forty years of deindustrialization, anti-labor policy, wage stagnation and welfare retrenchment has left many U.S. workers — 44 percent of which are low-wage– vulnerable to the compounding crises of the COVID-19 pandemic.

Brookings reported that more than 24.2 million U.S. workers are employed in high-risk industries and face significant virus-related work disruptions. Oxford Economics Chief U.S. Economist Greg Daco warned that the unemployment rate could hit 10 percent in April, while Treasury Secretary Steven Mnuchin cautioned that without effective government intervention, unemployment could jump as high as 20 percent in the coming months.

As Congress negotiated the $2 trillion stimulus deal that President Trump signed on March 27, there was little debate that workers and businesses required critical financial support. However, Trump and some Republicans swiftly rebuked House Democrats’ proposed environmental measures as unrelated to the crises.

Not only are they wrong — climate impacts, including increasingly frequent pandemics, have everything to do with the current political-economic system — but by omitting green provisions from the stimulus package, they have put the nation at risk of deepening its dependency on fossil fuels at a time when it has never been more crucial to decarbonize. While it may seem that the moment for such a green stimulus has already passed, the acceleration of confirmed U.S. cases coupled with Trump’s refusal to heed health experts’ pleas for aggressive containment, do not incite confidence that an end to the pandemic is near.

Additional legislative action will likely be needed in the coming months, as Congress’s industrial bailouts and one-off cash payments prove to be merely stopgap measures. Before we squander yet another stimulus on attempts to revive a deeply flawed economic system, it is worth seriously considering the following proposed Green New Deal measures.

Green Bailouts

As former President Barack Obama increased mileage standards following the $80 billion auto industry bailout during the Great Recession, the COVID-19 stimulus’s $500 billion corporate assistance program could have included similar efficiency requirements. House Democrats argued that the airline bailout should have required carbon neutrality for domestic flights by 2025, but the provision was dropped as a compromise with Trump, who in exchange agreed to omit a $3 billion bailout for the oil industry.

Green Jobs Guarantee

A federal jobs guarantee program would not only assist workers unemployed due to the impacts of COVID-19 but also those needing to transition from carbon-intensive industries. Pre-pandemic estimates show that if approximately 15 million participants were paid $15 per hour, it would cost about $500 billion annually, or only 2.5 percent of the federal gross domestic product, barring increased tax revenue and savings from reduced welfare expenditures. Green jobs, in particular, have the potential to reshape power dynamics between labor and capital by providing a floor for compensation. Green jobs pay 8 to 19 percent higher than national averages, and half require no more than a high school diploma. Historical examples of successful federal jobs initiatives include former President Franklin Delano Roosevelt’s Works Progress Administration and Civilian Conservation Corps, which employed 9 and 3.5 million workers respectively, with the latter also credited with planting 2 billion trees, developing 800 parks and stocking rivers with 1 million fish.

Green Bonds

Economist John Maynard Keynes’s “paradox of thrift” is often a source of frustration for governments seeking to inject money into a contracting economy. A green bonds program, which would fund climate-smart projects such as efficiency or infrastructure improvements, would appeal to citizens’ inclinations to save during times of crises while also providing an investment opportunity with sizable returns at a time when few exist.

Green Tax Credits

By stimulating research and development, unlocking private investment, driving down costs and stabilizing markets, tax incentives can and have historically been a powerful tool to advance clean energy. During economic crises, when tax equity markets tighten, converting credits into direct grants — like Obama did with the American Recovery and Reinvestment Act’s (ARRA) 1603 Cash Grant program– may be more effective. Although annual federal energy tax credit expenditures have grown from around $50 million to $2.8 billion since the ARRA was enacted, on March 18, the Solar Energy Industries and American Wind Energy Associations, each of which represent more than 1,000 member companies, sent a joint letter to Congress arguing that expanding credits would permit the “hire of thousands of additional workers and inject billions in the U.S. economy.”

Green Banks

Despite extant federal finance available for green innovation — notably through the U.S. Department of Energy Loan Programs Office and the Advanced Research Projects Agency-Energy — a national green bank, like that introduced by Sen. Edward Markey, could unleash a plethora of green financial tools and products to advance sustainability, drive emergent technology and leverage private investment. Fourteen green banks across nine states and the District of Columbia already exist in the United States, having spurred $3.67 billion in clean energy investments since 2009. A national bank could also offer technical assistance to green bank startups, as their proliferation is likely necessary to meet Intergovernmental Panel on Climate Change emissions targets.

The omission of environmental provisions from the unprecedented $2 trillion stimulus is a tough loss in battle against the climate crisis. We must, however, be vigilant in pushing forward alternatives to the status quo, because those are the ideas that will become the solutions to tomorrow’s deepening crises.

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