Alexandria Ocasio Cortez, the Rep. of New York, released plans of the, “Green New Deal”. This deal details how the United States should combat climate change, however, it calls for the complete abandonment of oil production, and consumption within 10 years. She also wants to, “upgrade or replace every building in the US for state-of-the-art energy efficiency”, and to completely abandon air travel, and replace this system, with energy efficient trains. What will be the effects of this deal on the economy, and the million dollar question, how will she pay for it?
The Oil and Natural Gas industry makes up about 8% of the Gross Domestic Product of the United States. In 2015, the industry employed around 10.5 million people, both full-time and part-time workers, which accounted for 5.6% of the US total employment. This includes both direct impacts, and indirect impacts the industry has on the economy.
The Labor Income, the industry directly, and indirectly, through its operations, and capital investment, accounts for $714.2 billion, and makes up 6.7% of the national income. This includes wages, salaries, and benefits for americans that are provided by the industry, as a whole. In addition to this, the average salary of a worker that is a non-gas station employee is around $100,000 which is almost double the average working american’s salary of $51,000.
In total, the Oil and Natural gas industry in the United States is said to be valued at around $1.3 trillion, which ultimately leads the industry to consist of 7.6% of the overall GDP of the industry. This statistic includes the operational impact, as well as the capital investment impact of the Oil and Natural Gas industry.
Additionally, her proposal of replacing, or rebuilding every building in the United States, requires 2000-3000 buildings a day to be reconstructed.
Also, to put her plan for constructing an energy efficient train system in perspective, the California High Speed Rail Project, before it’s cancellation, was projected to cost over $77 billion to connect San Francisco and Los Angeles, and it was under construction for over a decade. How long would it take for an entire transportation system of high-speed energy efficient trains to be constructed?
Does AOC know the contributions the airline industry makes towards the US economy? Well, according to Airlines of America, the industry “creates more than 10 million jobs, and drive[s] 5% of the US GDP.” It also, “produces nearly $1.5 trillion in annual economic activity.”
In order to pay for all of these policies put forth by the Green New Deal, Alexandria Ocasio Cortez proposed a 70% marginal tax rate on the rich. A marginal tax rate is an increase in the income tax rate of people once they surpass a certain level of income. For instance, AOC defines it by: “as you climb the ladder, you should be contributing more.” This plan would generate around $72 billion a year.
Furthermore, keeping in mind she has a degree in Economics, she thinks she can just keep printing more money to pay for the deal, to go along with her 70% tax rate. Have you seen what’s going on in Venezuela?
Ultimately, This plan comes nowhere near the amount required to pay for all of the policies mentioned the Green New Deal. In the plan, she also mentions free college education, universal healthcare, paying people who are unwilling to work, and the ridiculous policies mentioned above. In fact, even AOC doesn’t know how much the deal would cost. So, we’re gonna have to resort to look at other outlets’ predictions. For instance, Bloomberg projects the deal, “would cost upwards of $6.6 trillion.” Whereas other outlets, like the Washington Examiner, predict the deal would cost tens of trillions of dollars. To put this into perspective, the projected revenue of the US government in 2019 is around $3.422 trillion.