Almost overnight, the idea of a Green New Deal has won over environmental activists and many lawmakers. An all-out national mobilization to decarbonize the economy has a natural appeal to those who see climate change as an immediate, existential threat. But others have doubts. Why can’t markets guide the transition from carbon? Do we really need an expansion of the public sector on the scale of the New Deal or World War II? Can we afford it?
Results/Conclusions
We argue that the government needs to mobilize the collective productive capacities of the U.S. through a mix of tools: directly through public investments and credit policy; through regulations that enforce key climate goals, in the same way that harmful chemicals are banned and not just taxed; and through taxes and subsidies that ensure that what consumers and businesses pay for goods and services reflects their true social cost.