The Green New Deal: A Strong Option for Sustainable Economic Recovery During and After COVID-19

Representative Alexandria Ocasio-Cortez and Senator Ed Markey introduce the Green New Deal resolution in February 2019. Photo by the Senate Democrats.

On October 24, 1929, a day now known as “Black Thursday,” the New York Stock Exchange crashed, marking the beginning of the Great Depression. As global markets collapsed, the world entered a period of economic depression that hit Americans across the United States with rising rates of unemployment and declining wages. At the peak of the Depression in 1933, the U.S. saw an unemployment rate of twenty-five percent, a striking increase from three percent prior to the crash. As people grew cautious of spending during the economic downturn, businesses experienced surpluses in their inventories, leading to a decline in production. In turn, unemployment increased as factories cut employees and shut down. All of these factors caused the U.S. gross domestic product (GDP) to drop 25 percent from 1929 to 1933. Due to the collapsed economy, the U.S. entered a new era of economic policy and relief programs, changing the course of our nation’s history. 

Fast forward to this year: in March of 2020, the New York Stock Exchange began careening downward due to the COVID-19 pandemic, prompting some to draw comparisons to the Great Depression. On March 16, the Dow Jones Industrial Average, used to indicate how top companies’ stocks are performing on a given day, dropped 13 percent, the second largest drop in U.S. history. On July 30, the Federal Reserve announced a drop in annualized GDP of 32.9 percent for the second quarter, the worst such drop in U.S. history. Contributing to the country’s current economic downturn is an increased rate of unemployment: since February, the unemployment rate increased from 3.5 percent to 14.7 percent in April, and only came down to 10.2 percent in July. According to Forbes magazine, nearly 50 million Americans have now filed for unemployment over the last 16 weeks. 

But numbers alone don’t provide the full picture of the emotional toll that the faltering U.S. economy has taken on people’s lives during the pandemic. We’ve all witnessed the closure of some local small-businesses. We’ve all directly or indirectly felt the loss of opportunities, employment, and in-person education. We’ve all experienced the effects of both cautious and fast attempts to reopen the economy and governments’ attempts to factor in the overall public health risk. If these experiences show us anything, it’s that the current U.S. economy and the incredible losses that people are experiencing parallel the conditions of the Great Depression.

At the peak of the Depression in 1932, Americans elected Democrat Franklin Delano Roosevelt as their president. Roosevelt campaigned on the promise of the New Deal—a series of legislation to create economic relief programs while also reforming several industries, both of which would expand the scope of the federal government. The New Deal had three main objectives: relief, recovery, and reform. Relief provided immediate help to people through funds for food and shelter. Recovery aimed to reignite the country’s economic and agricultural sectors by creating jobs to decrease unemployment. Finally, reform, the most lasting aspect of the New Deal, worked to establish social benefits in a changing economy.

The New Deal moved the country’s political economy to the left by expanding the scope of the federal government. Many of Roosevelt’s economic policies during the Great Depression came from the philosophy of British economist John Maynard Keynes, who established the idea that the federal government needed to borrow and spend money in order to stimulate economic growth and consumer purchasing power during a recession. Since the 1930s, the U.S. has maintained Keynesian ideas in much of its economic policy, including after the economic recession of 2008. We even see Keynesian ideas in today’s congressional spending, especially within the context of the pandemic.

“Depression Breadline,” a sculpture by George Segal, part of the Franklin Delano Roosevelt Memorial. Photo by Jim Bowen.

In response to the pandemic, Congress initially attempted to aid the economy by passing the CARES Act, a sweeping relief package that issued stimulus checks, expanded upon unemployment benefits, and offered loans and other forms of aid to small businesses. Also among the CARES Act provisions were an extra $600 a week to Americans receiving unemployment payments and a federal moratorium on evictions. After the CARES Act benefits expired on July 31, President Trump took executive action to extend the benefits—but only at $400 per week, instead of $600. In May, the Democratic-controlled House passed the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, a relief package even more extensive than the CARES Act. The HEROES Act, if passed into law, would extend the increased unemployment benefits through January of 2021. The Republican-controlled Senate, meanwhile, put together a rival series of proposals called the Health, Economic Assistance, Liability Protection and Schools (HEALS) Act, which would still provide extended unemployment benefits through October 5, but only at a rate of $200 a week. The two parties are currently at an impasse on these negotiations.

Although Black, Latinx, and Indigenous communities have been disproportionately affected by the economic downturn from the pandemic, these communities have not received adequate aid. Business relief packages have been built across all levels of government, yet only 12 percent of Black- and Hispanic-owned businesses have received the support that they requested. In New York City, 57 percent of city-wide small business loans went to Manhattan businesses, while only two percent went to businesses in the Bronx, the borough with the highest percentage of Black people. The lack of monetary support given to Black-owned businesses and Black Americans in comparison to white-owned businesses and white Americans is a historic trend. For example, Roosevelt’s New Deal was in many ways a double-edged sword for Black Americans. While many Black people were able to benefit from federally funded employment programs such as the Federal Music and Theatre Projects, which hired and funded Black artists, most opportunities were first open to members of the white working class. Discrimination was not just limited to employment opportunity; Black workers were paid significantly less than their white counterparts and also suffered from housing segregation. The Federal Housing Authority (F.H.A.) infamously refused to offer housing mortgages to African Americans and “redlined” communities of color—the practice of systematically engineering racial segregation. During a time when unstable economic conditions heightened housing insecurity, the inability to get a mortgage hurt Black people for generations afterward. Nevertheless, as a result of the more progressive New Deal policies, many Black Americans shifted their support from the Republican Party to the Democrats. Black Americans became a vital voting bloc that helped Roosevelt’s reelection efforts and have largely continued to support the Democratic Party since. 

While the passage of either the HEROES or HEALS Acts would continue to provide short-term relief to the American people, the pandemic is likely to continue after they expire, even after the Democrats’ proposed January extension. This legislation only creates surface-level solutions that fail to adequately address the larger issues of unemployment and the lasting economic effects of the pandemic.  In repairing our economy and helping businesses recover, we must enact inclusive legislation that lifts up and supports Black-owned businesses. Americans need and deserve a long-term, sustainable solution to the current crisis. As economists, businesses, and politicians alike look to reopen our economy while balancing the current public health crisis, they must look to the past to build the future. 

One possible solution is to build up and effectuate the Green New Deal. Proposed by Representative Alexandria Ocasio-Cortez, Democrat of New York’s 14th District, and Senator Ed Markey, Democrat of Massachusetts, the Green New Deal is the nation’s most comprehensive climate change bill to date. In addition to confronting climate change, the Green New Deal, like its 1930s namesake, aims to combat socioeconomic and racial inequalities through Keynesian economic approaches. Though drafted prior to the COVID-19 pandemic, the Green New Deal’s policies surrounding energy infrastructure and job creation can aid the country’s long-term economic recovery while creating vital social change for the future. 

Climate change and COVID-19 are inextricably linked, and enacting the Green New Deal would address the effects of both crises while building a stronger and better future. Climate change shapes our relationship with the ecosystem and can increase our risk of contracting infections. According to the Harvard School of Public Health, for example, people with greater exposure to air pollution are far more likely to contract respiratory illnesses such as the coronavirus. To proactively combat future pandemics, we must prioritize stopping habitat destruction and deforestation. As human encroachment forces bats, primates, and other animals that carry infectious diseases away from their habitats, they become more likely to interact with humans. This displacement therefore increases the risk of outbreaks of infectious diseases such as Ebola or COVID-19. Further, people of color and low-income communities are disproportionately impacted by both climate change and the coronavirus. Addressing these inequalities is essential to improving both public health and socioeconomic conditions.

Fundamental to the Green New Deal is a commitment to reduce carbon emissions and switch to entirely renewable energy sources. As climate change rapidly alters the way the world works, we must consider the economic and public health costs of not enacting the Green New Deal. As sea levels rise, for example, communities in proximity to the ocean are in danger of flooding. Meanwhile, as CO₂ emissions increase, more and more children are developing debilitating asthma. 

The Green New Deal also addresses socioeconomic inequalities, exacerbated by climate change, by creating new jobs and new economic opportunities. The Green New Deal’s commitment to public transportation, for example, would expand access to the economic networks to people who are currently shut out on account of not owning a car. Companies making the switch from fossil fuels to renewable energy would promote long-term, sustainable employment in the field of energy-efficiency. Scientific American conservatively estimates that 1.4 million jobs would be created per year between 2020 and 2030. Given the increasing unemployment rate right now, what’s a better way to reignite the economy than by passing legislation that would create 1.4 million jobs per year? 

The last section of the Green New Deal emphasizes that the government will make a commitment to provide all people in the U.S. with access to high-quality healthcare, safe and affordable housing, economic security, healthy food, clean water, and air. Now, more than ever, the need for affordable healthcare for everyone has become apparent. As more Americans are hospitalized for the coronavirus, the medical costs tick upward—the estimated cost of hospital treatment for a patient with COVID-19 is $30,000. The pandemic has also highlighted the importance of safe, affordable housing. Due to the declining economy, many Americans have struggled to make ends meet while paying rent. When the CARES Act benefits expired on July 31, so did the federal eviction moratorium. The Aspen Institute, a nonpartisan think tank, estimates that 30 million families are in danger of eviction in the month of September. Dr. Brendan O’Flaherty, Professor of Economics at Columbia University, conducted research that projects an increase in homelessness by 40-45% this year.  A mass wave of evictions would further destabilize the already fragile housing market and create lasting economic damage.

While the Green New Deal may seem extensive, a comprehensive, feasible solution is a necessary step on the road to economic recovery. In an interview with Vox Magazine, Senator Markey said, “When we reshape our energy system and our economy, we reshape our democracy, housing, health care, and jobs. These are not new principles. These are the Democratic Party’s core values, going back to FDR.” In the 1930s, Roosevelt’s New Deal proposals may have seemed radical, but they worked, alleviating economic burdens and creating lasting social change. Several of those proposals, such as Social Security, are still in effect today—completely normalized and accepted. The policy goals of the Green New Deal may currently seem new and ambitious, but the persistent conditions of climate change, racial and socioeconomic inequalities, and the unprecedented effects of COVID-19 require similar groundbreaking action. Congress should prioritize the Green New Deal to mitigate the short-term economic crisis and lay the foundations for long-term prosperity for our climate and country. 

Carina Layfield is a copy editor at CPR and a rising sophomore at Barnard College majoring in Urban Studies with a Political Science specialization; she is also minoring in Italian. She is originally from Boston and enjoys being outside, taking the subway, and baking cookies.