Conservative Scholars Rebut Cornell Prof's Claim That Paying for Green New Deal 'Isn't a Thing'
Estimates vary for the price of Rep. Alexandria Ocasio-Cortez's signature "Green New Deal" (my PJ Media analysis found it would cost $49.109 trillion over the first ten years), but most agree that the sticker price is extremely high. However, Robert Hockett, a Cornell University law professor, claimed that paying for the Green New Deal "isn't a thing" and that inflation isn't, either. Two scholars shot down his economics gobbledygook.
A fellow with The Century Foundation and regular commissioned author for the New America Foundation, Hockett also does regular consulting work for the Federal Reserve Bank of New York, the International Monetary Fund, Americans for Financial Reform, and a number of federal and state legislators and local governments.
Hockett's key passage comes early in his Forbes article. "The money that’s spent, for its part, is never ‘raised’ first. To the contrary, federal spending is what brings that money into existence," the professor argued. Citing the vaguely Keynesian idea that government spending adds value to the economy, he used economic jargon to suggest that conservative naysayers are either stupid or deceptive.
Hockett went even further, however. He claimed that America's current economy struggles with deflation, so worries about inflation are misplaced.
Joel Griffith, research fellow in financial regulations at the Heritage Foundation, shot back against Hockett's strategy.
"Large and small countries alike have experienced excessive rates of inflation as a result of governments debasing currency," Griffith told PJ Media. "As examples, consider Germany in the first half of the 20th century, Argentina in the late 1980s, or Venezuela today."
Inflation devastates savers and the economy. "Regardless, politicians are tempted to simply 'create' currency to pay for expenditures because the hidden tax of inflation is sometimes more politically palatable than either incurring more debt, raising taxes, or cutting spending."
Griffith admitted that "the federal government indeed could 'tax' some of the funds out of circulation" to prevent some of this inflation, but these tax hikes would stunt growth.
The last ten years of American monetary history serve as a clear warning of monetary manipulation, he argued. "The Federal Reserve created trillions of dollars out of thin air, using these dollars to buy government debt and mortgage-backed securities." To restrain inflation, "the Fed began paying banks to hold excess reserves at the Fed."
"We haven't seen a bout of inflation -- thanks to this. But the economy has been distorted as the Fed has ensured much allocation of capital to housing and government debt," Griffith explained. "This suppressed investment and lending to the private sector. Many economists believe this contributed to the historically slow recovery following the Great Recession."
Griffith claimed that money-printing strategies "would be a Frankenstein monetary experiment. Inflation and/or stunted growth would result. Let's heed the lessons of Venezuela, Argentina, and the Romans," and reject these dangerous policies.