Green New Deal would boost municipal bond market
WASHINGTON — The Green New Deal has sparked a national debate over climate change that could lead to a massive boost to the public finance sector once the details about the role that the municipal bond market would play are eventually determined.
More immediately, the legislative future of the Green New Deal also is unclear given that the congressional Democrats who formally are sponsoring it remain a minority within their party ranks in both the House and Senate.
"It’s a set of principles, not individual prescriptions," said Sen. Edward Markey, D-Mass., who is an original co-author of the document along with Rep. Alexandria Ocasio-Cortez, D-N.Y.
Markey told The Bond Buyer that the role of public finance will be decided “as we are going along.”
Mayors and other local officials are already dealing with the impact of climate change.
“Los Angeles just announced a New Green Deal,” Markey said. “Bold. City after city is going to do the same thing.”
But that’s not been the case in Washington over the last two years with Republicans in control of both chambers of Congress and the White House.
President Donald Trump has been “the denier in chief,” Markey told the Council on Foreign Relations on Tuesday, warning that in 50 years rising sea levels will transform Trump’s Florida getaway at Mar-a-Lago into "Mar-a-Lagoon."
Released 12 weeks ago on Feb. 7 at a news conference outside the U.S. Capitol, the 1,984-word Green New Deal is a statement of the problems and challenges — mass migration of people, increasing wildfires in the West and damage to public infrastructure — caused by rising global temperatures and carbon emissions.
It sets broad goals for responding to the crisis that include “dramatically expanding and upgrading renewable power sources,” creating “smart” power grids and “upgrading all existing buildings in the United States and building new buildings to achieve maximum energy efficiency, water efficiency, safety, affordability, comfort, and durability, including through electrification.”
Republican critics, however, have seized on the social justice goals in the plan, which include “guaranteeing a job with a family-sustaining wage, adequate family and medical leave, paid vacations, and retirement security to all people of the United States.”
Senate Majority Leader Mitch McConnell, R-Ky., brought the Green New Deal to a floor vote in an effort to highlight divisions among Democrats. The measure was unanimously defeated 0 to 97.
Senate Minority Leader Chuck Schumer, D-N.Y., said that McConnell did Democrats a favor by highlighting the issue of climate change.
In the House, Republicans are in the minority but are making an uphill effort to also force a floor vote.
Minority Whip Steve Scalise, R-La., released a critique Wednesday that the projected cost is $93 trillion and the plan would “build enough high speed rails to make air travel obsolete while guaranteeing “welfare to people unwilling to work.”
At a March press conference held by Western House Republicans, Rep. Rob Bishop, R-Utah, ate a hamburger as he claimed to reporters that hamburgers would be banned. Bishop said the Green New Deal was created by “Eastern urbanites who don’t understand the West.”
Markey and Ocasio-Cortez, in response to the hamburger critics, held an ice cream eating media availability to demonstrate their support for cows.
“We are working through this first line of attack which is, of course, lies and misinformation,” Markey said, recalling that when Democrats enacted the Affordable Care Act in 2010 Republicans falsely claimed the legislation called for establishing “death panels.”
“Frankly, I expected a little more nuance,” Ocasio-Cortez said during an appearance March 29 on a town hall edition of “All In” with Chris Hayes on MSNBC.
Ocasio-Cortez acknowledged that Republicans came up with the purported ban on beef based on an working draft of the Green New Deal that was released by a staffer who “had a really bad day.”
“It doesn’t mean you end cows,” she told the MSNBC town hall audience, explaining that the Green New Deal would take a look at the use of grain and regenerative agriculture.
“This issue is not just about our climate,” Ocasio-Cortez said. “First and foremost we have to save ourselves.” She said the Green New Deal calls for economic justice and social justice as part of the plan.
Many congressional conservatives have said their alternative is the Trump energy agenda of deregulation and energy independence.
But some Republicans in Congress have acknowledged in recent weeks there is a need to address carbon emissions.
The Green New Deal has 12 Senate cosponsors while the identical House version had 93 as of May 1. All of them are Democrats except for Vermont Sen. Bernie Sanders who was elected as an independent, but is seeking the Democratic nomination for president. Several other senators also seeking the presidential nomination also are cosponsors.
That ensures the Green New Deal and climate change will be part of the 2020 presidential election debate, according to Markey, who told an audience at the Council on Foreign Relations on Tuesday that neither Hillary Clinton nor Donald Trump were asked about climate change during the 2016 election.
The Green New Deal “has triggered a national debate,” Markey said. “Everyone has a view on it now. It has injected itself into the political debate in our country.”
Municipal finance and expanding the use of municipal bonds will be part of that debate, lawmakers and experts said in interviews with The Bond Buyer.
And although the Green New Deal hasn’t been endorsed by more than a minority of congressional Democrats, House Speaker Nancy Pelosi, D-Calif., has created a select committee on climate change that Republicans have agreed to appoint members of their party to.
“I’m sure the work of the select committee will include resiliency,” Rep. Mike Levin, D-Calif., a member of the committee, told The Bond Buyer. “And as a part of that I would say, yes, building green infrastructure and trying to transition our transportation system to a more sustainable one will certainly be a part of that work.”
Senate Democrats also have appointed a select committee on climate change, although the majority Republicans are not participating.
Sen. Brian Schatz, D-Hawaii, who is chairing a Democratic Special Committee on Climate and the Climate Crisis, also said in an interview, “We will prioritize green infrastructure if there’s an infrastructure bill.”
Municipal bonds are integral to the nation’s infrastructure and that will continue to be the case on a broader scale, experts expect. But the transition may take years, they said.
Kevin DeGood, director of infrastructure policy at the liberal-leaning Center for American Progress, said, “I think the issue is, we have a whole number of federal infrastructure programs that for a long time we have thought about more narrowly through the lens of pure economic development.”
“And what we have to do now, we have to add in a global climate change lens and to re-envision how those programs are going to function so that we not only get economic development benefits but also significant reductions in greenhouse gas emissions, DeGood said.
“It’s undoubted there would be substantial increases in municipal bond issuances in response to any major federal infrastructure bill if for no other reason than that those federal dollars act as a seed that helps to push out projects and they end up doing more borrowing as a result of that,” he said.
Rep. Stephen Lynch, D-Mass., a cosponsor of the Green New Deal, stressed that “the message and the impact of the Green New Deal are aspirational.”
“So these are goals and I think that people need to remember that,” Lynch said. “I think that the mechanics of hammering out legislation that would actually undertake some of the initiatives in a meaningful way, that’s going to be a longer and much more difficult discussion.”