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Ocasio-Cortez-Backed Green New Deal Could Save Us

A well-planned and implemented Green New Deal could save us from broken politics, wealth inequality and global warming.

The reason the US has taken little action on climate change is the same reason one percent of the population has gained 85 percent of post-recession GDP growth. The global economy is set up to serve the interests of an elite minority, and an addiction to short-term profit is destroying the planet.

Approximately 37 billion tons of carbon entered the atmosphere in 2018, as hurricanes lashed coasts in the East and record-breaking fires destroyed communities in the West. Biodiversity is vanishing, oceans are acidifying, and soil is being rendered infertile, bringing devastation to interrelated ecosystems. Every day, we insulate as much heat within the atmosphere as 400,000 Hiroshima atomic bombs, and the past four years have been the hottest in recorded history.

Based on the findings of 6000 scientific reports from 91 scientists, the most comprehensive report from the United Nations’ Intergovernmental Panel on Climate Change (IPCC) to date has asserted that climate change is occurring faster than anticipated and urges the international community to cut carbon emissions in half by 2030 to avert irreversible ecological catastrophe.

As global warming has worsened, so has income inequality. America’s top 10 percent now average more than nine times as much income as the bottom 90 percent, while America’s top 1 percent now average more than 40 times more income than the bottom 90 percent.

Wage disparity is worse as well; in 1980 CEOs earned 42 times more than the average worker whereas in 2016 CEOs earned 347 times as much as the average worker. The gap between CEO and worker benefits is even wider.

A Green New Deal and the transition to clean energy offers an opportunity to recognize and address deep-seated flaws in our societal and economic structure as well as save the planet.

The Corrosive Influence of Oil in Politics

A Green New Deal that moves the world away from fossil fuels could also free the world from the grip of oil’s power.

The fossil fuel industry has exerted significant influence on American politics since its foundation and today is no different. John D. Rockefeller, Standard Oil founder and the world’s first billionaire, used his railroad connections to undermine competition and establish total control of the energy sector. However, Standard Oil was broken up in 1911 by one of the most famous anti-trust actions in American history.

Eighty-eight years later, two factions of the splintered Standard Oil monopoly, Exxon and Mobil, merged to become one of the most powerful corporations on the planet. The multinational corporation’s autonomous geopolitical authority is only matched by its enormous wealth, which is greater than the GDP of most countries. ExxonMobil is only only one company in the number of companies that have much to gain from influencing policy.

ExxonMobil has operated in opposition to US foreign policy on multiple occasions, from dealing with Hugo Chavez’s Venezuela and Vladimir Putin’s Russia, to exerting more influence than the US State Department in Chad and Equatorial Guinea, to facing accusations of torture and murder in Indonesia. As President George W. Bush told the Prime Minister of India in 2001, “Nobody tells those guys what to do.”

“I’m not a US company, and I don’t make decisions based on what’s good for the US.”—Lee Raymond, ExxonMobil CEO, 1999-2005

Today, oil’s presence in modern politics and its influence over environmental policy is only becoming more obvious. President Trump’s former Secretary of State and ExxonMobil CEO, Rex Tillerson, received a $180 million severance package from the oil conglomerate before becoming America’s chief diplomat.

As head of the State Department, Tillerson would ostensibly be charged with promoting civil society and transparency abroad, but his purpose at ExxonMobil was the opposite.

According to a court filing by New York Attorney General Eric Schneiderman, Tillerson obscured his emails concerning the risks of climate change by using the alias “Wayne Tracker.” Schneiderman is currently investigating the company for suppressing its scientific knowledge and engaging in efforts to deceive investors and the public about the science produced by its own researchers.

In February 2017 former and current ExxonMobil employees sued the corporation for misleading them and making false statements about climate change. In August 2017 two Harvard researchers published a peer-reviewed analysis of 40 years of ExxonMobil’s climate change communications, demonstrating a discrepancy between their public position and the private position discussed between their scientists and executives. In 2017 Exxon has spent more than $30 million funding think tanks that disseminated climate denial, despite internal documents showing the company’s researchers confirming its existence since 1981.

ExxonMobil filed a counter-lawsuit challenging the right of state attorneys to investigate their internal communications, arguing that its public statements discrediting the science provided by researchers constituted free speech. On January 7, 2019, the Supreme Court declined to hear ExxonMobil’s appeal, a major victory for future climate change legal battles.

In 2017 ExxonMobil reported lobbying expenditures of $11.4 million, which doesn’t include expenditures for political candidates. 

All the money spent and all of ExxonMobil’s back door secret affairs paid off when one of the Trump administrations first acts was the elimination of a pending SEC rule that would have required fossil fuel companies to disclose information about oil and gas payments to foreign countries. ExxonMobil had previously lobbied against the rule, designed to limit bribery to corrupt governments during Tillerson’s tenure as CEO. Shortly after eliminating the rule, the Trump Administration withdrew from the Extractive Industries Transparency Initiative, another effort to restrain corruption and promote transparency in the fossil fuel sector.

In April 2018 President Trump replaced Secretary of State Rex Tillerson with his CIA director Mike Pompeo who is perhaps even more beholden to the oil industry. Pompeo is commonly referred to as “the congressman from Koch” for receiving the single most donations of any legislator from the Koch Brothers in the 2010 election cycle and the Koch brothers are big oil.

Koch Brothers

David and Charles Koch. (Image via YouTube)

As detailed by ThinkProgress the Koch brothers numerous companies are heavily invested in the oil and gas industry. In fact, in 2008 they single-handedly drove up the price of gas anywhere from 20 cents to 40 cents per gallon by renting supertankers to hold oil in the Gulf.

Put together, Charles and David Koch hold a net worth of around $100 billion, more than any person on earth except Jeff Bezos. The Kochs are among the biggest political donors in America, spending $400 million in the 2018 midterm election cycle alone. But because they use tax-deductible organizations to conceal their activities, the totality of their undisclosed spending is unknown.

As investigative journalist Jane Mayer describes in her book Dark Money, the brothers have pushed their agenda by funding a huge network of non-profits like the Cato Institute, the Heritage Foundation, the Heartland Institute, and Americans For Prosperity (to name a few). These tax-exempt non-profits hire researchers to produce studies that support the Koch’s political positions, including climate-change skepticism. The studies and policy proposals crafted by Koch-funded think tanks are then distributed to Koch-funded public officials.

In addition to slashing environmental regulations, (Koch Industries has paid hundreds of millions in fines for knowingly using faulty pipelines, oil spills, ammonia pollution, and emitting other illegal chemicals such as benzene), and the Kochs support dismantling labor unions and cutting corporate taxes.

A 2017 Public Citizen report revealed 44 Koch-connected officials in the Trump Administration, from Education Secretary Betsy DeVos to Vice President Mike Pence, one of the brothers’ most loyal crusaders against climate change legislation. The vice president’s connections with the Kochs are so strong even Steve Bannon expressed reservations about a Mike Pence presidency, saying I’m concerned he would be a president the Kochs would own.

“If Pence were to become president for any reason, the government would be run by the Koch brothers—period. He’s been their tool for years.”— Senator Sheldon Whitehouse (D-RI)

Former Secretary of the Interior, Ryan Zinke, and former EPA leader, Scott Pruitt, sold public lands to fracking companies and rolled back regulation on toxic chemicals. The two were loyal servants of the Kochs and other big fossil fuel players but were forced to resign amid ethics investigations in 2018. Those scandals havent stopped their successors from being fossil fuel lobbyists, however, and Pruitt is making the full spin through the revolving door to his new position as a coal consultant.

Big oil reaches far into the corners of our political structures and the agenda big oil promotes benefits company profit at the expense of the environment and average workers, as evident in Trump’s tax overhaul.

Tax Cuts on Demand

Big oil’s presence in politics is ubiquitous. Thirteen days after the 2017 GOP tax cuts, the Kochs donated nearly $500,000 dollars to then-House Speaker Paul Ryan’s fundraising committee. Ryan proceeded to thank the billionaires at a Koch-held event for conservative mega-donors.

“We would not be in this unique position without the hard work and the devotion from everyone within the Koch network…. Thank you so much for all that you have done to help Americans improve their lives.”—Former House Speaker Paul Ryan, 2017

The 2010 Citizens United Supreme Court decision opened unlimited independent contributor spending in elections, vastly concentrating the amount super-donors directly pour into elections. In the 2010 election America’s top 100 individual political contributors donated $73 million to federal candidates. In 2016 that number was more than $900 million. While the decision did not vastly increase the overall amount of money in American politics, it destigmatized the connection between private money and public policy influence.

The GOP tax cut exemplifies this connection. As conservative donor Doug Deason explained to his beneficiaries, “We’re closing the checkbook until you get something done.” Deason, who was a major supporter of former EPA leader Scott Pruitt and a prominent donor within the Koch organizational network, openly refused to hold fundraising events for conservative lawmakers until they honored their end of the bargain.

“Get Obamacare repealed and replaced, get tax reform passed…. You control the Senate. You control the House. You have the presidency. There’s no reason you can’t get this done. Get it done and we’ll open it back up.”—Doug Deaton, 2017

Representative Chris Collins (R-NY), further clarified the nature of the arrangement, explaining, “My donors are basically saying, ‘Get it done or don’t ever call me again.’

In an RNC meeting of wealthy benefactors Vice President Mike Pence’s Chief of Staff advised donors to reconsider their contributions if the tax bill fails:

“If I were you, I would not only stop donating, I would form a coalition of all the other major donors, and just say two things. We’re definitely not giving to you, No. 1. and No. 2, if you don’t have this done by Dec. 31, we’re going out, we’re recruiting opponents, we’re maxing out to their campaigns, and we’re funding super PACs to defeat all of you.”—Nick Ayers, 2017

And now that the tax bill has passed?

According to the Institute on Taxation and Economic Policy, 5 percent of Americans will gain more than 50 percent of the bill’s benefits, over 25 percent of which will be received by the wealthiest one percent of the population. The Tax Policy Center’s analysis holds that as aspects of the bill expire, one percent of the population will accumulate 82.8 percent of the savings by 2027.

Since the bill was enacted, corporations such as AT&T, Verizon and Walmart have cut tens of thousands of jobs, despite their CEOs promising to do the opposite. And even though the unemployment rate is 3.9 percent, wage growth remains weak.

ExxonMobil paid an effective tax rate of 13.6 percent from 2008-2015. Matt Gardner, a senior fellow at the Institute on Taxation and Economic Policy, explained, “In the case of Exxon, they have never in the past five years paid anything close to a 35 percent US tax rate on income. And now their already low rate is being slashed by another 40 percent.”

Effective corporate tax rates for select industries (2009). The effective tax rates are equal to the total taxes paid divided by pretax income. The average effective corporate tax rate was taken from excel spreadsheet of NYU’s Aswath Damodaran; (Graphic via Guest2625 [CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0)], from Wikimedia Commons)

Fossil fuel companies had already enjoyed numerous privileges from the US tax code before the cuts, avoiding expenditures on “intangible drilling costs” among other exemptions. The sector also possesses the unique license to defer tax payments in exchange for “tax liabilities,” allowing oil and gas companies to be the biggest immediate beneficiaries of the bill, reclaiming an instant $25 billion in future payments owed to the government.

The bill also includes new deductions for drilling equipment and a provision to open Alaska’s Arctic National Wildlife Refuge for oil and gas development.

Big money in politics and big oil in politics is a big deal. It is easy to understand why a recent Pew Research Poll revealed 77 percent of Americans concerned with the amount of money individuals and groups spend on campaigns. The dismantling of campaign finance laws has coincided with monopoly dominance of the market, allowing a corporate-influenced rewriting of the economic rulebook. A vicious cycle is created as economist Joseph Stiglitz explained.

“A vicious spiral has formed: Economic inequality translates into political inequality, which leads to rules that favor the wealthy, which in turn reinforces economic inequality.”—Joseph Stiglitz, Nobel Prize winning economist and former World Bank chief economist

What a well-planned Green New Deal could do is free us from big oil, big donors the outsized power of a few, and break the vicious cycle. An economy powered by green energy means shallower pockets for big oil and less political influence. It means creating environmental policies, corporate rulebooks and a tax code without the meddling hand of big oil. And it means a chance to create a new economy built on a growing alternative energy industry providing jobs and new economic opportunities across the country.

As widespread as fossil fuels reach is, the monopolization of the American political economy goes much deeper than oil. The fusion of the public government with private corporate governments in the financial sector is outright, evident in the shadow operations of the Federal Reserve and the special privileges of the too-big-to-fail banks.

Any comprehensive Green New Deal legislation must regulate the financial sector as the climate crisis is inseparably linked to extreme wealth inequality in finance.

Big Banks and Big Money

Big banks, like big oil and any monopolized industry (big pharma is another) revel in the same vicious cycle Stiglitz detailed. As money and power become increasingly concentrated in the financial industry, the financial rulebook is increasingly adapted to benefit the same concentration of wealth and power.

Left behind, suffering the consequences, is the environment and hit especially hard is the average American worker. But like FDR’s original New Deal, a Green New Deal would not only focus on alternative energy but also on reining in the repeated abuses and predatory practices of the financial industry, which were so clearly illustrated in 2008.

After the great recession of 2008, the Federal Reserve cut interest rates and pumped trillions of dollars into the too-big-to-fail banks to prevent their losses, while neglecting millions of regular Americans who were foreclosed on and left with the tab. Taxpayers paid for the recession, ignited by predatory lending and market manipulation, while financial institutions were given massive sums at near-zero interest to lend out at high interest rates for profit.

The largest banks had targeted people in low socioeconomic brackets with “subprime mortgages” knowing they would likely default, calling them “liar’s loans” and “NINJAs,” an acronym for “no-income, no job, no assets.” The lenders proceeded to obfuscate the poor quality of the loans by packaging them together in arcane financial products, such as “synthetic CDOs,” which credit rating agencies like Moody’s enthusiastically endorsed (Moody’s later settled with the Justice Department for negligence).

As JP Morgan Chase CEO Jamie Dimon later put it in a 2012 memo, “Poorly underwritten loans represent profits today and losses tomorrow,” although he failed to mention that US citizens covered the losses, due to the federal government’s implicit insurance policy for too-big-to-fail banks.

“Most voluntary contracts should be at the contractor’s risk. The pursuit of wealth would be less shameless in the state and fewer of the evils of which we spoke just now would grow up there.”—Socrates, the Republic (Book VIII)

The recession was the culmination of decades of policy restructuring in the United States, in which the rules of the economic game were rewritten to entrench advantages for monopolies and the super-rich. The market power of major corporations has grown to totally dominate the bargaining power of workers, with only 11 percent of American laborers in unions after decades of fierce anti-labor legislation.

Tax loopholes allow the most affluent, who make the majority of their money from capital gains instead of income, pay a much lower rate than lower socioeconomic brackets. Corporate campaign financing and revolving-door lobbying have resulted in a legislature that sculpts laws to serve the interests of monopoly conglomerates, slashing labor, financial, and environmental regulations in the process.

To provide one example of America’s structural inequality, the Justice Department allowed JP Morgan Chase to avoid criminal charges by paying a $13 billion settlement, the largest penalty ever levied against a financial institution in history. After the settlement was reached, US Attorney General Eric Holder reviewed the bank’s fraudulent activity:

“It [JP Morgan Chase] packaged loans that it knew did not pass its own stated due diligence test. We have a whistleblower who indicated that she expressed concerns about what the strength of these mortgage-backed securities were, and they put them out there to the market and said that they were perfectly fine, when in fact they were not.”—US Attorney General, Eric Holder

Holder presented the settlement as a hard-fought victory for the American people, but the reality is far less flattering. Holder held legal proceedings against Jamie Dimon and other top financiers in private, refusing the public access to the unilateral, secret actions taking place behind closed doors. Furthermore, Holder allowed the bank to designate its settlement as a “remedial expense.” This allowed JP Morgan Chase to write off $7 billion of their settlement as a business expense, making it eligible for tax deduction. Because of Holder’s semantic gift, taxpayers paid $2.45 billion of JP Morgan Chase’s penalty.

After his service with the Justice Department, Eric Holder returned to his previous employer, Covington & Burling, a white-collar defense firm that has represented JP Morgan Chase, Wells Fargo, Bank of America, Citigroup, and Morgan Stanley. Holder’s DOJ chief of staff Margaret Richardson and other Obama administration officials also followed him through the revolving door to Covington, joining many DOJ alumni who have made the transition to the white-collar defense firm, representing the same corporations they previously regulated.

The DOJ and SEC’s egregious revolving doors have contributed to the drastic decline of federally prosecuted white-collar cases in the past few decades. During the Savings & Loans crisis of the 1980s, around 1,100 individuals were criminally prosecuted and the heads of several major banks served jail time. During former Attorney General Eric Holder’s tenure, only a single criminal case was made against bankers involved with mortgage servicing, despite tremendous evidence of criminal fraud. Not even HSBC, which laundered nearly a billion dollars to the Sinaloa drug cartel, was criminally prosecuted during this period.

As alarming as this is, the lack of public transparency in the financial crisis goes deeper than Holder’s total circumvention of the judicial system. A 2011 Government Accountability and Office (GAO) report on the Federal Reserve revealed major conflicts of interest at the secretive central bank, as top executives served on the Fed’s Board while their private corporations received huge bailouts from the federal government.

JPMorgan Chase CEO Jamie Dimon served on the board of the Federal Reserve Bank of New York while receiving $29 billion in public financing (alongside other special exemptions) to acquire Bear Stearns, making his too-big-to-fail bank even bigger. General Electric CEO Jeff Immelt sat on the reserve board while receiving $16 billion in emergency funding. New York fed chairman Stephen Friedman simultaneously sat on Goldman Sachs’ board of directors throughout his public service, a direct conflict-of-interest exempted by a waiver the Fed refused to make public.

The Federal Reserve inhibited the full examination of its conduct in the GAO review, and still refuses to undergo a true audit.

After the Great Depression, strong New Deal regulation such as the Glass-Steagall Act restricted financial institutions from engaging in risky speculative lending with public funds. Glass-Steagall separated the activity of commercial and investment banks to prevent Wall Street from endangering the wider economy with reckless activity. It is no coincidence that the post-war period, despite flaws regarding social justice, demonstrated strong, equitable growth and social cohesion.

Debt and Inequality

A Green New Deal cannot succeed without also addressing debt and the predatory practices of lenders. The American economist Irving Fisher coined the term “debt deflation,” to describe an economy in which a society must devote its resources to pay off ever-expanding amounts of debt.

US Federal Reserve (FRED) [Public domain], via Wikimedia Commons

US Federal Reserve (FRED) [Public domain], via Wikimedia Commons

As regular people must use their disposable income to pay off their mortgages, credit cards, student loans, and health insurance debts, the amount of money they can spend on goods and services shrinks, hurting the real economy.

The average college student now leaves school with nearly $30,000 in debt. In slashing 25 percent of higher education funding between 1980 and 1985, the federal government shifted its focus from providing grants to student loans. President Reagan’s Office of Management and Budget Director explained to Congress that students were “tax eaters” and student grants were not a “proper obligation of the taxpayer.” There is now a$1.4 trillion student loan debt bubble, which multiple studies have pointed to as a major factor in the declining economic well-being of younger generations.

Home ownership, which is associated with the traditional idea of the American dream and closely linked to community involvement, is at its lowest rate in 20 years. After the 2008 recession the financiers responsible for the crisis were bailed out with federal dollars, while many homeowners were foreclosed and put into debt. Private equity firms like Blackstone took advantage of the situation by buying hundred of thousands of foreclosed houses, making huge profits for CEO Steve Schwarzman, a former economic advisor for President Trump (and major fracking investor), while the population suffered.

According to a 2018 House of Commons study, the top one percent of the population is projected to hold two-thirds of the world’s wealth by 2030, while a 2014 study from the Federal Reserve found that 40 percent of Americans could not supply even $400 in the case of an emergency. Too-big-to-fail banks get slapped on the wrist for laundering drug money and get rewards for systemic fraud, while citizens lose their homes, are arrested for possession, and loaded with high-interest debt for receiving an education.

A Green New Deal can rein in the predatory practices of lenders and restore an economy that provides opportunity for its citizens rather than ensnare them in a debt for the benefit of a few.

Climate Inequality

But as unfair and non-meritocratic as our societal system can be, nothing demonstrates the price of inequality and the desperate need for a Green New Deal like climate change.

In the California Camp Fire of 2018 Kim Kardashian and Kanye West could afford private firefighters to protect their home while less fortunate communities were incinerated. A report by Evan Osnos details the pre-apocalyptic preparations of the super-rich, who have already booked safety bunkers and property in New Zealand for the coming climate crisis.

Meanwhile, 2017 saw the number of chronically malnourished people in the world increase by 38 million after a decade of decline, with “climate-related shocks” cited as a major contributing factor.

After years of progress fighting child labor exploitation, the Food and Agriculture Organization of the UN found child labor had grown in 2018, due in part to “climate-related disasters.” It is a cruel irony that those least responsible for causing climate change are the most vulnerable to its consequences.

The Green New Deal

On, November 13, 51 climate activists from the Sunrise Movement were arrested for holding a sit-in in House Speaker Nancy Pelosi’s office, demanding that Democratic leadership back a Select Committee to work on the policy details of a Green New Deal. Incoming representative Alexandria Ocasio-Cortez joined the sit-in, illustrating a growing rift in the Democratic party between progressives who demand change and establishment officials who seek to uphold the status quo.

Georgette Sordellini, an activist with the Sunrise Movement, spoke with Citizen Truth about her experience with the environmentalist organization.

The youth-led organization knocked on doors across the country for the 2018 midterms, contributing to the greatest voter turnout in a century. Forty congressional members are now signed on for the Select Committee for the Green New Deal and studies continuously show that citizens desire action on climate change, including a recent Yale Program on Climate Change study showing support for the Green New Deal among 92 percent of Democrats and 64 percent of Republicans.

Our representatives have failed to enact the policies that citizens want, and grassroots movements like Sunrise fight to restore democracy in our country.

But as we reestablish democracy in America, our corporate, financial and political culture must evolve. Many of the examples of corporate actors forgoing societal concerns for personal gain in this article were not illegal. The point is not to condemn and villainize specific people, but to recognize the systemic flaws in our society that incentivize destructive behavior.

Margaret Thatcher famously said, “There is no such thing as society, there are individual men and women, and there are families.” This idea neglects the fact that Homo sapiens are social creatures who have operated beyond family units for all recorded history. We would not have survived as a species if we did not have the biological drives of compassion that lead us to take care of each other.

The British Prime Minister also famously claimed “there is no alternative” to her policies of deregulation, privatization, and austerity. From Joseph Stiglitz to Jeffrey Sachs to Dani Rodrik, the best economists of our era disagree. And a Green New Deal provides an opportunity to prove her wrong.

There is an alternative. We can restore unions and allow workers to bargain for fair wages and labor standards. Anti-trust legislation can be reinstated to fulfill the ideals of fair competition and innovation, and we can transform campaign financing so politicians are incentivized to serve their constituents instead of corporate donors. The revolving doors that allow regulators to come from and return to the same industries they regulate can be closed, just as we can close tax loopholes and crack down on offshore tax havens.

We can replace GDP with a metric that more accurately measures societal progress. Financial and environmental regulations can be established to restrain the worst inclinations of corporations. We can audit the Federal Reserve and end closed-door settlements for criminal activity. Debilitating debt can be restructured or forgiven.

We can instate a carbon dividend tax, end fossil fuel subsidies, transition to renewable energy and transform our national infrastructure while creating new jobs for workers who have been forced to leave the industry.

The most common argument against the Green New Deal is affordability. Nobel Prize-winning economist Joseph Stiglitz said we cannot afford not to do these things. Extreme inequality has historically led to social instability, violent revolution and authoritarianism. As the climate destabilizes, bringing droughts, famines and refugee flows across the globe, far-right movements will become more seductive to marginalized populations unless there is a real progressive alternative.

States and municipalities across the United States are already proving how possible the transition to clean energy is. From California’s zero-emission public transport plan to New York City’s $5 billion divestment in pension funds, municipalities can work with the federal government to hash out a comprehensive plan of action that leaves no one behind. Wind and solar are cheaper than coal and their prices continue to fall.

It is time to act.

Peter Castagno

Peter Castagno is a co-owner Citizen Truth.

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