“You know, watching the debate the other night, with all the Democrat candidates standing so far on the left, I thought that debate stage was going to flip over. … In fact, if you add up every budget-busting proposal they offer — from Medicare-for-all and the Green New Deal — it would actually cost every household in America over $900,000 over the next 10 years.”
— Vice President Pence, in remarks at the Detroit Economic Club, Aug. 19, 2019
Pence said every U.S. household would have to pay $900,000 over the next decade to cover the cost of Medicare-for-all and the Green New Deal.
The median U.S. household income was $61,372 in 2017, so the vice president is making one of those huge, scary claims that immediately draws our attention — and skepticism.
We’ve never seen such an exorbitant estimate. Pence is saying these two Democratic proposals would cost more than $100 trillion, or roughly five times the national debt.
The vice president’s office did not respond to repeated inquiries about where he got his numbers, which only added to our skepticism. Any politician throwing around specific estimates like this should at least provide source materials. Pence is the only official we’ve seen using this $900,000-per-household figure. None of the experts we consulted could make sense of it. President Trump has not made the same claim.
The United States had nearly 119 million households on average from 2013 to 2017, according to Census Bureau data. The total was closer to 128 million using one-year data for 2018. That means Pence is estimating a total cost of $107 trillion to $115.2 trillion.
The Green New Deal is an ambitious, 10-year plan backed by many Democrats. The goal is to reach net-zero carbon emissions; retrofit all buildings for energy efficiency; build out a “smart” energy grid and high-speed rail; guarantee jobs, health care, housing and higher education to all; and more.
For now, it’s only a resolution in Congress. That means it’s a lofty statement about aspirations, not a bill with specific policies and benchmarks. If the resolution passed, it wouldn’t have the force of law. The lead sponsors are Rep. Alexandria Ocasio-Cortez (D-N.Y.) and Sen. Edward J. Markey (D-Mass.).
Estimating the cost of the Green New Deal can feel like a wild-goose chase. The plan would operate like a Rube Goldberg contraption, transforming government and society in numerous intersecting ways. Some costs would go up, some would go down, and some parts of the Green New Deal would be redundant in the end.
The American Action Forum, which describes itself as a center-right think tank, analyzed the Green New Deal proposal and estimated that it would cost from $50 trillion to $93 trillion. This study often is characterized by Republicans as saying that the Green New Deal would cost $93 trillion, but the authors are more circumspect. They stress that they came up with a range of estimates, not one hard number, and their analysis includes several caveats.
For example, the American Action Forum study says:
The sheer scope of these proposals would presumably reduce or eliminate existing federal spending in certain areas, perhaps beyond what we have estimated here. Obviously, this leaves room to improve on the estimated impacts. …
Similarly, the GND promises to ensure that every person has a guaranteed job, a family-sustaining rate of pay, and benefits such as paid leave and paid vacations. If everyone has good pay with good benefits, why is it simultaneously necessary to provide targeted programs for food, housing, and health care? Some of these objectives appear to be redundant. Nevertheless, we incorporate them into our analysis in an effort to reflect the GND’s intent.
The lead author, Douglas Holtz-Eakin, is a former director of the nonpartisan Congressional Budget Office who later served as the top economic adviser for Republican John McCain’s presidential campaign in 2008.
“The thing I would emphasize is that I think too much attention has been paid to artificial precision,” Holtz-Eakin said. “The purpose of the exercise was to figure out the range” or “the order of magnitude.”
Whether it’s $50 trillion or $93 trillion, he said, “the important thing about that — those are all numbers that are double-digit trillions of dollars.”
Noah Kaufman, a research scholar at Columbia University’s SIPA Center on Global Energy Policy, dismissed the study. “The Green New Deal, as I understand it, is a set of principles or objectives, not policy proposals,” Kaufman said. “Achieving a goal like decarbonization can be cheap or expensive, depending on the policies chosen to get there. So I don’t put any credence on a study that assigns a set of expensive policies to an objective and then says achieving the objective is expensive. They are assuming the answer to the question.”
The American Action Forum study estimated $1.3 trillion to $2.7 trillion in costs from building “enough high-speed rail … that air travel becomes unnecessary.” The Green New Deal calls for investments in high-speed rail to the extent that it’s “technologically feasible,” but the resolution says nothing about phasing out air travel.
Earlier this year, Ocasio-Cortez aides issued FAQ documents alongside the resolution that mused about getting rid of cow farts and airplanes. Those outlandish proposals were never in the resolution itself, and Ocasio-Cortez retracted the FAQs within days. (More on that here.)
What happens when removing the assumption that the Green New Deal would replace air travel with high-speed rail? “It would change the transportation number; there’s no question about it,” Holtz-Eakin said. “But I don’t think it would change the spirit of the analysis.” He noted that his study “missed free college,” and he added, “What does it mean to retrofit every building in America? … That could be incredibly costly.”
A Markey aide questioned other assumptions in the study, such as its $5.4 trillion estimate for transitioning to a low-carbon energy grid.
“They assume that most new capacity will come from nuclear, which we know from the latest, state-of-the-art Lazard energy cost analysis is the most expensive zero-carbon power source one can build at utility scale,” the Markey aide wrote in an email. “Even without subsidies already on the books, wind power is cost-competitive with existing coal and nuclear plants in operation. Cost of solar and wind are coming down (by 88% and 69% respectively since 2009) and cost of nuclear has gone up (+23%).”
Medicare-for-all is a universal health-care proposal championed by many Democrats running for president, but not all of them. Former vice president Joe Biden, for example, is not proposing Medicare-for-all or backing the Green New Deal.
The left-leaning Urban Institute estimated the cost of the Medicare-for-all bill sponsored by Sen. Bernie Sanders at $32 trillion over 10 years. The libertarian-leaning Mercatus Center at George Mason University, for different reasons, landed on a similar $32.6 trillion estimate. Sanders (I-Vt.) has said in debates that wealthy and middle-class Americans would pay more in taxes under his plan but that out-of-pocket medical expenses would decline.
Now let’s drill down on Pence’s claim. Alyssa Farah, his spokeswoman, did not respond to our questions. But the White House has not produced any estimates of the costs associated with the Green New Deal or Medicare-for-all. So the best assumption is that the vice president was relying on independent analyses such as those from the American Action Forum and the Mercatus Center or the Urban Institute.
Taking all the assumptions in Holtz-Eakin’s study to the max, the cost per household from the Green New Deal would be roughly $670,000 from 2020 to 2029. Spreading out the $32 trillion cost estimate of Medicare-for-all among 128 million households adds $250,000 to the bill. That’s roughly $920,000 per household combined.
But if this was Pence’s math, there was a big mistake baked into it. The Green New Deal includes a universal health-care guarantee, and the American Action Forum study factored in $36 trillion for the cost.
So the vice president appears to have double-counted the cost of Medicare-for-all.
“AAF acknowledges it is merely ‘estimating the order of magnitude’ of the cost,” said Howard Gleckman, a senior fellow at the Urban Institute. “And the range of its estimates is quite high. It is most extreme with the guaranteed-jobs piece, where the range is from $49,000 to $322,000 [per household]. This is not surprising, since it is not possible to model a proposal as vague as guaranteeing a well-paying job to every American.
“And, as you note, Pence seems to be double-counting the health piece. If he takes the high range of AAF’s estimates, the per-household cost is about $670,000, not $900,000. The low end of the AAF estimate is about $370,000.”
He added, “Pence’s $900,000 estimate is simply made up.”
Asked about the $900,000 estimate, Holtz-Eakin said, “I’ve not seen it before and, I’ll be honest, I don’t actually know what to make of it because I don’t know what’s in it.”
The Pinocchio Test
Whatever savings these proposals would produce, it seems clear that the Green New Deal and Medicare-for-all would entail steep costs, at least up front, and we’ve noted that repeatedly in previous fact checks.
But there’s a difference between sober warnings and unsupported exaggerations. Pence earns Four Pinocchios. He should back up his claims.
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