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A Green Economic Stimulus

October 24, 2008 - by Donny Shaw

There is only one thing left for Congress to do this session: come back after the November elections and try to pass an economic stimulus package for Main Street America. One of the major Democratic priorities that has emerged for the stimulus is investing – through tax cuts and new spending – in transportation and infrastructure projects that will create new, high-quality jobs.

A subset of that idea has emerged as well: using the stimulus to fund green infrastructure projects that will reduce carbon emissions, encourage alternative energy production, and reduce dependence on foreign oil, all the while providing millions of new jobs.

Economic stimulus is “the fine art of throwing money at people,” said economist Dean Baker in January, when Congress was working on the first stimulus package. “There is no reason that we can’t throw money at people in exchange for reducing greenhouse gas emissions,” he added.

Baker’s vision of a green stimulus package didn’t come to fruition in January, but, since infrastructure investment is a serious option this time around, there is more support for using the second stimulus package to prop up green projects. Today, the House Education and Labor Committee held a hearing on the issue with several liberal-leaning economists who argued for using the infrastructure projects. One of the witnesses, Prof. Robert Pollin, talked extensively about his plan to create 2.9 million jobs in the short-term by investing in the green economy.

“A green investment agenda — focused primarily on measures to dramatically improve energy efficiency but on advancing renewable energy commercialization as well — can itself serve as a powerful engine of job creation in the short run,” said Pollin. As he explained in his testimony (pdf), the main focus of Pollin’s green stimulus plan is on providing funds for retrofitting public buildings:

>In the area of public infrastructure and green investments, one obvious area capable of generating rapid results is a building retrofit program. This will rely entirely on known technologies, can be implemented on buildings of all sizes, and can provide
short-term returns on the money being invested. Moreover, the construction industry is already in a severe slump, with large numbers of construction workers eager for new job opportunities.
>
>To achieve the most rapid and effective short-term stimulus through a program of building retrofits, the U.S. government, working in conjunction with state and local governments, can mandate a program of retrofitting public buildings that could
commence as soon as new legislation authorized it. Indeed, programs to retrofit public buildings are already operating throughout the country. These could serve as the active starting point for a more ambitious national program of public building retrofits.
>
>Of course, it is equally important to retrofit the country’s stock of privately owned buildings, including residences and commercial structures. In Green Recovery, my coauthors and I a propose a program of strong financial incentives—including both loan guarantees and tax credits—to advance such an initiative. But even operating under such incentives, privately-owned structures will be retrofitted only when private investors and homeowners choose to make these investments. This means that the speed at which new investments in retrofits will occur in the private sector will be slower than with the
public sector.

The other, smaller elements of Pollin’s plan include mass transit investment, “smart grid” electrical transmission systems and the renewable energy industry.

Between the construction workers, manufacturers and people in other industries that will benefit from the employment increase (i.e. “a waitress serving dinner to the mill worker and her family”), Pollin estimates that his green investment plan, combined with other education and infrastructure funding, would create 2.9 million new jobs in the short term, and 3.3 million new jobs within two years. If the labor market remained unchanged relative to September 2008, Pollin estimates that his plan “would cut the unemployment rate to 4.3 percent, moving the job market forcefully away from its current slump.” The current unemployment rate is 6.1 percent.

Now, from a practical perspective, this is probably not something Democrats in Congress are going to be able to pass in a lame-duck session. Congressional Republicans and the Bush administration have both expressed reservations about using the stimulus for infrastructure investments, let alone green infrastructure investments. Realistically, Democrats will have to choose between passing a pared-down, bipartisan stimulus package in November (including an unemployment insurance extension, food stamps increase etc. ), or waiting until January, when (presumably) their majority in Congress is larger and Barack Obama is President, to pass a bill that includes all of their priorities. Obama has already pledged 5 million new green jobs, calling them “jobs that pay well and can’t be outsourced; jobs building solar panels and wind turbines and fuel-efficient cars; jobs that will help us end our dependence on oil from Middle East dictators.” Pollin’s plan seems ideally suited to help Obama realize this campaign promise.

Very related: here’s Van Jones from Green For All explaining his concept for a “Green New Deal” :

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Comments

  • mroles 10/27/2008 6:22am

    It’s pretty black and white, and green as well. Do iiiiiit.

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