Bill Grant Column October 07, 2008
Green-recovery program could provide a middle-class bailout
The lipstick is on the pig. The $700 billion bailout is a done deal. If it is a good deal or a bad deal, new deal or raw deal, remains to be seen, but everyone seems to agree that it is not the final deal. As the Salt Lake City Tribune editorialized, “there are no guarantees the plan will work but time was of the essence and doing nothing was not an option.”
With the bailout in place, some politicians, Barak Obama prominent among them, are calling for a new stimulus plan to fight the rising unemployment that threatens the middle class. As Obama says, “This is not a moment for celebration, but a sobering day when we found out that three-quarters of a million jobs were lost just this year. Passing this rescue plan cannot be the end of our work to strengthen our economy — it must be the beginning.”
Now that Wall Street has got its bailout, it is time to consider how to offer relief to the America middle class that has been in recession longer than the bankers and brokers. Main Street deserves its bailout too.
The Center for American Progress has outlined a “green recovery” program — http://www.americanprogress.org/issues/2008/09/pdf/green_recovery.pdf — that could provide a short-term economic stimulus to help stem the rising rate of unemployment by putting Americans back to work in green jobs, while setting the country on a course toward energy independence. By spending $100 billion over two years, this program is estimated to generate two million new jobs based on energy efficiency and production of renewable energy.
The center’s plan calls for an auction of carbon permits in a cap-and-trade system to pay for the program, but recent events suggest that the government would be equally justified in using tax revenues to jump start the program.
If $700 billion can be invested in financial paper of dubious value to benefit Wall Street, a measly $100 billion invested to help the middle class prosper again would be a bargain. Over time, cap and trade auctions could repay the initial investment, just as the government hopes the paper purchased by the bailout will rise in value to pay for that program.
The six critical areas addressed by the proposal are retrofitting buildings for energy efficiency, expanding mass transit and freight rail systems, building a new “smart” electrical transmission grid, developing wind and solar power, and developing next-generation bio-fuels. These crucial infrastructure elements would set the country on the road to energy independence while reducing unemployment and stimulating the economy.
To show how each state might fare under a green-energy stimulus program, the authors offer a state-by-state breakdown of benefits and effects. Colorado, under this plan, would receive an infusion of $1.7 billion in green public- and private-sector investments, sufficient to add 32,849 jobs. Based on June 2008 numbers, this would reduce unemployment from 5.3 to 4.1 percent.
Broken down by sector, $667 million would go for retrofitting buildings, mass transit and freight rail would get $33 million, the new smart grid would receive $167 million, solar and wind power and biofuels would share $500 million.
Not included in these employment figures are the numerous secondary jobs that would be created by a stimulus package of this type, since they are not directly related to energy. It is safe to assume that the actual reduction in unemployment would be above that calculated by the formula.
Barak Obama’s proposal to spend $150 million over 10 years for an energy independence program is well-intentioned, but too slow to turn around our stalled economy.
Obama should promote an energy program that will quickly stimulate the economy as well as move the country toward energy independence. We need bold leadership to resurrect our middle class economy while hastening the advent of a new energy future.