Obama’s Economic Stimulus Plan: Cleaning Up Washington, or Greenwashing?
by Neil Chambers, New York City 
on 11.26.08
Last weekend, President-elect Obama announced his plans for the economic stimulus plan. He says it's going to be big, green, and expansive. But is it truly green, or just greenwash?
Economics and Green
Obama announced his economic stimulus plan Saturday, Nov 22, 2008 during his weekly Democratic Radio Address. The announcement is the first of many steps he plans to take to turn around the United States’ failing financial system. The building blocks for the plan are to create tax relief to the middle-class, create green jobs, rebuild elementary & secondary schools and invest in renewable energies such as wind farms and solar panels.
The Sunday Morning Quarterbacks
The Sunday morning political shows were aflame with commentary about the plan and several interested points were made on This Week, Meet the Press and The McLaughlin Group – not to mention, that the announcement comes with a large number of undefined variables as well as a bigger question of whether or not the plan is as green as it first appears.
Barrack Obama says in the radio address that 2.5 million jobs will be created with investments into green jobs, the energy sector and construction by January 2011. Yet as Erin Burnett points out 2.5 million jobs over two years would still be a net loss because 2.7million people are presently unemployed nationwide. She also pointed out that Wall Street is lukewarm about a massive infrastructure program coming out of Washington. Though Wall Street and investment banks have been getting hit hard by public criticism over the last few months, most wind farm projects and solar panel companies will look for private investment to generate an upswing of output – and if investors aren’t willing to invest, the equity side of renewable energy deals could find itself in a complete standstill.
Infrastructure and Economic Stimulus
It was striking to me to hear Obama talk about infrastructure projects as a source of job growth over the next 24 months. I worked as a project architect on highway and bridge projects for more than five years, and I would be cautious about claiming to be able to get infrastructure projects up and running in 24 months. Though Robert Kuttner says infrastructure projects could be going within 6 months, even small projects take 12 to 18 months to go from the RFP process into Design Development. Moreover, I wonder how green these projects are going to actually be. Rushing a project into construction is a bad indication of implementing strict environmental regulations as well as green building standards. Infrastructure, especially highways and bridges, tend to have huge environmental impacts typically not included in the debate about green cars and governmental infrastructure programs. For example, car collisions are one of leading causes wildlife fatalities. Endangered species such as the Florida Panther are nearing extinction because of the numbers of big cats hit by automobiles each year. I wonder if the planners and strategists around Obama are going to put into the stimulus package requirements for the implementation of sustainable highway practices and mandate bridges to not disturb wildlife connectivity during or after construction. Of course, with all the potential harm the stimulus could cause – the plan has the opportunity to coordinate with the national park service and bureau of land management to decrease the number of roads within or near wilderness preserves, and affectively support rewilding and conservation biology goals.
Campaign v/s Administration
One of the biggest issues facing the economic stimulus plan is its size. During the campaign, Obama quoted numbers in the $175 billion range, reassuring voters that he can pay for every dime of spending proposals while cutting taxes (for all but the most affluent). Factcheck.org stated that “budget experts say that's unlikely.” For all the hope of a green economy, what happens if the green movement gets labeled a “tax and spend” initiative without real results? For more than a decade, green leaders have made the case that environmental solutions can be based on new economy values to encourage the business community and mainstream America to buy into a green vision. There are signals that the Obama Administration will be much more business-friendly than some think. Signs of this come from the New York Times report on Nov 22, 2008 that Obama may not repeal Bush tax cuts for wealthiest Americans, but let them expire in 2011 as originally scheduled to give himself time to let the stimulus plan work.
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Well, I am by no means an expert at this but I wonder if we'll have much to worry about with our economy if we continue to contaminate the planet we call home. I believe Obama has his hands full with the economy and the environment, but I am happy that finally there are serious talks about the future of the environment. The U.S. is significantly behind the curve on environmental policy. I look forward to any progress that is made, even with the economy in the state it's in. -L (onthefox.blogspot.com)
I think the plan is to get projects that have already had design completed, and get them funded and up and running immediately. Obviously 2 years is not enough time to do initial design, environmental impact report, and construction.
Also, I'm not sure how rushing a project would allow you to circumvent the EIR process any more than a well-planned one.
I do think that to really be green, the vast majority of these projects need to be transit related, and Obama's historical support of Amtrak is a good sign.
Finally, certain projects like repaving roads don't require much design and could rapidly create construction jobs as well. Repairing roads may not help the environment a ton but it doesn't cause much harm either.
Finally, some sound policy making. Go Obama,
I agree completely that Obama will have trouble implementing his energy/environment plan as described, but not just because of the cost -- as you point out -- but also because some parts of it, like the cap-and-trade proposal, could be a drag on the economy at a time when we need an economic recovery. He needs some fresh ideas that are cheap, effective, and won't sink the economy.
I addressed this at my blog at http://www.greenenergytaxcuts.com/2008/11/since-you-ask.html
Here is the gist:
All the biggest problems we face (the economy, jobs, the auto industry, oil dependency, global warming, the Iraq War) have one common solution:
MAKE ALL GREEN ENERGY TECHNOLOGY 100% TAX FREE.
It is that simple. You don't have to spend money, or hike any taxes to create millions of new jobs and fix the environment/economy/auto industry/oil dependency. We can do it with a smart tax cut. No sales or income tax on revenue from clean, renewable energy or technology (like plug-in, flex-fuel hybrids) that radically decrease oil consumption. No tax on the interest on loans for green energy investments. No capital gains tax on companies' stocks and dividends in proportion to the percentage of their revenue that comes from green energy technology. That simple policy will supercharge private investment in clean and renewable energy technologies... on the order of $300 billion per year, or more. That will create millions of new jobs fast -- many more than you could create by federal spending alone. That includes billions of new investment in the US auto industry, as investors see a greener path towards an increasingly tax-free auto industry. Further, it will encourage oil, coal companies and utilities to voluntarily go green, in order to escape taxes. A carrot frequently works better than a stick.
Slashing taxes on green energy will directly lower the cost of green energy, but also lower the cost of ALL energy. Economic law states that increased supply results in decreased price. So new green energy investment will increase the total energy supply, decreasing the price of all energy, including oil and coal. Increased energy diversification and competition will create a permanent downward pressure on energy prices. Cheap energy will in turn stimulate every other sector of the economy, creating millions of non-energy jobs as well. By contrast, a carbon tax, or cap-and-trade, would raise the cost of energy, crippling the economy, and putting more people out of work.
Take note: NO FEDERAL SPENDING IS REQUIRED. Further, any tax revenue reduction will be minimal initially -- since green energy is now just a small part of the economy -- and as it grows, revenues will grow from green energy payroll taxes and other sources. A focussed tax cut on this one sector of the economy can lift all others by keeping the price of energy low for all, and producing massive domestic employment. A tax cut here will produce a massive tax revenue surge from the rest of the economy. Tax freedom for green energy will make the US the world leader in green energy investment in President Obama's first term -- in fact, most world green energy investment will go through the US for the tax advantage.
So forget the $150 billion federal "investment" over 10 years -- that is PEANUTS compared to what is really needed here and now, and what the private sector can do if you make green energy technology tax free. And please forget the stupid cap-and-trade proposal that does not really work and will only raise the price of energy, and further depress the economy. Tax freedom for green energy technology provides the same tax differential as a carbon tax, with the same incentive to shift green, but will stimulate rather than depress the whole economy by pushing energy prices lower.
(Oddly enough, tax-free green energy is logically the double-negative of a carbon tax: the no-carbon tax cut. Similar but diametrical concept, superior result.)
A 100% tax cut for renewable, clean energy technologies, vehicles and infrastructure is the cheapest and most effective stimulus you could provide right now for our struggling economy in general, and for financing a green revitalization of the auto industry in particular. And it is the absolute best and fastest way to achieve your goal of creating a clean, green economy, and creating millions of new jobs.