Re-energizing the Economy
SOURCE: AP/Alex Brandon
The U.S. economy has gone from bad to worse to worst over the past year. The current unemployment rate of 7.2 percent is the highest in 15 years, with more layoffs likely. Major companies have declared bankruptcy, while others teeter on the brink. Outgoing President George W. Bush opposed all but the barest economic stimulus measures, leaving the new Obama administration and 111th Congress to clean up the mess.
Thankfully, the days of inertia and inaction are over. As President-elect Barack Obama prepares to ascend to the nation’s highest office, he travels today to Bedford Heights, Ohio. There he will visit a wind turbine factory to urge Congress to promptly enact an $850 billion economic stimulus and recovery plan, which includes an unprecedented $69 billion for clean energy programs.
What’s more, our new president and Congress are working closely together. Yesterday, House Appropriations Committee Chair David Obey (D-WI) released the draft American Recovery and Reinvestment Act of 2009, a $550 billion spending plan to stimulate the economy and create jobs by funding essential energy, infrastructure, education, and other needs. House Ways and Means Committee Chair Charles Rangel (D-NY) released a companion proposal with $350 billion in tax cuts designed to spur investments by businesses and increase the income of households.
The economic recovery and reinvestment proposals are of the scale and breadth necessary to tackle the economic chaos that President-elect Obama will inherit from his conservative predecessor. These progressive proposals make important investments where they will do the most good in overcoming the nation’s damaging loss of jobs and put the U.S. economy back onto a sustainable long-term growth path with rising living standards for all. In addition to funding for clean energy, the plan would invest in education, infrastructure, and other pressing needs.
The spending plan provides $69 billion for energy efficiency and renewable energy programs. These investments would reduce oil dependence while boosting private-sector innovation, lowering the costs of addressing the climate crisis, enhancing U.S. economic competitiveness, and expanding the global market for clean technology. Top economists from the incoming Obama team project that the energy investments will create at least 459,000 jobs by the end of 2010.
In addition to the creation of jobs, the clean energy spending package begins to address pressing energy needs. The proposal would provide $19 billion for the smart grid investment program and loan guarantees for transmission lines. Smart grid technology will increase efficiency, while additional transmission lines are necessary to move electricity generated in rural areas by wind, solar, and other renewable energy sources to urban centers. Well-paying jobs in engineering and construction would be created to build and maintain this system.
Spending on efficiency would create jobs, save energy, and lower utility bills. The proposal would invest $23.2 billion to increase the energy efficiency of homes, federal buildings, manufacturing facilities, and other buildings, and decrease electricity use by appliances. There is an additional $7.2 billion to weatherize low-income homes and provide assistance to pay utility bills.
The stimulus package provides funds to develop technologies to reduce greenhouse gases from coal-fired power plants and cars—the two major sources of U.S. global warming pollution. The proposal would provide $2.4 billion for “carbon capture and storage” demonstration projects, which would test the technology to capture carbon emissions from coal-fired power plants and store them underground. It would also invest $3.5 billion in the development and deployment of cleaner, more efficient motor vehicles and fuels. The plan would further reduce oil use with an investment of $10 billion for new public transit projects, repairs, and railroads.
These and other provisions in the stimulus package would create jobs, cut electricity and oil use, jobs, lower energy bills, and reduce global warming pollution. But these benefits will not occur without congressional action. The House Appropriations Committee plans to debate and vote on this proposal next week, with the full House of Representatives voting toward the end of January. The Senate could consider and approve a similar measure in early February. Congressional leaders want this bill on President Obama’s desk by mid-February. It won’t be a moment too soon to put people back to work building a 21st-century clean energy economy.
Daniel J. Weiss is a Senior Fellow and Director of Climate Strategy at the Center for American Progess. Alexandra Kougentakis is a Fellow’s Assistant. Michael Ettlinger, Vice President for Economic Policy at the Center, also contributed to this column. For more information on the Center’s Energy policies, please go to the Energy and Environment page of our website. For more information on the Center’s economic policies, please go to the Economy page of our website.
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