Saturday, December 06, 2008

Green stimulus

What better way to stimulate the economy than with initiatives that are also designed to propel the country towards a clean energy economy? In our interconnected world it is impossible to do only one thing so it makes immense sense to craft strategies and policies that take into more than just the short-term impacts into consideration.

President-elect Obama's decisions and actions to address this challenge bodes well for our future. (GW)

Stimulus Push Gets Greener Tint

By Jonathan Weisman and Naftali Bendavid
Wall Street Journal
December 6, 2008

WASHINGTON -- President-elect Barack Obama and congressional Democrats are intensifying work on a stimulus plan that would dole out roughly a half-trillion dollars over two years on tax-rebate checks and an array of "green" projects from home weatherization to renewable energy.

Democrats seized on the job-loss numbers to argue for the urgency of a sweeping stimulus plan, and lawmakers will meet next week for a "forum" on the economy. They hope to have the recovery plan on the House and Senate floors in early January, with an eye toward putting it on Mr. Obama's desk by Inauguration Day.

The goal is to create a portfolio of programs, according to transition officials. Some initiatives, including tax rebates and traditional infrastructure projects like road repaving, would inject money into the economy immediately. Others would kick into gear months after enactment. For instance, a massive expansion of the federal program to weatherize homes and federal buildings would include a six-month training period for new workers.

Complex green infrastructure initiatives -- such as building renewable energy plants, improving the electrical grid and installing "smart" meters that allow consumers to reap benefits from using electricity at off-peak hours -- would take effect well into the second year.

The recovery package also will include tax relief, though what form it will take remains unclear. Many Democrats want to include a rebate of perhaps $500. Other initiatives, like a broadening of the child credit and payroll-tax relief, are also under consideration.

Green-technology advocates, for their part, want to include such elements as a multiyear extension of a tax credit for investment in wind power, plus another credit for solar-power makers. All told, they estimate the green component could be $50 billion, or 10% of the overall package.

"America's unique excellence is innovation, and it's easy to understand businesses that innovate are the ones that have the longest and largest kinds of impact," said Eric Schmidt, chief executive of Google Inc. and an Obama economic adviser, in an interview. "You would want to invest in something that would not just physically build a bridge, but would help build businesses that would create more wealth."

Mr. Obama on Tuesday sent Jason Furman, a top economic adviser, and Phil Schiliro, his congressional liaison, to Capitol Hill to brief Democratic leaders. Mr. Obama's White House chief of staff, Rahm Emanuel, has also been on the Hill, as has Rob Nabors, Mr. Obama's newly named deputy budget director, who spent much of his career at the House Appropriations Committee.

Mr. Obama's aides have made sufficient progress on the package that they have tasked Mark Zandi, chief economist of Moody's, to run simulations of various recovery plans. "They're pretty far along," said Mr. Zandi, who was an occasional adviser to Mr. Obama's Republican rival, Arizona Sen. John McCain, during the presidential campaign.

Even so, the Obama team remains split over how much money to devote to green and high-tech projects, and how much to focus on traditional infrastructure.

In purely economic terms, a traditional infrastructure building spree might provide the biggest bang, Mr. Zandi said. But, he added, "there's something to be said for an infrastructure program that captures the imagination, because confidence is just shot."

Such talk worries some in the Obama economic camp, who fear the most vulnerable workers -- undereducated minorities, for instance -- may be left behind by an economic recovery program too focused on jobs that require skills those workers don't have. Robert Greenstein, of the Center on Budget and Policy Priorities, said attention should be focused on far more immediate programs, such as unemployment insurance.

Some of the stimulus plan's targets may be so complicated that the Obama team will need subsequent legislation to make it work, Mr. Schmidt said. The economic plan might set aside money for renewable-energy projects, and in subsequent legislation, mandate that utilities use electricity generated by sources such as wind and solar projects.

—Greg Hitt contributed to this article.


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