Obama’s economic stimulus plan: how accurate were my predictions?
November 23, 2008
Two weeks ago, I told both of my classes that within the next few weeks, President-elect Obama would announce that upon taking office he would propose an economic stimulus plan with the following features:
1. It would be termed “Green Recovery” or something to that effect
2. It would be touted as a plan that would create 2 million or more jobs in the short term
3. It would feature direct federal spending of at least $100 billion (but probably considerably more than that) over two years in the following areas:
- Retrofitting buildings to increase energy efficiency
- Expanding mass transit and freight rail
- Constructing “smart” electrical grid transmission systems
- Wind power
- Solar power
- Advanced biofuels
I also predicted that any new comprehensive federal carbon regulation (a cap-and-trade program similar to that proposed in the Climate Security Act, for example) would not be a priority until after this stimulus plan was underway.
I predicted that Obama would use the following talking points to justify this program:
– it would create 2 million new jobs, with a significant proportion in the struggling construction and manufacturing sectors (I showed a graphic detailing the professions that would see increased jobs).
– it would be a strategy to “invest in the greening of our economy,” “to jumpstart a comprehensive clean energy transformation for our nation,” to provide “more jobs, and better jobs, compared to continuing to pursue a path of inaction marked by rising dependence on energy imports.”
It now appears that this sort of plan is pretty close to what the incoming Administration has in mind, according to this report.
I had several reasons for my confident prediction.
First, “personnel is policy,” as Ronald Reagan once famously said. John Podesta, head of the Obama transition team, is the head of the Center for American Progress, the progressive think tank that issued the Green Recovery report in September. That report “shows the impact of a swift initial investment in climate solutions that would direct funding toward six energy efficiency and renewable energy strategies.” There are other proposals of this sort floating out there, but none came with Podesta’s central position in the transition to power. Robert Reich, the former Clinton Secretary of Labor and an Obama economic advisor, repeated most of the six strategies on his blog, calling for investment “mostly [in] infrastructure — – repairing roads and bridges, levees and ports; investing in light rail, electrical grids, new sources of energy, more energy conservation.” Note the substantial overlap.
Many Americans still believe that protecting the environment and growing the economy are incompatible. So what’s a new President to do in a time of economic downturn? Simple: use government spending to create “green jobs,” which was a theme Obama touched upon frequently during the campaign. It’s no accident that creating the kinds of jobs described in Green Recovery, jobs for civil engineers, mechanics, HVAC professionals and the like, could do a wealth of good in Rust Belt states. Just ask Tom Friedman.
Finally, let’s return to the idea that a “green recovery” program signals that action on a comprehensive regulatory program for carbon regulation is not forthcoming immediately. I think Obama knows that if Congress moves forward with a cap-and-trade bill shortly after taking office, he will be “Harry and Louise”‘d to no end, and it will be a major blow to his political standing. The cloture vote on the Climate Security Act was 48-36 in favor of closing off debate. Six Senators (including Obama, Clinton and McCain) were not present and indicated they would have voted with the 48. So it has been reported that 54 Senators in this outgoing Congress were in favor of the bill. That’s misleading, as the vote was on a procedural matter, not the underlying substance of the bill. I don’t think there are 60 votes for a variant of the bill in the new Congress.
Here’s an interesting nugget from Green Recovery: “[t]he next president and lawmakers can pledge to repay the Treasury the cost of the green infrastructure recovery program from cap-and-trade auction revenue.” This is both a justification for starting with a green recovery plan (the $ will come back later) and a signal that the economic stimulus plan will come first. What better way to resolve a primary difference between the two Presidential candidates’ global warming plans (McCain wanted to distribute free pollution allowances to companies) than to remind lawmakers in 2010 that auctioning off allowances is necessary to recoup the downpayment on green recovery?
And while we’re at it, let’s not forget that the international community will be meeting in Copenhagen in December, 2009 to conclude negotiations on a global warming agreement. I foresee President Obama announcing that the United States will agree to binding greenhouse gas reductions and achieve its target through implementation of a comprehensive control scheme to be put in place after Copenhagen.
As for the plan itself, I offer the words I say at the outset of every class I have ever taught: “let’s get started.”
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If only Bush would resign so we could start this today. This economy is in crisis and the current administration is clueless.