The Case for a Green Stimulus
By Mark Paul
The United States is in turmoil. Not only is a global pandemic rapidly spiraling out of control, but the country is also facing a series of interconnected crises, including an impending recession, a crisis of economic inequality, and a climate crisis. In isolation, each of these threatens to upend our world. But there is a feedback loop at play here too: The inequality crisis will exacerbate the pandemic and economic downturn. Together, these crises may kill and impoverish millions and bring the world to its knees.
After long denying the gravity of the situation, the Trump administration is now asking Congress for a $1 trillion rescue package. Initially, the administration chose to forefront regressive tax cuts coupled with bailouts for the oil, gas, casino, cruiseline, and airline industries. This simply wasn’t going to do. Sensing a backlash, the administration quickly pivoted away from tax cuts and toward providing $500 billion in cash payments directly to citizens. President Trump also signed legislation to provide $100 billion for temporary paid family and medical leave for some workers, free coronavirus testing for all, and an extension of unemployment insurance.
The administration may be appeasing some with their promise to deliver “Trump bucks”; however, the stimulus package the White House seeks still includes outrageous, no-strings-attached bailouts of industry. Deploying golden parachutes shows once more how little we have learned since 2008. Bringing empowered labor leaders into the negotiation room could ensure industries stay afloat while protecting workers over executives.
While recent measures passed by the House and supported by the White House are welcome stop-gap measures, they will do little to get the economy moving again once workers can return to the job—if their job still exists, that is. Unfortunately, the pandemic will take months, not weeks, to get under control, and will most certainly leave the economy in shambles. Millions of people will be unemployed at that point, their jobs having evaporated with the rapid collapse. Those on Capitol Hill are contemplating crisis packages in the hundreds of billions of dollars, with some upward of a trillion. But that will only stop the bleeding. To get the economy moving again, an additional $3–4 trillion stimulus will be needed. Ideally, the government would direct these funds toward our most pressing social need: addressing the climate crisis.
The first priority must be protecting public health as governments and healthcare workers try to get the pandemic under control. But there is no greater second priority than the climate crisis, which threatens our very civilization. Right now, the global community is on track to heat the planet by 3.5 degrees Celsius at the close of the century. This will spell social, economic, and ecological disaster. It’ll also exacerbate the spread of many infectious diseases. Thankfully, we have the means to decarbonize. If only we could also muster the political will.
The current economic crisis necessitates massive fiscal stimulus. And there is simply no better place to spend that money than on the climate crisis. By doing so, the government can put people back to work building the green economy we desperately need. Green investments have a number of benefits: they provide a socially useful outlet for investment and job creation; they mitigate greenhouse gas emissions, which are responsible for the current, rapidly evolving climate crisis; they help improve air and water quality, and will save tens of thousands of lives in the US per year; and lastly, they can bring long-term savings to consumers and businesses while improving people’s everyday lived experiences.
What should the government prioritize in the green stimulus?
There are dozens of great ideas to fund. To start, the government should retrofit all buildings in the United States. Improvements in energy efficiency, along with electrification, can decarbonize the building sector, currently responsible for 29 percent of greenhouse gas emissions. The government could start this process by retrofitting the nation’s schools and libraries, using its procurement power to further drive down the cost of fully electrifying the sector. The government should also launch a new program to decarbonize the residential buildings, providing up to $7,500 in subsidies, along with interest-free loans to homeowners and renters nationwide. Successful retrofit programs, such as Mass Save in Massachusetts, have demonstrated that these undertakings can be an engine for economic growth and job creation while saving consumers and businesses big time on energy bills.
Second, the government should drastically ramp up investment in green infrastructure and transportation. After all, transportation is the largest source of greenhouse gas emissions in the economy. Here, the government should focus on building out green public transportation, making it both free of fares and carbon in an effort to increase ridership, reduce regressive fees, and green the sector. Regarding infrastructure, the government could rapidly fund all backlogged programs from the Department of Transportation’s BUILD program, which include emissions reductions and climate-resiliency efforts.
Third, the government should pass the Growing Renewable Energy and Efficiency Now (GREEN) Act, which would extend or create tax credits for a range of green investments, including wind, solar, electric vehicles, heat pumps, and more. One important modification would be to provide cash grants upon purchase rather than tax credits to ensure all consumers can benefit from the program.
But tax credits aren’t enough. To channel cheap and stable credit into the green economy, Congress should authorize the creation of a green investment bank, modeled on Governor Jay Inslee’s plan. The creation of a $90 billion green bank would provide government-backed financing at near-zero rates, unleashing investments across the clean-energy sector.
To be sure, there are many other green programs the government should fund. And while a $3–4 trillion stimulus package may be enough to get the economy back on track, it’s still woefully insufficient to address the climate crisis. For that, we’ll need additional, permanent, debt-financed stimulus on the order of 2 percent of GDP. But these ideas provide some food for thought for Congress.
The crisis is sadly upon us. There’s no escaping it now. But we can plan. Proper planning can ensure the recovery is fast, equitable, and green.. Some might balk at the headline numbers outlined here. But the risk of underspending is immense, and the risk of overspending at a time like now simply pales in comparison.
Mark Paul is an assistant professor of economics and environmental studies at the New College of Florida, and a senior fellow at Data for Progress
Edited by Andrew Mangan, Senior Editor, Data for Progress