It’s Getting Hot In Here

The San Francisco Chronicle ran an op-ed by me today calling on Obama to triple the size of his clean energy investment plan and deficit spend on long-term clean energy investments:

Deficit spend to remake the U.S. economy

Teryn Norris

San Francisco Chronicle, Tuesday, December 2, 2008

A group of more than 300 economists led by three Nobel laureates submitted a letter last month urging Congress to deficit spend at least $300 billion to $400 billion per year to jump start the economy and avoid the possibility of a depression. Nobel Laureate Paul Krugman is calling for $600 billion per year, and similar numbers are being discussed in Congress.

But rebuilding a strong economy will require more than short-term stimulus. One important but oft-neglected lesson from this crisis is that smart, long-term investments — as opposed to short-term speculation and consumption — are essential for creating new and lasting prosperity.

None of these investments is more critical than those for clean energy, which can simultaneously address the economic, energy dependency and climate crises. That’s why President-elect Barack Obama recently told Time magazine that he would make clean energy investment his greatest priority as president. And it’s why his first national radio address on Nov. 15 reiterated the call for a $150 billion Apollo-like energy project:

“Even as we dig ourselves out of this recession, we must also recognize that out of this economic crisis comes an opportunity to create new jobs, strengthen our middle class, and keep our economy competitive in the 21st century. That starts with the kinds of long-term investments that we’ve neglected for too long … It means investing $150 billion to build an American green energy economy …”

“Green stimulus” — efficiency retrofits and “green” job creation — is important, but it is only one part of necessarily large-scale investments in research, development, education, demonstration and direct government procurement and deployment of clean energy technology and infrastructure. This will require federal investments on the scale of $500 billion over 10 years — more than three times the size of Obama’s current plan.

Few people have articulated this project better than Al Gore. In a recent New York Times op-ed published on the first Sunday after Obama’s election, Gore made a major shift from his long-standing focus on regulating carbon pollution to urging direct government investments in clean energy. His top three recommended investments were in renewable energy construction, a unified national smart electric grid (a $400 billion price tag alone), and plug-in hybrid technology.

How should these long-term investments be funded? In the immediate future, the government should run deficits. Opponents of deficit spending will argue that clean energy investment should be funded by a price on carbon pollution. But given the extreme political difficulty of raising energy prices during a recession — and given the danger of increasing taxes during a recession — we cannot make these investments dependent on a carbon price.

Fortunately, this moment offers a historic opportunity for the government to borrow and invest on favorable terms. With interest rates on Treasury bills at all-time lows, the federal government can essentially borrow foreign money for free. And due to the recession, commodities and labor are relatively cheap. Facing even less favorable conditions than the United States, the Chinese government has seized upon the moment, recently announcing it would spend 7 percent of its gross domestic product each year — $586 billion — building new subways, airports and train lines, and rebuilding communities hurt by last May’s earthquake. Beijing’s clarity and swift action are currently unmatched in Washington.

There’s not a moment to waste. Many will continue to rail against deficit spending. But there’s too much work to be done. Too many jobs to create. Too much infrastructure to rebuild. Too many clean power plants to erect. Too much research to perform. Too many students to educate.

On Nov. 4, the American people gave Obama and the new Congress a mandate for bold action. Now is their opportunity — and responsibility — to go beyond short-term economic stimulus and pollution regulation with a long-term national investment project to rebuild and revitalize the American economy.