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Late last week, the U.S. House of Representatives released its economic stimulus bill. Democratic and Republican staffers on Capital Hill tell me that the proposal was developed by the incoming Obama team with top Democratic members of the House. The Senate is expected to issue a similar bill shortly. You can read about the House bill at these links:
Federal Spending Provisions
• Summary
• Bill
• Report
Tax Provisions
• General Summary
• Tax Summary
• Bill
Despite the fact that the stimulus plan was prepared with little consultation with the GOP or the rank and file of both parties, I give the bill's creators high marks for moving rapidly and for crafting a sensible approach to injecting capital into the economy. The big question is whether the legislation delivers enough of a jolt.
The Basics: The House stimulus legislation offers $275 billion in tax cuts and $550 billion in additional federal spending, for a total of $825 billion. The tax cuts will need approval by the Congressional tax committees (the House Ways and Means Committee and the Senate Finance Committee), while the spending measures will be considered by the House and Senate Appropriations Committees. The bills, as amended by these committees, will then be considered by the full House and Senate. If passed, the bills will go to a Conference Committee comprised of House and Senate members who will resolve differences between the versions passed by the two chambers, and then back to the House and Senate floors for a final vote. The rough timetable contemplated in Washington is to have a stimulus package passed by mid-February.
The House stimulus package is crafted sensibly in that most of the expenditures are directed to tax cuts and the provision of additional funding for previously authorized programs. Thus, cuts and new spending can take effect without the need to establish new initiatives, which facilitates a rapid flow of federal funds to the economy. All funds would be disbursed in 120 days or less, earmarks are excluded from funding, and solid public disclosure, audit and whistleblower protections are incorporated in the bill.
The question: Is $825 billion enough? The Obama economic team projects that the bill would create an estimated 3.7 million jobs, but that's less than the 4.3 million jobs that were lost from mid-2007 through 2008, and doesn't even begin to address potential additional job losses. In light of the magnitude of the expected economic slowdown, I think it prudent to include a cushion of additional federal spending-better that than to see the economy hurtle lower.
The financial incentives provided under the House stimulus bill target a number of green activities, most of which were identified in my January 6 column:
• $4 billion in new energy conservation and tax credit bonds for renewable energy would be issued.
• Tax incentives for renewable energy, energy related research and development, home energy efficiency improvements and alternative fuel pumps would be extended. These incentives are estimated to cost $37 billion over 10 years.
In addition, $27 billion in bonding authority for local school systems and state and municipal projects can support green initiatives if recipients are required to give preference to activities which use green design and construction technologies.
The Obama team and House Democrats have delivered the promise to include green building in the stimulus package and numerous other components can be made greener by requiring stimulus recipients to give preference to green design, construction, land and water management approaches.
Here's my rough tally of what's included in the House stimulus package:
• $20 billion in funding for demonstration programs and basic research, much of which relates to energy efficiency and environment. Energy efficiency research is split between alternative fuels, carbon capture and sequestration and nuclear and fusion programs.
• $11 billion for modernizing the nation's power grid.
• $14.9 billion for energy efficiency and conservation programs at the state and local levels and for loan guarantees for renewable energy projects
• $16 billion for the weatherization of private homes occupied by lower-income Americans, federally subsidized housing and public housing. An additional $300 million would provide rebates for the purchase of energy efficient home appliances, a provision that might warrant additional funding by Congress.
• $25 billion is targeted for renovations to federally owned buildings and facilities, including $6 billion for energy retrofits for buildings managed by the General Services Administration. The bulk of this funding will likely be deployed in accordance with green building principles, as most federal agencies have adopted green building design and construction protocols.
• $20.8 billion for environmental cleanups, wastewater treatment, watershed reclamation and national park and forest restoration.
• $13.3 billion for green vehicle and mass transit programs, including rail and light rail.
These programs total approximately $121 billion. Additional programs that can -- and should -- be greened by requiring that preference be given to sustainable design and construction approaches and to green technologies include $35.5 billion in state and local construction and community development support and $3.3 billion for the modernization of information technology. One more area in which to ask for at least a little greening: $30 billion in highway restoration funds. Recycled materials can be used in highway construction and surfacing, and highway beautification programs can be expanded. These latter areas add $69 billion in proposed federal expenditures that can be at least partially greened, for a grand total of $190 billion.
Not a bad first step toward a green economy. Advice to the policymakers? Require that the recipients of stimulus monies give preference to environmentally friendly approaches.
Leanne Tobias is founder and principal of Malachite LLC, an advisory firm that specializes in the development, leasing, management, financing and certification of sustainable or green real estate on a global basis. Write to Leanne about your thoughts on jumpstarting the economy at greenstimulus@malachitellc.com. She'll share the best ideas in future posts.
Accountability
Accountability is the big buzzword at the moment. Obama says we need to be accountable.
However, if you noticed recent events with the bailout, and continued bailouts promised by the Obama administration - the only people we've seen held accountable so far is the taxpayers - to pay for the bailout.
Have we held any corporate executives accountable (except Madoff)? - No. Has Barney Frank or Chris Dodd, who was supposed to act as oversight of the banking, lending and financial industry held accountable? - No.
Has Chairman Bernanke of the Federal Reserve been held accountable? - No.
How about former Secretary Paulson - who helped lobby to repeal that Glass-Steagall banking act that led to this mess? - No!
So if we were really holding people accountable we'd abolish the Federal Reserve and fire Bernanke, we'd remove Dodd and Frank from their chairman posts, we'd stop the bailouts and we'd hold a congressional investigation into Paulson's decisions before and during his tenure in Treasury.
So far Obama has dropped the ball on accountability. I believe what he says when I see the taxpayers left off the hook for this economic boondoogle and allow the pain and suffering to fall directly on the shoulders of those who should be blamed and suffer for this.
Accountability
I agree with some of the comments made by the first person who posted a comment. I agree that the green industry needs customers, but the reality is "going green" is perceived in the business community as expensive and quite frankly you have many managers and decision makers that don't see the importance of being sustainable. Many are not long-term thinkers and will not commit to doing anything as it relates to "going green" if the efforts does not produce immediate bottom-line results. I definitely think our government (like other governments around the world)need to spearhead efforts in moving our businesses towards sustainability. If not, we will find ourselves 20 years from now doing the same thing and wlagging behind other nations. The key to this stimulus is ACCOUNTABILITY. We have to hold the recipients accountable for the tax incentives and money they receive and have a watchdog in place to ensure we reap REAL results from these efforts. I totally disagree with the first comment on redirecting these funds to consultants...we've seen that happen before in the healthcare industry and it was total waste. Many consultants charged outrageous rates and produced nothing.
why is a bailout good?
The above article serves the premise that we need an 825B bailout. Nothing could be further from the truth.
The Federal Government has already spent $300B last year with stimulus checks, and spend another 425B to shore up the balance sheets of washington insider financial institutions.
If anyone cares to notice, the above bailouts didn't work. Nor will the 825B. That's because the U. S. economy is winding down a giant asset/credit bubble and nothing can stop those forces - no more than the Federal Government could outlaw tides rising and falling on our sea shores.
Is a bailout with green features good? I think not. Most bailouts usually end up with highly inefficient capital expenditure. This gets renewable energy off to a bad start.
What the green/sustainable industry really needs is customers. If the Federal Government simply opted to buy more renewable energy, hire sustainability consultants, etc, - THAT would help the industry!
The industry needs customers with cash - not capital injections. If customers are there - the capital will come. And the capital will be spend on those companies that use capital most wisely - by solving customers problems efficiently and effectively!