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.