Monday, January 12, 2009

Stimulate This

Congress and the President (elect) are now debating how best to work out a stimulus package to pull us out of of the recession we have been in for more than 12 months. And while we only have 535 Senators and Representatives (give or take) we have thousands of ideas how best to do this. Obama has promised for more than a year tax breaks for families making under $250k and for employers who hire American workers instead of shipping jobs overseas. Every member of Congress wants a tax break or direct hand out for their own local pet project (that they want their name attached to in stone after it's completed). And there are even some who think we should lock up the money and hope it's still worth something after our economy has collapsed.

In times like we are now facing, though, only the government has the capability of spending unfortunately. Even with trillions of dollars in bail outs, buy outs, and other promises, the lending institutions that could empower the private sector to drive the recovery are still hording their money, ensuring no improvements can come from there. Private citizens are (for the first time in decades) saving more than they are spending and, while wise for a population who's personal savings rate has been in the low $1,000s, this adds more to the stranglehold on our financial system. The Federal Reserve, even as lender of last resort, simply can't put as much on its balance sheet as would be necessary. This leaves only the federal government itself as the spender of last resort and the best chance of breaking through the deadlock.

But while the government does need to increase spending, it must do so carefully. Spending a couple million on a Woodstock Museum or $400 million on a bridge to nowhere will only serve to tie up that money and keep it from its full potential. We need to make sure the money we the people spend will work not just once for a handful of local jobs, but work repeatedly. We must invest in things that will serve us long term, as the interstate system has since it was started in the 1950s. We need to expand broadband access, improve our electrical grid to handle the new requirements that will be put on it, and create a true green economy that will last us for centuries longer than fossil fuels could possibly hope to.

To this end, governors and mayors from across the country have sent proposals to Obama's transition team. Many of these "shovel ready" projects will strengthen communities and create jobs as is needed, but many others are aptly titled pork. The President and VP (elect) have made it very clear there should be none of the later in the bill, but they have a 535 member body that is very accustomed to bacon and will put up a fight. Obama and Biden must hold the line because otherwise it will be even harder next time.

Some proposals though may just need tweaking to turn from pork to a true improvement. Seattle is proposing projects worth as much as $7 million (for one solar installation). This may seem ludicrous when you consider that some years there are more rainy days in Seattle than sunny days. But, while areas like Nevada may be able to make thousands of times more solar megawatt hours than Washington, it is unable, with the current electrical grid, to efficiently send that electricity up north. Meanwhile, countries like Germany, which gets a comprable amount of sunlight annually, is the leader of solar power in all Europe. Now, the plan as proposed would only power the (publicly owned) Qwest exhibition center and as planned would only reduce energy costs 14-16%. I don't know what the current energy costs of this building are, but that doesn't sound like much bang for the buck. It is possible, though, if Seattle uses lessons learned in Germany, to apply such funds to a solar network that may generate much better results and make that $7 million really work.

We are very lucky to have a President (can I drop the "elect" yet? PLEASE!!!) who values a high level of skill and expertise over dogmatic loyalty. This quality will hopefully guide policy and spend our money much more wisely than the failure of Bush and Paulson have.

3 comments:

Dan Mosqueda said...

There's no doubt, we both agree to solid infrastructure as the responsibility of the government. While I'm not a "Big Government" or big spending kind of guy, there are some areas that need attention. I'd say Lithium Ion battery production, resume meaningful tax credits on hybrids, with a focus on US-made hybrids (what's the point in encouraging sending consumer dollars out the nation?), and manufacturing technology that would allow the US to to efficiently produce goods here and work on that balance of trade thing.

Good post.

Dan Mosqueda said...

Oh, and since we're not going to stop fighting the Global War On Terror, take a look at my post on areas in Iraq, and pretty soon Afghanistan where the billions being spent over there could be coming back here. To me, it's a no-brainer, but I don't think most Americans have any idea about how much money we send to other nations when we're suffering pretty badly here.

Link: http://dminiraq.blogspot.com/2008/12/economic-stimulus-in-iraq.html

no_slappz said...
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