Paul Krugman was my favorite New York Times columnist even before he won the Nobel Memorial Prize in Economics this week. His column on Friday lined right up with my current obsession: federal stimulus spending, quick, lots of it. He writes: “Right now, increased government spending is just what the doctor ordered, and concerns about the budget deficit should be put on hold.”
We’re plunging into what is looking like the worst recession in decades—precisely the circumstances in which federal governments should spend more than they take in, borrowing the extra. Yes, it’s a horrible time to accumulate additional debt in the United States, given our imponderably enormous national debt. But the alternative to additional debt is colossally worse: a depression.
So the question is, How do we invest a lot of federal money quickly to stimulate the economy? How do we do it without wasting the money and, in fact, in ways that will generate enough shared prosperity to repay the new debt in time?
Find this article interesting? Support more research like this with a gift!
Here are Krugman’s suggestions:
“[The federal government] can provide extended benefits to the unemployed, which will both help distressed families cope and put money in the hands of people likely to spend it. It can provide emergency aid to state and local governments, so that they aren’t forced into steep spending cuts that both degrade public services and destroy jobs. It can buy up mortgages . . . and restructure the terms to help families stay in their homes.
“And this is also a good time to engage in some serious infrastructure spending, which the country badly needs in any case. The usual argument against public works as economic stimulus is that they take too long: by the time you get around to repairing that bridge and upgrading that rail line, the slump is over and the stimulus isn’t needed. Well, that argument has no force now, since the chances that this slump will be over anytime soon are virtually nil. So let’s get those projects rolling.”
Last week, the New York Times reported that the majority in Congress is thinking along the same lines. We’ll write another time about infrastructure that generates the prosperity to pay for itself. (Bikeways, anyone?) And we’ll mention some grand plans that others have offered.
For starters, though, let’s fund programs we’ve already created. Here are two ideas from Sightline’s friends at Redefining Progress:
- In December 2007, the Energy Independence and Security Act become US law. It authorized a national Green Jobs program to train 35,000 workers a year for clean-energy jobs. It also authorized a set of innovative Energy Efficiency Block Grants to the states. But Congress never funded these programs. Let’s double-down on both the training fast, while unemployment is up, and on the block grants so states can harness their creativity to retrofitting buildings: a win for energy independence, economic stimulus, and workforce development. Existing training and energy-efficiency institutions could absorb several billion dollars of funding fast and well.
- Let’s send block grants to states for their own green-collar jobs programs. Early this year, for example, Washington established a model program for training low-skill workers for green-collar trades, but the deflating economy has left budget writers in Olympia with no way to fund the program.
What are your ideas for a clean-energy stimulus package?