Even prior to its enactment, there has been much heated opposition to the American Recovery and Reinvestment Act of 2009, a.k.a. President Obama's economic stimulus plan. Opponents have tried to smear it as a bill laden with earmarks (which is not true) that wasted money on pointless projects. Opponents have also (correctly) pointed out that it is mostly paid with borrowed money (I'll come to that later). However, the Recovery Act has gone further than any prior piece of legislation in the past half century in revolutionizing antiquated areas of our economy. And it truly has kept the economy from the brink of depression.
Perhaps the keystone effort of the stimulus plan was its investment in a variety of projects that will make America more energy efficient and less dependent on carbon fuels (and the despotic regimes that supply us with them.) One of my key concerns in the 2008 Presidential Election was selecting a candidate who would make energy independence their priority. This act was a big step in the right direction for a green energy economy and the investments it makes in new technologies has the potential to create tens of millions of jobs.
The notion that private corporations are primarily interested in the short term (to satisfy shareholders) and do not invest nearly enough in research and development that would primarily provide benefits in the long run is a well-established economic idea. Some of the most important inventions of the past 100 years, that are the backbone of today's economy, have been supported by government-funded research. The cellular phone, computers, the Internet, and GPS are but a few of the most important inventions that have come about in large part due to research performed by U.S. taxpayer-funded scientists and engineers. Corporate America's fiercest foreign competition significantly benefits from foreign government-sponsored research and development. A good example of this is Airbus, which is a consortium of French, British, German, and Spanish aerospace companies, that have received very heavy investment from their respective governments. As a result of all of the R&D; and other investment European taxpayers made into Airbus, that company has now surpassed Boeing as the world's largest supplier of commercial airliners and has provided an incredible amount of high tech jobs to those countries. Perhaps the most important idea I learned in studying economics is the fact that more than anything else, new technology drives economic growth. Many if not most of the jobs lost during the Great Recession are not coming back. The way to get America back on its feet is to develop the technologies that will be the backbone of the future economy. We have plenty of tough competition. Europe, China, and India all invest a significant amount of money in research and development in support of their key industries. If America wants to lead in and reap the benefits of the future global economy, we must ensure we invest money into today's research that will be tomorrow's must-have technology. I cannot think of a better use of my tax dollars.
So in returning to the Recovery Act, a recent TIME Magazine article gave an impressive summary of what types of energy investments the Recovery Act is making.
The investments extend all along the food chain. A brave new world of electric cars powered by coal plants could be dirtier than the oil-soaked status quo, so the stimulus includes an unheard-of $3.4 billion for clean-coal projects aiming to sequester or reuse carbon. There are also lucrative loan guarantees for constructing the first American nuclear plants in three decades. And after the credit crunch froze financing for green energy, stimulus cash has fueled a comeback, putting the U.S. on track to exceed Obama's goal of doubling renewable power by 2012. The wind industry added a record 10,000 megawatts in 2009. The stimulus is also supporting the nation's largest photovoltaic solar plant, in Florida, and what will be the world's two largest solar thermal plants, in Arizona and California, plus thousands of solar installations on homes and buildings.
The stimulus is helping scores of manufacturers of wind turbines and solar products expand as well, but today's grid can only handle so much wind and solar. A key problem is connecting remote wind farms to population centers, so there are billions of dollars for new transmission lines. Then there is the need to find storage capacity for when it isn't windy or sunny outside. The current grid is like a phone system without voice mail, a just-in-time network where power is wasted if it doesn't reach a user the moment it's generated. That's why the Recovery Act is funding dozens of smart-grid approaches.
The Recovery Act's clean-energy push is designed not only to reduce our old economy dependence on fossil fuels that broil the planet, blacken the Gulf and strengthen foreign petro-thugs but also to avoid replacing it with a new economy that is just as dependent on foreign countries for technology and manufacturing. Last year, exactly two U.S. factories made advanced batteries for electric vehicles. The stimulus will create 30 new ones, expanding U.S. production capacity from 1% of the global market to 20%, supporting half a million plug-ins and hybrids. The idea is as old as land-grant colleges: to use tax dollars as an engine of innovation.
Recovery Act money was also used as follows:
- Tax cuts for 95% of working Americans (Federal taxes now are at the lowest rates they've been in over 50 years for middle class Americans, so please remind me what Tea Partiers are complaining about again?)
- Bailed out most state governments to avoid laying off hundreds of thousands of school teachers, police officers, fire fighters, and other state and local officials.
- Provided record amounts of unemployment benefits to record numbers of unemployed workers.
- Funded upgrades to roads, bridges (recall the Minneapolis I-35 bridge collapse), schools, airports (ever flown through JFK?), military bases (recall reports about the decrepit Fort Bragg barracks, among others).
- Computerized paper health care records system (to reduce redundant tests and errors caused by doctors with bad handwriting).
- Invested in public transportation, including high speed rails.
This act provided for a smart balance of near-term projects to help prevent the economy from suffering a complete and utter collapse while assisting those most vulnerable in the Great Recession (the unemployed) along with long-term investment that would lay the groundwork for our future economy. As Kristin Mayes, the Republican chair of Arizona's utility commission stated, "It will leverage a very different energy future... it really moves us toward a tipping point." As an older post pointed out, there are key economic indicators that indicate we have stepped back from the brink and are moving in the right direction.
Despite all of the carping by the Tea Party types about the federal deficit and its contribution from the Recovery Act, the non-partisan Congressional Budget Office has indicated that the Bush tax cuts are the single biggest contributor to the structural deficit. (Extending the Bush tax cuts would add $2.3 trillion to the 2018 debt. I really hate the term "Bush tax cut" because they really were not tax cuts, but tax deferrals as they were paid for with credit. Congress and former President Bush essentially extended America a loan that would need to be paid for by our children.) The next biggest contributor to the long-term deficit are the two current wars. While the Bush Administration initially estimated that the Iraq War's cost would be less than $100 billion, latest estimates are that it will be over $3 trillion. Has the Recovery Act contributed to the deficit? Of course it has. However, a concept that was taught to me by multiple economics professors at the not-at-all-liberal Brigham Young University was that truly the only time deficit spending by a government is warranted is in the case of a severe economic recession (which we were in), in order to stimulate the economy. These not-at-all-liberal BYU economics professors also supported a volume of economic data and research that indicates such stimulus spending helped the economy recover during the Great Depression.
So the next time a FOX News pundit laments how your tax dollars were completely wasted in the "stimulus act" and that it had no net affect, you'll know their argument is hogwash.