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Infrastructure and Carbon
INFRASTRUCTURE AND CARBON....Robert Reich says the best way to stimulate the economy is through massive spending on infrastructure:
So the crucial questions become (1) how much will the government have to spend to get the economy back on track? and (2) what sort of spending will have the biggest impact on jobs and incomes?The answer to the first question is "a lot."....The answer to the second question is mostly "infrastructure" — repairing roads and bridges, levees and ports; investing in light rail, electrical grids, new sources of energy, more energy conservation. Even conservative economists like Harvard's Martin Feldstein are calling for government to stimulate the economy through infrastructure spending. Infrastructure projects like these pack a double-whammy: they create lots of jobs, and they make the economy work better in the future.
This is actually something that conservatives should be relatively happy with. Entitlement programs never go away once they're enacted, but infrastructure projects do. Spending a trillion dollars on bridges and electrical grids may be a lot of money, but it's a well-defined lot of money that isn't likely to continue indefinitely. What's more, conservatives aren't actually opposed to bridges and electrical grids on principle, so from their perspective the money is also being pretty well spent. (Or at least, not too badly spent.) All in all, it should get a fair amount of support.
Here's another way to make it even better. One of the problems with running a big deficit is that we want it to be temporary. Infrastructure helps with the spending side of that, since it's not likely to go on forever. But how about on the revenue side?
A pretty good answer might be found in Barack Obama's energy plan, which includes a cap-and-trade proposal to reduce carbon emissions. One of the details of his plan is that it includes full auction of carbon permits, with the revenue from the auction going to the federal government. But that money won't start rolling in immediately. If a cap-and-trade plan were passed in 2009, it would probably take effect in 2012 or so, and the revenue stream would start small the next year and then grow every year after that. That's perfect timing. We don't want to raise taxes right now, but a program that guaranteed a growing revenue stream starting a few years from now would help convince investors that the current budget deficit won't last forever.
That's not the main reason to pass a cap-and-trade bill, of course. The main reason is to start reducing carbon emissions. But an infrastructure program that makes the country more productive in the future but automatically winds down, combined with a revenue program that automatically winds up in the out years, is a pretty fiscally conservative plan. That doesn't mean conservatives will support it, of course, but they should.
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...and of course, having a truly national electrical grid when cap and trade goes into effect would sync well. Though not all large emitters are energy producers, a true grid with cap'n'trade would facilitate each updating tech at a pace commensurate with their capital abilities without screwing up service for other industries.
i cannot imagine the republicans NOT filibustering a bill creating a cap and trade system.
that concept is simply outside the realm of acceptable thinking.
nice post, KD.
Dave the Republicans might not be successful with their filibuster. If memory serves John McCain and Joe Lieberman are sponsors of the most popular cap and trade bill. Breaking that filibuster might not be too hard.
Of course, Davis-Bacon will ensure that said infrastructure projects are as inefficiently built and overpriced as possible, but I guess you can't have everything...
David E. Bernstein, Davis-Bacon: Racist Pork
"In 1927, Rep. Robert Bacon (R-NY) --whose pet issue was protecting America's racial "homogeneity"--introduced what became the Davis-Bacon Act in 1927 after a contractor employed African-American workers from Alabama to build a Veteran's Bureau hospital in his district. The "neighboring community," Bacon reported, was "very upset," as were local unions.
"Bacon's bill was later co-sponsored by a fellow avowed racist, Sen. James Davis (R. Pa.), who sympathized with Bacon's complaints about the "outfit of negro laborers" who worked on the hospital. Davis-Bacon's legislative history is punctuated by repeated complaints from various congressmen about African-American construction workers stealing jobs from "white labor."
Somebody needs to explain to me why we can't repurpose defense spending on infrastructure. Isn't building a bridge and developing high speed rail just as good as building a base or designing the next generation of human slicer-dicer?
Agreed Chris, and it lends itself to rhetorical advantage. It isn't "new" spending but rather "repurposed" spending. That may help assuage more reasonable conservatives as Ron alluded to.
What's more, conservatives aren't actually opposed to bridges and electrical grids on principle, so from their perspective the money is also being pretty well spent...
Well spent? How much will go to unionized labor? That consistently votes the wrong way?
Oh, yeah, Bechtel and GE will do the planning and sell the turbines, and such, but far too much money is going to find its way into the pockets of the wrong people.
This is why things like the Paulson plan are way better. The money goes where the money belongs, i.e. where the money already is.
I suggest letting all the contracts, buying all the heavy equipment, doing all the planning and site work, and then stopping right there.
But an infrastructure program that makes the country more productive in the future but automatically winds down, combined with a revenue program that automatically winds up in the out years, is a pretty fiscally conservative plan. That doesn't mean conservatives will support it, of course, but they should.
Conservatives do support that plan. The radicals and reactionaries of the Republican Party are not in any sense conservatives and, of course, won't support such an effective plan.
Recommended reading: Al Gore's five point plan for (1) addressing the climate crisis, (2) regenerating the economy, and (3) liberating US foreign policy from the "need" to control the world's dwindling supplies of oil:
The Climate for Change
By Al Gore
The New York Times
Sunday 09 November 2008
The inspiring and transformative choice by the American people to elect Barack Obama as our 44th president lays the foundation for another fateful choice that he - and we - must make this January to begin an emergency rescue of human civilization from the imminent and rapidly growing threat posed by the climate crisis.
[...]
Here is the good news: the bold steps that are needed to solve the climate crisis are exactly the same steps that ought to be taken in order to solve the economic crisis and the energy security crisis.
[...]
Here's what we can do - now: we can make an immediate and large strategic investment to put people to work replacing 19th-century energy technologies that depend on dangerous and expensive carbon-based fuels with 21st-century technologies that use fuel that is free forever: the sun, the wind and the natural heat of the earth.
What follows is a five-part plan to repower America with a commitment to producing 100 percent of our electricity from carbon-free sources within 10 years. It is a plan that would simultaneously move us toward solutions to the climate crisis and the economic crisis - and create millions of new jobs that cannot be outsourced.
Obama should make this plan the central organizing principle of his administration.
Somebody needs to explain to me why we can't repurpose defense spending on infrastructure. Isn't building a bridge and developing high speed rail just as good as building a base or designing the next generation of human slicer-dicer?
Not only that, but investing in energy infrastructure is a form of defense spending. Few things will reshape the geo-political environment more than reducing our dependence on foreign oil. I like the fact that Obama repeatedly stresses this link.
Davis X. Machina: Bechtel and GE will do the planning and sell the turbines
Turbines? Oh, right, the ones that GE is going to make in China.
Marshall: "reducing dependance on foreign oil" is pretty unlikely to make much difference to defence policies.
Oil, gasoline, diesel, and to some extent natural gas are fungible commodities, and are shipped around the world. So even if the USA wasn't directly importing oil from the Middle East, the price paid at the pump in the USA would depend a great deal on what happens there.
Furthermore, America is not an autarchy when it comes to other goods. If Europe or China couldn't get oil and went into an energy depression, the effect on the American economy would be almost as bad as if the USA itself couldn't get oil.
The strategic importance of the Middle East only goes away if everybody stops using oil.
SecularAnimist, you kinda style my thunder. Nice post.
I'll say my piece anyway. We need to invest in frastructure for sure, but we shouldn't get too focused on repairing bridges and highways, if it takes our attention away from other things. Instead, we first need to establish a vision of how the global economy can work without petroluem ... 10, 20 30+ years in the future. Then we need to invest in an infrastructure that enables that vision. There's a decent chance that rail transport will play a larger role than tractor-trailers on highways. I'm not saying we don't need the highways at all, just that we need to settle on a vision of the future and work toward it.
Am I the only one who remembers the Republican reaction to Democratic proposals for infrastructural investment in the early 1990s as part of the all-but-forgotten Peace Dividend? How about the response of Republican Governor Pawlenty after the bridge fell in Minneapolis? Boehner and his merry crew are going to be sneering, "Investment!? More pork barrel give-aways from tax and spend liberals!!!" until the chickens come home to roost. Cap and trade doesn't have to be within hailing distance, there are some Republicans who can be counted on to react this way and we shouldn't forget it.