From the fall of 2008 through the winter of 2009, President Barack Obama’s transition team and administration made decisions that prevented another Great Depression. They also invested nearly $90 billion on “green” measures—including clean energy deployment, advanced research, and infrastructure—with major successes. But it is clear now that, as some progressive economists believed at the time, the overall stimulus (including green investment) should have been much larger. A larger stimulus would have created a faster jobs recovery, kept more people in their homes, and produced even deeper green transformations. And by meeting people’s immediate needs while making climate progress, it probably would have been more popular.
Now the economy is crashing again, as the lockdown in response to the COVID-19 pandemic has raised unemployment to unprecedented heights—likely above 20 percent, with over 40 million filings for unemployment since the crisis began. Disease is killing Black, brown, and Indigenous Americans in disproportionate numbers. And climate breakdown continues. We can learn from the successes and failures of the 2009 stimulus experience to make sure that in the years ahead, we make transformative and lasting investments to rebuild the economy, tackle unemployment, and take on climate emergency and social inequalities at the same time.
A decade ago, we saw that a green stimulus could deliver results. This time, with record unemployment and the United States’s first quarter gross domestic product contracting by nearly 5 percent, and the climate emergency more desperate than ever, it’s time to scale up. And it’s time to win the argument that far from being an expensive distraction from immediate health and economic needs, a green stimulus is the best available strategy for making helpful investments in people’s lives, investments that will restore full employment and improve the standard of living for low-income communities and communities of color.
The Sense in a Green Stimulus
The most logical response to the current crash is a massive green investment in workers and communities—offering relief from immediate harm, while rebuilding a more equal, climate-friendly economy. From German conservatives to South Korean progressives to G20 central bankers, political and economic leaders across the world are embracing the logic of a green stimulus. As the leading energy scholar Dan Kammen and I pointed out in The Guardian, “$1m invested in the oil and gas in the United States creates just five jobs, compared to 17 jobs per million dollars invested in energy-saving building retrofits, 22 jobs for mass transit, 13 for wind, and 14 for solar.”
In the United States, Kammen and I co-authored an open letter to Congress, alongside nine other social and climate policy experts, advocating a just, green stimulus; labor, community, and environmental groups have made similar calls, echoed by presidential candidate Joe Biden and congressional leaders like Representative Nanette Barragán (D-CA). After all, in the 2020s, it makes no more sense to rebuild the economy around fossil fuels and polluting industry than it did to recover from the Great Depression by ramping up the production of horse-drawn carriages and fur hats.
In the 2020s, it makes no more sense to rebuild the economy around fossil fuels and polluting industry than it did to recover from the Great Depression by ramping up the production of horse-drawn carriages and fur hats.
And as I will show below, starting green investments now—especially in infrastructure— is needed to ensure that we get the maximum short-term effect, as soon as it is safe for more people to get back to work. When the current administration’s economic advisors use delaying tactics and deploy a “wait-and-see” approach, they risk inflicting long-term economic damage. Instead of dithering, we should be building the organizational and financial runway for the recovery to take off once the pandemic is under control. Indeed, one of the challenges that the Obama administration faced in early 2009 was that, because of the Bush administration’s dithering, there was no easy way to immediately spend hundreds of billions of dollars on worthy projects.
But logic alone isn’t enough to make good things happen in American politics. It will be easier to undertake long-term, transformative economic changes if they also bring immediate short-term benefits, and not sacrifice the present for an uncertain future.
Already, some Republican leaders are planning to label any progressive investment proposal a “Green New Deal” as a way to attack it—despite the fact that there is majority Republican support for a swathe of green investment measures, that the Green New Deal is a more popular idea today than it was before the crisis, and that two-thirds of Americans want the government to spend more on relief. This broad public support will persist and even grow once it becomes clear that a green stimulus goes hand in hand with immediate relief measures.
These measures will mean an increase in cash payments and a suite of aggressive housing policies. In the context of this pandemic, we could also link the long-term vision of green stimulus with immediate, universal, and generous social care—free testing and treatment for the insured and uninsured alike. And perhaps most important, we would need a mix of direct and indirect hiring—at levels of investment far greater than we saw in 2009.
A recovery stimulus could address massive unemployment through new programs like a Climate Conservation Corps, a massive scale-up of home retrofits, and an Emergency Responder Corps that would do work like contact tracing to contain the pandemic. Then, unprecedented infrastructure investments could increasingly scale up economic activity and public and private sector employment (and further strengthen the constituency for an ongoing green stimulus in the process). Instead of worrying about restoring the recent balance between the public and private sectors, we should focus on bold public interventions to solve our problems: health calamity, economic misery, social inequalities, and the climate emergency.
Finally, to push back against calls for austerity, we might point out that a green stimulus could be partly funded by substantially raising taxes on the wealthy, just as the government did during the booming economic recovery from the Great Depression and World War II mobilization. The rich can afford it (and such taxes are highly popular). In just two months this spring, billionaires gained $434 billion in wealth.
How to Get There?
Much of what I propose should be achievable in the current political context. As I will show below, it could even be achieved locally by channeling transfers of federal funds to states and cities in strategic, green interventions. And whatever transpires during the summer and fall legislative trench wars, climate advocates and progressive economists should be making the case for green stimulus throughout and after the next election. We will need one or more federal green banks to backstop this kind of investment long-term, but we can make a lot of needed investments in the meantime.
Some object that it’s too soon to contemplate massive investments while most of the country remains locked down. But that misses essential lessons from 2009.
Some object that it’s too soon to contemplate massive investments while most of the country remains locked down. But that misses essential lessons from 2009. The first is bureaucratic delay. Take a major expansion of energy-efficient retrofits to low-income homes—an idea supported across the political spectrum. In 2009, government officials spent half a year calculating appropriate wage rates countrywide to comply with existing law. If the government authorized an infusion of funds into the Weatherization Assistance Program this May, homebound office workers could start all regulatory and organizational work right away. The government could make advance payments, community agencies could identify contractors and start hiring and training online, and workers would gain stability. As soon as it’s safe in terms of public health, the retrofits would begin en masse.
Another lesson is infrastructure’s timeline. As Reed Hundt reports in A Crisis Wasted, in 2009, incoming administration economists rejected large infrastructure outlays on the grounds that public agencies wouldn’t be able to spend the money quickly enough. (Administration economists like Larry Summers have changed their minds: Summers now argues that it’s impossible to overspend on infrastructure.) Again, the benefit of starting planning now is that projects will be shovel-ready once it’s safe to break ground. The second issue is that even if it takes years to spend what’s needed on green infrastructure, this would benefit the economy for years—slashing carbon pollution, fortifying against extreme weather, and relieving economic inequalities. Indeed, many green stimulus advocates have proposed an automatically renewing annual stimulus of 4 percent of GDP until the economy is fully decarbonized, and full employment restored. After all, the point isn’t just to deliver a corrective shock to a failing system, but to build a new, and better, one year after year.
Thinking Big Costs Less in the Long Run
We must also think more broadly about infrastructure. It’s about more than large offshore wind installations and high-speed rail lines. It’s also about housing, community-scale battery storage, bus routes, rooftop solar panels, and neighborhood roads. In São Paulo, where I conduct research, the city government painted hundreds of miles of dedicated bus lanes in 2014, with immediate reductions in commute time, carbon emissions, and local air pollution. Community-scale energy and resiliency improvements would likewise reduce the impact of annual climate disasters.
And grants, no-interest loans, and renewed tax credits for clean energy projects would likewise have an immediate impact, simply by keeping already planned projects going, and allowing projects now on the drawing board to break ground later this year or early in the next.
Currently stalled and new smaller-scale infrastructure spending can yield results fast. It could take years to create a brand-new bullet train between New York and Chicago; but it would only take months for transit agencies to ramp up purchases of electric buses, and for unionized U.S. automakers to expand their capacity for manufacturing electric fleets. It would only take weeks to implement appliance and auto rebate programs, require the recycling of old goods, and spur the purchase of new, efficient, and electric replacements, while lowering cooling bills for a summer that will likely break heat records. There is even broad public support for government-owned factories that would pay good wages and accelerate the production of green manufactures.
Ultimately, a nationwide retrofit surge would provide new careers for millions, while revolutionizing the country’s retrofit economy.
It would likewise just take weeks to begin implementation of the Green New Deal for Public Housing Act. Workers could immediately be hired to sanitize housing complexes, while office workers took the organizational and financial steps to put firms to work on capital repairs and building system replacements as soon as it’s safe. Analogous work could begin in schools, which are often also plagued with broken HVAC systems and toxic materials; right now, many are empty (and some are already undergoing green retrofits). Ultimately, a nationwide retrofit surge would provide new careers for millions, while revolutionizing the country’s retrofit economy, along European lines.
Everyone’s Already On Board
Recent polling I led with Data for Progress showed that most of the concrete green investments for which we surveyed received majority bipartisan support. And even if the federal government does not immediately make these investments, but only makes major transfers to smaller jurisdictions, those states and localities could prioritize job-rich green projects.
Lower jurisdictions could also prioritize the repair of broken transit infrastructure (an efficient job creator) and clear backlogs of unfunded, shovel-ready projects. Transit agencies could use federal funds to further decarbonize its energy sources, accelerate the transition to electric buses, increase service and coverage, and pay for constant, thorough sanitation of vehicles and stations to give riders confidence in the system’s safety as the economy re-opens. Municipal school boards could accelerate the repair, retrofitting, and improved maintenance of their schools, many of which are currently empty. (In some jurisdictions, such retrofits are already happening.) Local agencies could begin to retrofit public housing, low-income homes, and schools; increase the spread of rooftop solar energy; support family famers; fix crumbling roads; and speed the electrification of buildings and recovery of local, advanced appliance manufacture.
If we spend big enough, and target our investments well enough, we could ensure that in years to come, every American could point to ways that the green stimulus helped rebuild the economy after a terrifying crash. Green investment is no abstraction or luxury, but a necessary boost for workers and communities, attacking carbon emissions and inequalities in the same places, at the same time.