Two for the Price of One:
Done Right, Stimulus Dollars Would Create Jobs and Save Energy Simultaneously
The House first voted down a substitute stimulus package consisting entirely of still further tax cuts for individuals and businesses. Not a single Republican then voted for the bill that ultimately passed because it comprised only one-third tax cuts and two-thirds spending.
Indirect as they are, economists disagree on the extent to which tax cuts create jobs. One thing is certain: tax cuts do nothing for the millions who have lost their jobs and have no income. Given that the economic crisis facing President Obama is the result of a failure of leadership at the national government, on Wall Street and in corporate America, shouldn’t the economic stimulus package of the new administration address the extreme income inequity in our society by creating new jobs, reducing the cost of living for working class Americans and reducing our dependency on fossil fuels?
The hardest hit by the economic tsunami are working class families and the poor. And during this time of year, families in economic
trouble are also faced with rising heating oil or natural gas prices, forcing them to cut expenditures on food or medical care, especially in the Midwest and Northeast. While there are government subsidies to reduce the cost of heating oil for low income families, they are inadequate.
If lower middle class Americans own cars, they are usually older gas guzzlers which they cannot afford to replace. Since they have to commute further to their places of work, they are disproportionately affected by rising fuel prices or increasing fees for public transit, if available.
Since the President not only wants to stimulate the economy but also put Americans back to work and reduce
our dependence on fossil fuels, what matters most are the portions of the bill that will make middle and lower middle class homes more energy efficient. Not only would they eliminate the cost of heating subsidies, but they would provide jobs for semi-skilled workers employed by local contractors to install insulation. Installing attic or wall insulation, or retrofitting older homes with dual-glaze windows is not that complicated or expensive, and combined with automatic thermostats, will reduce fuel consumption and costs. Some states and public utilities already offer tax credits or rebates for installing more efficient appliances or insulation. A federal program would make these available to all Americans.
Another cost-effective energy saver would be the replacement of 24/7 tank water heaters with on-demand, tankless models. Once properly insulated, and equipped with a more efficient hot water system, the consumption of heating fuel would decline not just for one year, but for the lifetime of the home, and would add value to the property. The benefits are also year-around since a well insulated house also stays cool on hot summer days and reduces the need for air conditioning. Homeowners can also install a radiant barrier, made out of perforated aluminum fabric, over the insulation in an attic, which reflects the heat back through the roof so that it does not enter the attic or living space. Ceiling fans, by circulating the air in a living area, also reduce the need for air conditioning.
Although installing solar panels to generate electricity and heat water would provide long term benefits to owners and the society alike, the cost of panels and their installation is often beyond the income of working class families, and of course, they are more efficient in sunnier areas of the country. While subsidizing the development of more efficient solar and wind technology should be part of any economic stimulus and long term energy plan, the impact on energy costs will not be as immediate and the subsidies will probably go to large companies, not local installers or workers.
Since much of the new energy technology is coming from small startups, however, a federal program to stimulate new technology should recognize and reward their contributions to improving energy efficiency. If we do not foster the development of renewable energy technology at home, we will end up importing it from Europe or Asia.
While state and local governments should continue to subsidize solar and wind-powered energy systems for businesses and residences, and encourage the development of more fuel efficient cars, they could achieve more immediate economic, social and environmental benefits from making American homes more energy efficient. This also includes encouraging the purchase of more efficient appliances to further reduce home energy consumption, either through tax credits, or providing incentives to trade in old, inefficient appliances, or to replace old heating systems.
Likewise, the tax credit for purchasing hybrids is a good idea, but the cost of most, including Toyota’s Prius, at $22,000 for a pre-owned Prius, is a substantial investment and beyond the disposal income of most working-class families. Meanwhile, the value of their old gas guzzlers depreciates while they have to spend a disproportionate amount of their monthly income to fuel their gas tanks. Why not subsidize or provide a credit for any vehicle which gets over 30 miles to the gallon, even if entirely gas fueled, while providing incentives to take older and unsafe cars off the road?
Americans of all social classes voted for President Obama, but if he lives up to the promises of change and hope, his economic stimulus package should include proven methods of creating new jobs for working Americans, which studies show, spend most of their income in their communities, helping to stimulate local businesses. On the other hand, bailouts to financial institutions which behaved irresponsibly, or to large manufacturers which made poor decisions or moved their manufacturing offshore, will not address the problem of putting Americans back to work and stimulating local economies. Besides the decline in confidence and lack of capital, part of the economic crisis is also the result of an alarming income disparity in America, which any comprehensive stimulus package should address.
The upgrading of our infrastructure is long overdue, and while better bridges, safer freeways, an improved electric grid and more extensive public transit are desperately needed, they will take time to design and complete, whereas improving the energy efficiency of homes, schools and public buildings by installing insulation or better heating systems could be jump-started immediately, thereby creating thousands of new jobs and businesses, reducing energy costs and making us less dependent on fossil fuels, while lowering carbon emissions.
- Tony White