Sunday, November 2, 2008

Green Stimulus Part 1: Rewarding Efficiency

A government stimulus package is a valuable opportunity to make important infrastructure changes. Well before the current crisis hit, Dean Baker predicted a recession and championed the idea of a Green stimulus package to help offset the bursting of the housing bubble. His logic was simple, Federal money should be given in exchange for greenhouse gas emission reductions.

Amongst his suggestions for a Green stimulus package: Give tax credits for people to install more insulation in their homes, solar panels or other improvements that will reduce energy use. This would have the added benefit of employing construction workers, many of whom are now unemployed. Give people a powerful incentive to use mass transit by giving transit agencies money to reduce fares. Pay by the mile auto insurance would reduce greenhouse gas emissions in the auto sector by giving people incentive to drive less. Support the pay by the mile auto insurance by giving a rebate for pay by the mile insurance policies.

In a more recent article for Truthout, Dean Baker encourages energy efficiency, through a 30 percent or 40 percent tax credit for making energy-conserving improvements to homes or businesses. He also understands that we should be thinking about the long-term. "Specifically, we should find forms of stimuli that can get the economy on a more energy-efficient path. This will mean more efficient power plants and transmission lines, increased used of trains and mass transit, and, of course, promoting alternative energy sources. The transformation needed to limit the damage from global warming will take decades and certainly goes well beyond the course of a stimulus package. But a good stimulus package will not only provide a temporary boost to the economy, it can also help set us on this course toward an energy-efficient economy."

This difficult time is also a beckoning opportunity to create a new economy that will enhance our competitiveness. A Green stimulus will animate the economy and create jobs while preparing for the future by laying the infrastructure of an energy-efficient economy.

Next: Green Stimulus Part 2: Basic Elements

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