Posted September 24th 2010 at 12:45 pm by
in Collaborative Thesis Project, Perspectives on Current Events, Useful Downloads

The Stimulus and Green Investment

The road ahead will be long. Our climb will be steep. We may not get there in one year or even one term, but America – I have never been more hopeful than I am tonight that we will get there.

— President Obama, Inaugural Address, January 20, 2009

The Stimulus and Mid-Term Elections

As we enter the mid-term elections, just twenty-one months since Barack Obama took the podium for the first time as President of the United States, voters are stepping back to assess what is working and not working during this era of intense economic uncertainty.

Lately, the media has been all over the Stimulus. Did it work?  Did it not work? Was it the right medicine? Was it not enough of the right medicine? Or, was it the wrong medicine?

Critics of the Stimulus point to the ten percent national unemployment rate, while defenders say that we would be much worse off without it. Last week, the President and Vice President pointed to a few projects as evidence of the Stimulus’s impact.  Today, Vice President Biden released a full report that details over 100 ARRA-funded projects and programs that are creating jobs and growing the economy.

ARRA = American Recovery and Reinvestment Act

A week ago, the Atlantic Monthly published an article which explained in layman’s terms the design of the stimulus.  The author, Derek Thompson, broke the $787 billion stimulus down into three categories:

1. tax cuts – a  means for keeping more dollars in peoples pockets (~1/3 of funds)

2. “the big fill” – a means for filling existing state and federal budget shortfalls (~1/2 of funds)

3. “fun stuff”– a means for building new infrastructure and investing in green (~1/6 of funds)

Given the  dispersed nature of ARRA, it can be easy for us regular citizens to say that the Stimulus didn’t actually do anything.  The great majority of the funds went toward recovery – tax cuts and and propping up of existing programs (Medicaid, unemployment, Social Security, student financial aid, etc) – where it is almost impossible to see direct outcomes.  How does one comprehend the full benefit of filling thousands of fiscal holes all over the country?

So… now the “fun stuff” is getting all the attention.  Why?  Because we can point to fun stuff.  “Hooray for project X that created Y jobs!”  Or conversely, “Boo on project X that only created Y jobs!”

Yet, many projects under “fun stuff” are just getting off the ground.  This is where  the reinvestment part of ARRA comes into play, where government invests in future-focused programs that can potentially conjure things like: high-speed rail, digital medical records, and the green economy.

ARRA = America’s Largest Investment in Energy Efficiency

Source: treehugger.com

Under the category of “fun stuff,” ARRA allocated over $20 billion to building energy efficiency programs. This represents the largest ever federal investment in energy efficiency.  The surge in funds was meant to help jump-start the building retrofit market and the much anticipated green collar economy.  The large majority of this money was funneled to city and state governments through the Department of Energy or the Department of Housing and Urban Development.

How far will this single shot of funds take us?  How much carbon will we capture?  How many good green jobs will we create?  How many private dollars will we leverage?

Cities across the country are now launching and implementing pilot retrofit programs that aim to answer these questions.  With ARRA funds they intend to demonstrate the true costs and benefits of investing in energy efficiency.

ARRA funded City-Scale Retrofit Programs

Over the past year, CoLab worked with MIT alumnus, Benjamin Brandin, to help “leverage the stimulus” for low-income communities in Massachusetts and to better understand the opportunities and challenges in creating large-scale retrofit programs.  Working with the community partners and the Emerald Cities Collaborative, Ben wrote his 2010 masters thesis on re-envisioning a retrofit strategy for Oakland, California.

In order to further articulate and illustrate the lessons of his thesis, Ben worked with Colab to create a guide called, “City Scale Retrofits:  Learning from Portland and Oakland.”This guide explores how municipal agencies and neighborhood institutions can work together to build a robust, sustainable retrofit market that delivers on the promises of lower carbon emissions, energy cost savings, and job creation.

Here, we present two ARRA funded city-scale retrofit programs outlining the basic components of each program and how it deals with the issues of financial sustainability, scalability, and equity. We look at how decisions about program structure and process lead to different outcomes in terms of which buildings get retrofitted, how they are retrofitted, and by whom.

This guide is one of several products generated through the Collaborative Thesis Project.

 

Post by Amy Stitely, U.S. Green Hub Program Director at CoLab. Amy works with MIT Master in City Planning students on shaping their academic research to generate practical knowledge about how to build a more equitable economy.

2 responses to “The Stimulus and Green Investment”

  1. Uyen says:

    Hi Amy!

    Thanks for a very informative and thought-provoking post. The links were very helpful, too!

    I’ve also been thinking a lot about the stimulus and the mid-term elections, and then more generally about the current political climate we are operating in. One of the biggest concerns I’ve had is that due to the high amount of sound-bite debates, “spin,” and politically segregated news sources we are surrounded by today, it’s very hard for us to compromise and empathize with multiple perspectives at a time.

    For example, I think a good compromise analysis of the stimulus is: It helped to prevent a major economic catastrophe in America, and also helped to infuse a lot of much-needed resources into cash-strapped states and cash-strapped households (tax cuts, unemployment insurance, etc.). However, because the stimulus dsigners were so concerned with getting money out the door as quickly as possible, they created processes where most of the money went out through existing channels, agencies, and programs. Thus, for the programs that were running effectively and producing positive impacts, the new infusion helped to generate more value. However, for the programs that were not that effective before the stimulus, throwing good money in after bad helped to exacerbate some existing problems within the federal funding system. So, the conclusion is that the stimulus was/is a great idea and was very necessary. However, we need to take a serious look at how the money is currently being spent and whether additional accountability, strategic planning, and re-prioritizing need to occur in order to improve on the stimulus outcomes.

    Okay, that was what I think a reasonable analysis of the stimulus is, but I could imagine President Obama trying to explain that and having it come back to him in headlines such as these: “Obama Admits Stimulus Didn’t Work” or “Stimulus Means Bad Programs Are Here to Stay” or “Democrats Give Free Money to Incompetent Government Agencies.” So, if you’re President Obama trying to get your party re-elected into Congress, then you probably don’t want to have a candid discussion on the stimulus and actually point out things that should be improved.

    It’s like a Catch 22. We want our leaders to be open to new ideas, to learn from their mistakes, and to change and improve. However, the minute they admit weakness, people are all over them trying to bring them down instead of supporting them in the process of trying to change things for the better.

    So, in another tangentially-connected point, I wished that folks are taught in schools, in workplaces, and at civic events that there are more than two sides to every story and debate, and instead of opposing the other side all the time by any means necessary, we can try to think of common-interest solutions or new innovative ideas that can over-come the “black & white” paradigms of the past.

    For example, I remember being really upset during grade school when we wrote argumentative papers and the teacher insisted that we had to pick either one side, or the other (always just 2 sides), and then point out all the ways that our side is awesome and their side is horrible. Well, I remember asking “What if I agree with certain points from both of these perspectives and I think there’s a better compromise solution?” “No! You have to learn to build a convincing argument, and this is the only way to do it” was the typical teacher response. Well then, how do you expect a nation of people who are taught like this to somehow magically know how to compromise, consider multiple perspectives at the same time, and have discussions that are based on common goals and interests and not based on trying to prove your side is right by cutting the other side down?

    As you can tell, Uyen the Optimist is sliding into some angry cynicism territory, but don’t worry, I do see some light at the end of the tunnel! The light’s path is not so clear, and I kinda feel like we are often just meandering in the dark. However, like some of our CoLab friends have said (summarized), innovations tend to come from the periphery and from crisis moments that disrupt the false assumptions and auto-pilot tendencies of a complacent society. As much as I am feeling beat-down by a political system that is built on power-plays, deal-making, half-truths, spin, and grid-lock, I’m also really looking forward to seeing how we learn and grow from here.

    Thanks again for the great post. Uyen

  2. Amy,

    First of all, kudos to you for tackling this “hot potato” debate on whether the ARRA failed or succeeded.

    It is too early to evaluate the ARRA. Most of these funds were allocated through an already existing institutional bureaucracy that was not prepared to disburse funds in an expedite manner. In addition, energy efficiency grant descriptions specified long-term deadlines allowing for pilot implementation and evaluation.

    Furthermore, the ARRA was not only an economic strategy but also an audacious political one. Government officials, in particular mayors, perceived ARRA funds as means to succeed politically or to fail due to many risks associated with trying an innovative energy efficiency strategy that may not work and/or being accused of public fund mismanagement. At the end, these government officials most probably executed safe options, as opposed to innovative ones, that will eventually undermine the ARRA’s ultimate strategic goals.

    It would be great if the political landscape would allow for the federal and state governments to use the ARRA to try innovative ideas to retrofit the national infrastructure, taking in consideration that some of these ideas will inevitable failed. However, with government officials and programs being under constant public scrutiny and a polarized political landscape, it would be very difficult for the ARRA to fulfill its ultimate strategic goals.

    Finally, I have probably over generalized several of my statements above, so please let’s build upon some of these to keep this discussion going.

    Carlos