On Wednesday, July 14th, Vice President Joe Biden and Council of Economic Advisors (CEA) Chair Christina Romer released CEA’s new fourth quarterly report on the economic and job creation impact of the American Recovery and Reinvestment Act (ARRA). The report finds that the loan guarantees, grants, and clean energy investments made under the Recovery Act — matched by billions of dollars in private investment – are successfully creating jobs today and growing clean energy industries of tomorrow. CAP’s Susan Lyon has the story.
Vice President Joe Biden credited the Recovery Act for stimulating jobs and economic growth far beyond what it would have been otherwise:
We knew if we didn’t act and we didn’t act boldly, the best estimates were telling us that we would lose another 4 to 5 million jobs immediate — in that year. Well, we did act, and I stand before you today to say to you that”¦the economic initiatives we took, they are working.
The report, which uses two economic models to assess the overall economic impact and job growth from ARRA, finds first that the actual outlay of recovery funds increased by about 50 percent between the first and second quarters of 2010. This stimulus led to both GDP and job growth benefits. As of the second quarter of 2010, CEA estimates that in total ARRA has saved and created between 2.5 and 3.6 million jobs. CEA also finds that ARRA has
Raised the level of GDP as of the second quarter of 2010, relative to what it otherwise would have been, by between 2.7 and 3.2 percent.
Clean energy investments are an important element of ARRA, and provide over $90 billion in “government investment and tax incentives to lay the foundation for the clean energy economy of the future,” much of which is in these key areas:
$29 billion for Energy Efficiency, including $5 billion to pay for energy efficiency retrofits in low-income homes;
$21 billion for Renewable Generation, such as the installation of wind turbines and solar panels;
$10 billion for Grid Modernization to develop the so-called “smart grid” that will involve sophisticated electric meters, high-tech electricity distribution and transmission grid censors, and energy storage;
$6 billion to support domestic manufacturing of advanced batteries and other components of Advanced Vehicles and Fuels Technologies;
$18 billion for Traditional Transit and High-Speed Rail;
$3 billion to fund crucial research, development, and demonstration of Carbon Capture and Sequestration technologies;
$3 billion for Green Innovation and Job Training to invest in the science, technology, and workforce needed for a clean energy economy;
about $2 billion in Clean Energy Equipment Manufacturing tax credits.
CEA estimates that 827,000 public investment jobs in the above categories will have been created from these areas by 2012; this is a conservative figure as it does not include related clean energy jobs in human capital, environmental cleanup and preservation, or clean energy transportation and efficient building infrastructure. The actual number of direct and indirect clean energy jobs will be much higher (see Table 12 of the report).
This chart shows the estimated jobs creation impact of ARRA relative to the “no-stimulus baseline:”
|Estimates of Jobs Saved or Created by the ARRA of 2009 at Different Times (Table 1)|
|As of the 4th Quarter of||Estimated Jobs|
Though ARRA is succeeding in job preservation, job creation, and leveraging of private capital, ARRA was a two year federal commitment with funds that will run out by 2012. As CAP has previously noted, ARRA made important strategic investments in clean energy, but this funding will soon expire, just as it is poised for major impact. If experts are indeed right that we may be at risk of an extended jobless recovery, key pieces of ARRAmust be extended to provide new industries the certainty they need to revitalize our economy and climb out of the current recession.
Only comprehensive clean energy and climate legislation can help overcome this ARRA “funding cliff.” It must do this by putting a price on carbon to level the cost between old, cheaper, dirty energy and newer, cleaner more expensive technologies. The American Recovery and Reinvestment Act is capturing the energy opportunity as intended, setting the foundation for our clean energy revolution – but we still have a long way to go.
ARRA launched critical steps to create jobs and reduce dangerous global warming pollution. Now, Congress must act to craft a better energy bill using the most effective clean energy proposals introduced in the Senate.