The Economy and the Environment: Can We Fix Both at the Same Time?

By Courtney Clayton

Though the economy fell very sharply in the fourth quarter, there is another concern for policy-makers on Capitol Hill: green technology. President-elect Obama and his economic team have indicated that his administration’s economic stimulus package will likely cost anywhere from $675 billion to $775 billion or more. This package will target different aspects of the economy, but job creation will certainly be a salient component of the package, given that the national unemployment rate is well over 6%, and in California, it is over 8%. And how will Sen. Obama create 2.5 million jobs? By building infrastructure, specifically transportation systems such as highways. But this part of his stimulus plan has already begun to create cleavages amongst Democrats. Ever since Al Gore published his “green” ideas, the Democratic party has substantiated their role as politicians who will cater to environmental-friendly services and manufacturers.

Within the Democratic party, different priorities have been set by various politicians, either putting job creation, public education, medicine, illegal immigration, state and/or federal budgets, or energy as the most crucial issue to deal with. Mr. Obama’s campaign ran on the slogan of change, but also another type of change: climate change. Climate change is definitely an issue Americans and politicians alike want to see addressed head on. Sen. Obama believes this debatable issue to be a substantial global threat and intends to mitigate the effects of climate change by implementing major changes throughout the energy sector such as a cap and trade program and a federal gas mileage standard. Obama has set an ambitious goal of bringing carbon emissions down 80% by 2050. He hopes to have 1 million energy efficient cars on the road with 150 MPG by 2012. He will likely face significant barriers. Coal still provides a large amount of the United State’s energy, and if Sen. Obama plans to make laws that will greatly reduce greenhouse gas emissions, he will certainly need to focus on funding for green energy. Within his energy plan on, he has stated that he will invest $150 billion in green energy over the next 10 years. That annual $15 billion may not satisfy environmentalists who expect a significant amount of the $775 billion stimulus plan to be allocated towards making the U.S. one of the most climate-friendly nations in the world. However, these green policies may prove to be more difficult to implement because of the financial crisis. For example, if the cap and trade program were implemented today, it would increase annual household costs by at least 3% for Americans in the lowest quintile of the U.S. income bracket, causing them significant hardship. Also in June 2008, the Lieberman-Warner Climate Security Act, a bill that would have put a cap-and-trade program into law, died on the Senate floor shortly after it was proposed. The problem with a program like cap-and-trade is that there has never been such a massive government mandate implemented to mitigate climate change in the private markets. Politicians fear the unknown, and how a program like cap-and-trade will pan out in the American public is part of this unknown category. It is also likely that the program will have to take a backseat to other bills that would actually help Americans with their personal financial struggles.

So just how will Mr. Obama find the balance between pleasing voters who expect him to make the U.S. the greenest country in the world and supporters who hope he will create jobs as soon as possible? The AFL-CIO has stated that job creation by the Obama administration should be the number one priority. Obama’s plan to create 3 million jobs is expected take at least two years, so within this time frame, union leaders believe that when Obama comes into office, the most crucial part of the stimulus package would be to create jobs that would go to vocations that are readily available, also known as “shovel-ready” jobs. There are some dissenting opinions amongst high-ranking politicians, too. House Speaker Nancy Pelosi has made it clear that the creation of green collar jobs should be a high priority. However, the core of the cleavage comes down to this: should the jobs aim to improve public buildings and highway transportation systems or to create a national grid for solar and wind power?

The dismal outlook on the future of the U.S. financial markets will likely put the Obama administration in a position that will disappoint environmentalists’ expectations that Mr. Obama will implement significant energy changes when he takes office. The combination of the failing auto industry coupled with the low price of oil will add to the list of reasons as to why Mr. Obama should focus on helping American jobs in the most expedient way that is best for the country in the short-term. Environmental organizations have been calling Obama’s plan to improve and add transportation systems a “road to nowhere,” as they believe it will cause more pollution by contributing to an increase in cars on the road and by diverting resources away from green technology. Divisions within parties are not uncommon, but in the upcoming months radical and moderate environmental groups will provoke controversy around Mr. Obama’s policies and whether they are “green” enough. Based on Mr. Obama’s recent moderate and intelligent appointments, it is likely he will implement policies that will attempt to please both sides of his party but will most fall short of satisfying extreme views on both ends of the Democratic Party. However, Mr. Obama’s moderate decisions will probably be the only chance for his administration to find a balance between economic and environmental interests.

This entry was posted in Articles for Volume 2, Issue 2, Winter 2009. Bookmark the permalink.

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