A Red and Green Christmas

The Washington Post reports today that President-elect Obama and his Administration are facing competing claims on how best to spend dollars in an economic stimulus package. Obama has increased his goal from creating 2.5 million new jobs to 3.0 million. However, environmentalists and smart-growth advocates oppose the desire to “act fast,” instead shifting funds from traditional infrastructure, such as highways and bridges, to more environmentally friendly “green” jobs.

Many lawmakers, not the least of which are incoming Democratic fiscal conservatives, oppose such a shift. In addition to arguing that any stimulus “has to be stimulating now,” Representative Baron Hill of Indianan, co-chairman of the Blue Dog Coalition, worries about running up more red ink. “I think there are [Democrats] who are trying to create a Christmas tree out of this," he said.

(I suppose that is exactly what we could expect “tree huggers” to do during this festive season.)

Vice-President-elect Joe Biden, following Hill’s metaphoric lead, vowed that the stimulus package would not become a Christmas tree for earmarks. He defended the importance of investing in traditional infrastructure projects.

If this Christmas tree has a star, it appears to be Democratic Representative James Oberstar of Minnesota, Chairman of the House Transportation and Infrastructure Committee, who recently proposed spending $85 billion over the next two years.

Environmentalists are pleased that federal highways and local transportation systems, which usually receive 80% of the funding in such bills, receive only 49.6% of the money in Oberstar’s proposal. On the other hand, the only large chunk of green spending identified so far – for “environmental infrastructure” improvements, such as clean-water funds – represents only 16.8% of proposed outlays.

Green advocates contend that improving existing highways will only encourage commuting, increasing pollution and discouraging use of any public transportation projects built. This argument, while with merit, often raises hackles and an insistence that government should not engage in social engineering through economic coercion and reward.

Whether you agree or disagree with the green line of reasoning, others make core economic cases for spending big now and investing for the long-term.

New York Times columnist Thomas Friedmam, yesterday compared the transportation and communications networks of Hong Kong to those of New York, only to find himself lamenting, “If [America is] so smart, why are other people living so much better than us?” The solution, he decides, is more than a mere bailout but a “reboot” and “national makeover.”

Governor Jon Corzine of New Jersey writes in today’s Washington Post that the incoming Obama Administration must follow the example of FDR’s New Deal and be “$1 trillion bold” in stimulating the economy.

These two erstwhile prophets differ on timeframe, with Corzine more focused on immediate needs (i.e. where we are) and Friedman stressing the future (i.e. where we need to be). They also differ on the method of stimulation. Corzine favors direct and massive spending by the federal government, including a substantial chuck for state and local governments facing their own budget crunches. Friedman prefers “creative tax incentives to stimulate the private sector to catalyze new industries and new markets.”

Yet for all their differences, there is surprising commonality between their competing visions. Corzine admits the need to “think broadly about the idea of infrastructure.” As an example, he proposes that improving transportation infrastructure means more than highways projects and includes investment in the nation’s “energy grid, Internet technology, ports, public housing, and school facilities.”

Most notably, both understand the importance of education. Friedman calls for “training teachers, educating scientists and engineers, paying for research and building the most productivity-enhancing infrastructure — without building white elephants.” Corzine concludes it is “essential that we continue developing a workforce that is able to meet the demands of the Twenty-First Century economy.”

During the campaign, Obama identified investment in green industries as the cornerstone of not only his environmental policy but also his energy and economic policies. While his newly emerging emphasis on short-term stimulation is a pragmatic response to the current financial crisis, it must not allow green investment to drown in a sea of worries over red ink.

After all, there is always some crisis on the immediate horizon and it has long served as a rationale – or excuse – to defer green investments. This is exactly why alternative fuels that could break our dependence on foreign oil perpetually remain “futuristic abstractions” we cannot afford. Somebody has to break the vicious cycle and that means spending money, even at the risk of running up more, unprecedented red ink.

Everybody wants a green Christmas this year, whether environmentalists, with their dream of a rescued planet, or fiscal conservatives, with their visions of more greenbacks dancing into everyone’s wallets.

Obama, in his usual manner, is currently attempting to downplay expectations of how much his Administration can do to turn around the economy as well as how quickly, saying, “It will get worse before it can get better.” Perhaps the truth lies in the realization that getting worse may be the only way it will ever get better. That is something he had better keep in mind as he contemplates how to give everybody what they want this Christmas.

Christmas green without red is not very festive. It seems like now is the time to start planting the seeds of those Christmas trees that some seem to fear so much.