Krugman, Reich, Take Obama Up On Stimulus Advice

January 12, 2009

As reported by Sam Stein


Last week, Barack Obama let it be known that when it came to formulating a stimulus bill, all ideas were welcome — whether they came from the bowels of conservative fiscal philosophy or New York Times columnist Paul Krugman.

“I want this to work,” said the president-elect. “This is not an intellectual exercise, and there’s no pride of authorship. If somebody has an idea for a tax cut that’s better than we’ve proposed, then we’ll embrace it… If Paul Krugman has a good idea, in terms of how to spend money efficiently and effectively to jump-start the economy, then we’re going to do it.”

Now Krugman has taken Obama up on his offer. Writing in today’s Times, the Nobel Prize winning economist puts together a laundry list of economic to-do’s, with the general theme of making the stimulus “bigger.”

• “Mr. Obama should scrap his proposal for $150 billion in business tax cuts”
• He should “get an early start on the insurance subsidies — probably running at $100 billion or more per year”
• His plan should “include[e] a lot more public investment in his plan.”
• He should not “wait for proof that a bigger, longer-term plan is needed… Right now the investment portion of the Obama plan is limited by a shortage of “shovel ready” projects, projects ready to go on short notice. A lot more investment can be under way by late 2010 or 2011 if Mr. Obama gives the go-ahead now — but if he waits too long before deciding, that window of opportunity will be gone.”


In providing Obama stimulus advice, Krugman is not alone. Writing on his personal blog, last week, former Labor Secretary Robert Reich had a specific recommendation for Obama’s economic team. If you wanted to create “lots of new jobs” while also investing “in the nation’s future productivity,” go green, he wrote.

… there’s no reason to think about “green jobs” as simply high-tech. Many low-income and low-skilled workers — women as well as men — could be put directly to work providing homes and businesses with more efficient and renewable heating, lighting, cooling, and refrigeration systems; installing solar panels and efficient photovoltaic systems; rehabilitating and renovating old properties, and improving recycling systems. “Green Jobs Corps” teams could be trained to evaluate and advise homeowners and businesses on these and other means of conserving energy.

I’d suggest that all contracts entered into with stimulus funds require contractors to provide at least 20 percent of jobs to the long-term unemployed and to people within comes at or below 200 percent of the federal poverty level. And at least 2 percent of project funds should be allocated to such training. In addition, advantage should be taken of buildings trades apprenticeships — which must be fully available to women and minorities.


As Reich and others argue, training people for “green jobs” could be a relatively cheap down payment for long-term economic growth. Employers may have to be nudged into helping — one of the chief concerns is not the cost but that a large enough work force won’t be in place — but once the ball is rolling a green corps could provide a large bang for the stimulus buck. And Obama has offered support for the idea.

“Not only does it generate good high paying long term jobs,” said Sasha Mackler, a research director for the National Commission on Energy Policy, which will be releasing a report on jobs generated from energy projects this coming spring. “It also gets us going in the direction we need to be in a lot of other fronts, including climate change and energy, which will be good for Americans in other areas.”

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