Infrastructure Investment Steers U.S. Out of Recession
WASHINGTON — Congress sent clear signals this week that clean energy technology and the infrastructure to support it will provide a path to help the nation’s economy recover from the COVID-19 pandemic.
In two hearings, economists and lawmakers bemoaned the loss of millions of jobs, many of which they said never would return. They also said the hardship fell hardest on minorities and women.
However, they also said a “build back better” strategy for improving roads, public transit, telecommunications and expanding renewable energy sources could offer the solution.
“We must first and foremost invest in our nation’s infrastructure,” said Rep. James E. Clyburn, D-S.C., who chairs the House Oversight and Reform select subcommittee on the coronavirus crisis. “We must put Americans to work at good wages.”
He oversaw a hearing Wednesday in which economists described a dismal outlook for the U.S. economy without strong government intervention.
Similar observations came a day earlier at a Senate hearing in which renewable energy industry officials said a switch to electric vehicles could create new jobs as well as reduce greenhouse gas emissions.
One example mentioned during the House hearing was the combination of government grants, loans and tax credits given to electric vehicle manufacturer Tesla, Inc. They gave the government a roughly 1,000-to-1 return on the investments, propelling the company to a valuation now at more than $52 billion.
However, some Republicans cautioned against lavish spending on electric vehicles and other infrastructure without good evidence they will benefit the economy.
The oil industry, along with its roughly 145,000 employees, could be hurt the worst by an aggressive switch to electric vehicles, according to some of the economists.
“Efforts to eliminate fossil fuels are going to take a tremendous toll on this country,” said Larry Kudlow, a Trump administration National Economic Council director. “We should be adding to the portfolio of energy, not reducing it.”
The main program for propelling the economy to recover is the Biden administration’s American Rescue Plan, the $1.9 trillion stimulus plan the president signed into law last week.
It offers tax credits, grants and low interest loans for various industries and the local governments where they are headquartered. The money is intended primarily to restore jobs lost during the pandemic.
At its peak during the COVID-19 shutdown last year, the unemployment rate rose to 14.8 percent. It now stands at 6.2 percent.
Congress is trying to decide how much of the stimulus plan money — or additional funds — should go to infrastructure to maximize the benefit.
Kudlow warned against spending which provides little return for the investment.
“This recent stimulus bill has expanded the welfare state,” he said. “I fear that it will create more poverty and more unemployment as we go forward.”
President Joe Biden is pinning some of his hopes for profitable infrastructure investment on installing 500,000 new electric vehicle charging stations nationwide by 2030.
They would represent a 10 fold increase in the current number of stations but only a first step toward the millions needed to charge all the vehicles Biden wants to replace gasoline-fueled cars and trucks, according to Energy Department estimates.
The U.S. Transportation Department is exploring several options to fund the infrastructure for the electric vehicles.
One of them would consist of grants to states and cities, which could transfer the money to their electric utilities to upgrade substations. A second option would be an extension of the 30C tax credit that allows businesses to claim a $30,000 credit for installing EV and alternative fuel infrastructure.
Government and industry witnesses at the Senate hearing Tuesday said a switch to widespread use of electric vehicles is possible but requires more development.
Edmund Adam Muellerweiss, chief sustainability officer for car battery maker Clarios, said EVs will become more practical as technology improves to recycle their batteries. Most of the batteries are now discarded into landfills.
“These batteries must be considered a resource, not a waste,” Muellerweiss said.
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