Obama’s Green Stimulus Too Slow to Deliver Money or Jobs

Time lags on projects that were supposed to deliver a quick fix to the economy hurt Democrats at the polls, especially in the Midwest

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From the moment he was elected president in the depths of a historic recession, Barack Obama held up a clear vision for America’s economic future: green jobs.

Two years on, 15 million people are still looking for work and frustration with Obama’s failure to haul the country out of recession led Democrats to a humiliating defeat in midterm elections.

But how much of it was Obama’s fault? Why haven’t those green jobs arrived?

Obama devoted $90 billion to so-called green investment in his $800 billion stimulus plan for home insulation, draught-proofing and energy-efficiency projects; new technologies such as the smart grid and advanced batteries; and public transport, including faster intercity rail.

He has made dozens of visits to midwest states hit the hardest by the economic downturn, to inaugurate projects and promote his green job-creation scheme. “These aren’t any jobs,” Obama said during a ground-breaking ceremony for a new electric-car battery plant in Michigan last July. “These are jobs in the industries of the future.”

But less than half of the promised billions for advanced batteries and electric cars, smart grid and other clean energy manufacturing projects have been released. To date, the Obama Administration has announced $12.4 billion in grants for energy and environment projects, according to data compiled by Recovery.Org. But government officials have released just $5.4 billion.

That record is actually a little better than the average across all sectors of the economy. Some $195 billion in recovery plan projects have been announced, but only $75 billion awarded.

“It is a double whammy,” said Michael Balsam, chief strategy officer of Recovery.Org. “It is the speed at which government works, which is not fast, coupled with finding ways to spend $800bn quickly, which is not possible. The pipeline didn’t get any bigger, but the amount of money they were trying to put through the pipeline grew exponentially.” He added: “It’s been really slow, slower than people thought.”

The time lag resulting from those rapid differences of scale applies across the foundations of the new green economy from smart grid to plug-in cars and clean energy manufacture. In 2009, department of energy investment had a budget of $500 million. By 2013, it will be $9 billion.

When Obama first unveiled his recovery plan in February 2009, the heavy focus on green investment in the recovery plan was seen as transformative for the US economy, pouring billions into smart grid, electric cars, wind and solar power, clean coal, and electric cars.

But a $5 billion programme to install tighter-fitting doors and windows in homes across the country took more than a year to get going. It also failed to create the promised boom in construction jobs.

A year later, only 32,250 homes had gone through the retrofitting process —only about 5 percent of the target. Only a fraction of the 87,000 promised jobs materialised. In California, the program got to just 849 homes in its its first year, creating only 84 jobs.

Even projects that had Obama’s personal stamp of approval, such as the conversion of a mobile home factory to one that produced electric delivery vans in Wakarusa, Indiana, were put on hold.

Obama visited the factory, owned by the Navistar trucking company in August 2009, to hand over a cheque for $39 million to start production on the vans. The manufacture of new vans was supposed to create 700 new jobs in the area.

“Just a few months ago, folks thought these factories might be closed for good,” Obama told factory workers. “But now they’re coming back to life.”

But the money never materialised. Navistar said it had hired just 10 or 12 workers. According to the federal government, no new jobs have been created. Navistar says it is not to blame. “We have not received a single cent from the $39 million grant,” the company spokesman, Roy Wiley, wrote in an email.

The Department of Energy confirms it has not given out the money. “The Department of Energy has been working closely with Navistar to finalise the details of the award contract,” a spokeswoman said in an email.

But she said officials would be able to pay a “sizeable invoice within two or three weeks of receiving it”.

Such time lags—on projects that were supposed to deliver a quick fix to the economy—were a powerful factor in the discontent with Obama that swept across the midwest, where the Democrats lost heavily in the midterm elections.

But they were entirely typical. “I don’t think there is any intent to fool people on the part of the Administration. I just think there is an overall lack of understanding about how the money moves, and when it moves,” said Balsam.

Many of the green-energy projects also had a longer timeline—up to 2013—for allocation of funds unlike the “shovel-ready” road construction projects.

But energy department officials admit that delays in handing over grants have been the rule, rather than the exception.

In addition to Navistar, 47 other companies were promised a slice of the $2.4 billion in grants for electric cars on the day of Obama’s visit to Indiana in August 2009.

A review of the top 10 projects on recovery.gov indicates that barely $140 million in grants was actually delivered and spent. Less than 450 jobs were created. One of the companies, Dow Kokam, which was awarded $160 million to build batteries for a new generation of hybrid plug-in cars, had not created a single job by September 30.

Energy department officials acknowledge the money has not moved as quickly as they had hoped. “There was a lot of variation in the timing and schedule of the invoices and awards and broad generalisations are a bit hard to come by. That said, many of the grants were like Navistar,” the official said. “In general, invoicing under the programme was fairly limited until this summer and has been ramping up since then.”

But by that point, it was too late to save Obama’s Democrats in the midterms.

Source: Guardian

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