Despite Problems In the Past, Biden to Try Again with ‘Green’ Stimulus

As vice president, Joe Biden oversaw a “green jobs” stimulus package that produced notable failures. This time, with more money and more demand for clean technology, will be different, Democrats say.,

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WASHINGTON — In September 2009, then-Vice President Joseph R. Biden Jr. traveled to a defunct General Motors plant near his hometown, Wilmington, Del., to announce a $528.7 million government loan for Fisker Automotive to make hybrid and electric vehicles.

The funding for Fisker, a small luxury automaker, came out of the American Recovery and Reinvestment Act, a $787 billion economic stimulus plan secured by President Barack Obama to lift the nation out of the Great Recession, in part by creating “green jobs” with $90 billion for wind and solar energy, a “smart” power grid, weatherized homes and the electric vehicle industry.

Fisker went bankrupt in 2013 before the Wilmington factory produced a single car. Mr. Biden also personally announced a $535 million loan guarantee for Solyndra, a California solar panel company that then went bankrupt, leaving taxpayers on the hook. An advanced battery maker called A123 Systems, which Mr. Obama extolled as part of a vanguard of a new American electric car industry, received a $249 million stimulus grant, then filed for bankruptcy in 2012, the vanguard that wasn’t.

Now, 12 years later, President Biden is preparing the details of a new, vastly larger, economic stimulus plan that again would use government spending to unite the goals of fighting climate change and restoring the economy. While clean energy spending was just a fraction of the Obama stimulus, Mr. Biden wants to make it the centerpiece of his proposal for trillions of dollars, not billions, on government grants, loans, and tax incentives to spark renewable power, energy efficiency and electric car production.

But the failures of the Obama stimulus, and Mr. Biden’s role in them — he oversaw recovery-act spending — could haunt the plan as it makes its way through Congress. The risk to taxpayers could be orders of magnitude more this time around, and Republicans for years have proven adept at citing Solyndra to criticize federal intervention in industrial planning.

Mr. Biden’s advisers, many of whom worked on the Obama stimulus, say the situation is very different. The market demand for electric vehicles is much higher, and the cost of the cars much lower than in 2009, the year after Tesla Motors produced its first roadster. Solar power is more economically competitive. Wind is entrenched and expanding rapidly.

Jennifer Granholm, the energy secretary, will oversee the same clean energy loan program that backed Fisker and Solyndra. Ms. Granholm knows the program well: As governor of Michigan during the Obama years, she helped her state secure money from it to help auto battery manufacturers — including some that failed.

“You have to step up to the plate and take a swing in order to hit the ball, and sometimes you swing and you miss,” she said of those failures. “But if you never swing, you will never hit the ball, and you’ll never get a run. So the overall benefits of the Obama-era clean energy investments were overwhelmingly a net positive.”

ImagePresident-elect Joseph R. Biden Jr. and  Jennifer Granholm, who was later confirmed to be energy secretary, in Wilmington, Del., in December.
President-elect Joseph R. Biden Jr. and Jennifer Granholm, who was later confirmed to be energy secretary, in Wilmington, Del., in December.Credit…Amr Alfiky/The New York Times

Still, she said her team was studying the lessons of 2009: “When you invest in innovation sometimes it works and sometimes it doesn’t. But you learn from the losses more often than you do from the wins, just like any human, right?” She said that the clean energy loan program would be “retooled” and “invigorated” for its second round.

Other advisers to Mr. Obama concede they fell short, especially on electric cars. The recovery act was supposed to put a million plug-in hybrids on the road by 2015 but mustered fewer than 200,000. Even today, fewer than 1 percent of vehicles on the road are electric.

“There was high ambition, but getting some of those projects off the drawing board and onto the ground was an area where it certainly proved to be a challenge,” said Heather Zichal, who served as Mr. Obama’s top clean energy and climate change adviser in his first term.

Republicans are already weaponizing the losses of the Obama green stimulus in their political attacks against the Biden plan.

“When President Biden was vice president, the Obama administration promised thousands of green energy jobs,” said Senator John Barrasso of Wyoming, the ranking Republican on the Senate Energy Committee. “These jobs never materialized. Millions of taxpayer dollars were wasted on green energy companies that went belly up. Now, the ‘Solyndra Syndrome’ has returned.”

Most economists say that, on balance, the Obama green stimulus spending did lift the economy, and had a long-lasting impact. Clean energy spending created nearly a million jobs between 2013 and 2017, according to a 2020 paper published by the National Bureau of Economic Research. It also made money for taxpayers: Despite the losses from companies like Fisker, the Energy Department’s loan guarantee program ultimately made $2 billion more in returns than it paid out.

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Wind turbines in Carbon County, Wyo.Credit…Benjamin Rasmussen for The New York Times

Wind power more than tripled in the last decade, and now generates nearly 8 percent of the nation’s electricity. Solar power, which generated less than 1 percent of the nation’s electricity in 2010, now generates about 2 percent, and is growing fast. Economists generally agree that the Obama stimulus, which pumped about $40 billion in loans and tax incentives to those industries, deserves partial credit.

But experts also point to a fundamental problem with throwing money at climate change: It is not a particularly effective way to lower emissions of planet-warming pollution. While the Obama green spending created new construction jobs in weatherization and helped turn a handful of boutique wind and solar companies into a thriving industry, U.S. emissions of heat-trapping greenhouse gases have stayed about the same, five million tons a year since 2010, and are projected to continue at the same level for the coming decades, absent new policies to force reductions, such as taxes or regulations.

Mr. Obama had hoped to pair the recovery act money with a new law that would cap planet-warming emissions, but that effort died in Congress. His administration then enacted regulations on emissions, but they were blocked by the courts and rolled back by the Trump administration.

The recovery act “was a success at creating jobs, but it did not meet emissions-cutting goals,” said David Popp, a professor, of public administration at Syracuse University and the lead author of the National Bureau of Economics study on the green stimulus money. “And this new stimulus, on its own, will not be enough to reduce emissions.

“Unless they can pair it with a policy that forces people to reduce emissions, a big spending bill doesn’t have a big impact,” Mr. Popp said.

Frequently Asked Questions About the New Stimulus Package

The stimulus payments would be $1,400 for most recipients. Those who are eligible would also receive an identical payment for each of their children. To qualify for the full $1,400, a single person would need an adjusted gross income of $75,000 or below. For heads of household, adjusted gross income would need to be $112,500 or below, and for married couples filing jointly that number would need to be $150,000 or below. To be eligible for a payment, a person must have a Social Security number. Read more.

Buying insurance through the government program known as COBRA would temporarily become a lot cheaper. COBRA, for the Consolidated Omnibus Budget Reconciliation Act, generally lets someone who loses a job buy coverage via the former employer. But it’s expensive: Under normal circumstances, a person may have to pay at least 102 percent of the cost of the premium. Under the relief bill, the government would pay the entire COBRA premium from April 1 through Sept. 30. A person who qualified for new, employer-based health insurance someplace else before Sept. 30 would lose eligibility for the no-cost coverage. And someone who left a job voluntarily would not be eligible, either. Read more

This credit, which helps working families offset the cost of care for children under 13 and other dependents, would be significantly expanded for a single year. More people would be eligible, and many recipients would get a bigger break. The bill would also make the credit fully refundable, which means you could collect the money as a refund even if your tax bill was zero. “That will be helpful to people at the lower end” of the income scale, said Mark Luscombe, principal federal tax analyst at Wolters Kluwer Tax & Accounting. Read more.

There would be a big one for people who already have debt. You wouldn’t have to pay income taxes on forgiven debt if you qualify for loan forgiveness or cancellation — for example, if you’ve been in an income-driven repayment plan for the requisite number of years, if your school defrauded you or if Congress or the president wipes away $10,000 of debt for large numbers of people. This would be the case for debt forgiven between Jan. 1, 2021, and the end of 2025. Read more.

The bill would provide billions of dollars in rental and utility assistance to people who are struggling and in danger of being evicted from their homes. About $27 billion would go toward emergency rental assistance. The vast majority of it would replenish the so-called Coronavirus Relief Fund, created by the CARES Act and distributed through state, local and tribal governments, according to the National Low Income Housing Coalition. That’s on top of the $25 billion in assistance provided by the relief package passed in December. To receive financial assistance — which could be used for rent, utilities and other housing expenses — households would have to meet several conditions. Household income could not exceed 80 percent of the area median income, at least one household member must be at risk of homelessness or housing instability, and individuals would have to qualify for unemployment benefits or have experienced financial hardship (directly or indirectly) because of the pandemic. Assistance could be provided for up to 18 months, according to the National Low Income Housing Coalition. Lower-income families that have been unemployed for three months or more would be given priority for assistance. Read more.

But, he added, “spending money is politically easier than passing policies to cut emissions.” If that “sets up the energy economy in a way that it’s eventually cheaper to reduce emissions, it could create more political support for doing that down the road” by making legislation or regulations less painful, he said.

Mr. Biden has a long way to go on that front. Wind and solar power remain more expensive than fossil fuels in most parts of the country. While it gave a jolt to electric vehicle manufacturing, including a successful loan guarantee to Tesla, those cars still have higher price tags than the ones with old-fashioned internal combustion engines.

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A Chevrolet Bolt charging in Baker, Calif. Credit…Philip Cheung for The New York Times

That is why Democrats say that one of the biggest lessons from the Obama stimulus is to go bigger — much bigger.

The short-term tax credits for renewable energy and advanced battery plants “weren’t big enough. They weren’t long enough,” said Senator Ron Wyden of Oregon, chairman of the Senate Finance Committee, which will play a key role in shaping Mr. Biden’s bill in Congress.

“If you were somebody who was very much committed in the area of clean manufacturing and energy, you didn’t have an idea of what was coming next,” he said.

Mr. Wyden has said he wants to use the Biden stimulus plan to create permanent tax credits that electric utilities could receive for generating zero-carbon electricity, regardless of the source.

Electric vehicles also present a challenge, even as companies like General Motors and Volkswagen promise to shift their fleets to electricity. With the current price of oil hovering around $65 per barrel, electric vehicle batteries would have to cost about $57 per kilowatt-hour of electricity to be cost-competitive — down from their current cost of about $156 per kilowatt-hour, according to an analysis by Michael Greenstone, an economist at the University of Chicago who served as the chief economist for Mr. Obama’s Council of Economic Advisers.

“Electric vehicles are still far out of the money,” said Mr. Greenstone. “But a stimulus that was targeted at reducing the cost of these batteries absolutely could help.”

Ms. Zichal, the former Obama climate adviser, who now works for the wind and solar lobby, said that this time around, electric vehicle battery technology is far more well developed than it was a decade ago. She compared the industry’s readiness to leverage new government spending with that of the wind industry a decade ago — when, she said, after years of stops and starts, it was at last at the cusp of a boom. “It took wind power a while to get going, but in 2009 it was ready,” she said, suggesting that electric vehicles could now be at the same inflection point, with some help from the federal government.

Mr. Biden’s plan is expected to call for funding at least half a million electric vehicle charging stations.

One element of climate change spending in Mr. Biden’s bill that was not in the Obama plan could draw bipartisan support: At his news conference last week, Mr. Biden spoke explicitly of the need to adapt the nation’s roads and bridges to a changing climate, which will bring stronger storms, higher floods and more intense heat and drought.

“We can’t build back to what they used to be,” he said of the nation’s creaking infrastructure. “The roads that used to be above the water level, didn’t have to worry about where the drainage ditch was, now you got to rebuild them three feet higher. Because it’s not going to go back to what it was before; it will only get worse, unless we stop it.”

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