From the inbox:
I am a reporter ... and I'm working on a story about the parts of the stimulus bill that have to do with green jobs, green technology and renewable energy. I am writing to you, because I'm hoping to get your take on the spending on green jobs and infrastructure. ... I would love to get your reaction to the numbers coming out of the conference committee today. ... I am particularly interested in the spending on energy, transportation and infrastructure. Are these figures a good idea in your opinion? A mixed bag? What's your reaction?
I have two concerns as an economist that focuses on microeconomic issues. Each item in the spending list (other than the money going to hurting households which, as a human being, I'd like to increase) should bear additional scrutiny in terms of the benefits generated to society, relative to the costs (which are the $$$ numbers listed). My guess is that there are other programs that could generate greater net benefits. These were not considered in the rush to get a macroeconomic stimulus bill passed.
Second, I'm sure that the green energy subsidies will substitute, at least for a time, for policy that addresses climate change. Some basic analysis shows that $37.5 billion in green energy subsidies will lower energy prices, relative to what they would have been otherwise, and increase energy usage putting relatively little price pressure on dirty energy usage. It is cheaper to tackle climate change head on by raising energy prices with a carbon tax or cap-and-trade than to deal with them indirectly in the market for green substitutes. The higher prices could be phased in so that they wouldn't slow down economic activity during a recession.
As an economist that might teach undergraduate macroeconomcis from time to time, I hope this works to generate some additional economic activity but I'm concerned about the long term economic drag that the borrowing that may arise.
Check out this great graphic of the stimulus bill from the WSJ [PDF].