President-elect Obama’s announced intention to create 2.5 million jobs through a recovery package focuses on infrastructure investment, aid to states, and tax cuts targeted at working families. Though the Obama team has not discussed the cost of such a package, it clearly has to be both large enough and long enough to offset the deepening problems noted above. At this point, a two-year plan costing more than $300 billion is necessary. How much more depends on the length and the depth of the ongoing downturn. Some economists and policy makers have suggested the need for investments of up to $700 billion.¹

In the interest of getting the biggest bang for the buck in terms of job growth, the package should focus less on tax cuts, which tend to have smaller multiplier effects and more on direct spending. We recommend the following:

• Aid to states. In an economic downturn, state and local governments are forced to cut services, increase taxes, or both. Such changes would make the recession both deeper and longer. A survey of state governments indicates that shortfalls will reach $72 billion in 2009,² and the outlook for 2010 is no brighter.
• Infrastructure spending. Rebuilding our national roads, bridges, schools, and water systems should be a high priority. By focusing on repair and “ready-to-go” projects, we can create new jobs now while investing in the economy’s future. Several areas of investment have already been identified as ready-to-go:
  • Ongoing transit projects: 246 projects totaling more than $3.6 billion could be implemented within 90 days of federal funding (American Public Transportation Association).
  • New transit projects: Approximately 400 projects totaling $248 billion are proposed, with 58 of those—totaling $25.2 billion—far along in the planning process. Most of the 58 projects have already completed the environmental review process and could be started within 4 months to a year (Reconnecting America).
  • Highway: 3,000 projects totaling $18 billion are ready and waiting for financing (American Association of State and Highway Transit Officials).
  • Bicycle/pedestrian projects: $325 million in ready-to-go projects have been identified (America Bikes).
  • Fleet Greening: $3.9 billion could be spent quickly for clean vehicles and retrofitting existing vehicles with green technology (Transportation for America).
  • Wastewater treatment projects: $4 billion in ready-to-go projects have been identified (National Association of Clean Water Agencies).
  • School repair and maintenance: $10 billion could be spent this summer (Economic Policy Institute).
• Assistance to those hardest hit by the recession. Congress has already worked to extend unemployment benefits to many people who have lost their jobs. Expansion of food benefits would also help stimulate the economy by providing additional purchasing power to those most likely to spend it quickly.

Down payment on long-term reforms. Moving the economy to a low-carbon platform will require extensive investments in energy efficiency and alternative fuel production. Investing today will both create jobs and secure our nation’s energy future.

If there is to be a new stimulus package then let it do more than prop up Wall Street and the CEO’s ridiculous salaries.