US renewable Infrastructure and employment plan

It is a shame China beat the US in announcing a major infrastructure investment plan:

"The spending announced today, of which 100 billion yuan is earmarked for this quarter, will cover low-rent housing, infrastructure in the rural areas, as well as roads, railways and airports, the State Council said. The government will also allow tax deductions for purchases of fixed assets such as machinery to stimulate investment, a move that will reduce companies' costs by an estimated 120 billion yuan."

The funds, equivalent to almost a fifth of China's $3.3 trillion gross domestic product last year, will be used by the end of 2010. The US has 14 trillion GDP, so a 2.5 trillion package would be the equivalent.

US Infrastructure Plan

With a long term US infrastructure plan, the US will see immediate job creation and real wages start to rise again. Corporations will start seeing increases in revenues and profits. This plan will last about 5 years and create millions of jobs a year. Total 5 year cost will be about 2 trillion, or 400 billion a year. This infrastructure plan needs to be diverse so we just don't create construction jobs, but new jobs in every area of the economy. Here are the 5 US infrastructure mandates:

1) Renewable energy development
2) Power grid enhancements
3) Housing redevelopment
4) Highway and bridge construction
5) Transportation - non oil based US vehicle fleet

This is not busy work or bridges to nowhere. The US has neglected its infrastructure for the past 15 years and is now losing its competitive abilities in a dynamic global economy. These 5 infrastructure projects will create immediate jobs.

Once the first 400 billion is funded and the bids go out the construction and engineering firms like Flour Corp, Foster Wheeler, GE, CAT, etc. will start creating new teams for these projects. These firms will hire engineers, IT specialists, project managers, project financial analysts, HR personnel etc. They will also need new computers loaded with new software such as Auto-CAD, Oracle, SAP, Vista, etc.

IT infrastructure orders will go to firms like EMC, Cisco, IBM, and HP. The US will see new orders for cranes, bulldozers, excavators, road building equipment, specialty tools, etc. These firms will start hiring again, reducing unemployment and increasing real medium wages in the US. Foreclosures will fall, consumer spending will increase, as will consumer sentiment.

The US needs a purpose, a mandate, a direction forward. This direction will be energy independence and leading the world into the renewable energy future. Importing oil from the Middle East must end in 5 years. This huge wealth and job transfer to foreign countries has crippled the US economy. The US can be the leader in solar, wind, bio-fuel and geothermal technologies, then sell these technologies to the rest of the world.

Renewable Energy Plan

I would prefer to see the US set up a per unit pollution taxation system with a 120% decrease in income taxation. This tax shift from income to polluting energy sources would help move the US to free competitive energy markets. With this tax shift the US would be putting the economic incentives in the right place and use much less inefficient polluting energy sources and use more renewable sources. Also individuals would not try to avoid or hide income. This tax shift program would reduce the federal deficit since we would not need subsidies for renewable energy and by broadening the tax base, allow for more efficient revenue collection for the US.

While the above tax shift would work over time, the US needs more immediate action for job creation. The renewable energy plan would be to convert the top 100 most inefficient, polluting power plants in the US to renewable and clean power plants. These most inefficient power plants should have been decommissioned many years ago.

Here is an informational article on the top 50 most polluting power plants in the US. When the clean air act was passed in 1970, The electric utility industry persuaded congress not to impose strict pollution controls on older power plants, because they promised these plants would be replaced by newer, cleaner plants.

These promises were never realized and now we are still stuck with these inefficient polluters. By converting the top 100 oldest, dirtiest power plants to solar, geothermal, wind, fuel cell, etc., the US would create many high paying jobs, huge investment into renewable and clean technologies and achieve much lower pollution levels.

Solar technology is finally starting to explode. Helped by new thin film solar manufacturing technologies, several solar firms can now produce solar power that is competitive with current utility grid pricing. Here is an article I wrote about solar economics.

Utility Grid infrastructure.

In 2002, the U.S. Department of Energy stated:

"There is growing evidence that the U.S. transmission system is in urgent need of modernization. The system has become congested because growth in electricity demand and investment in new generation facilities have not been matched by investment in new transmission facilities. Transmission problems have been compounded by the incomplete transition to fair and efficient competitive wholesale electricity markets. Because the existing transmission system was not designed to meet present demand, daily transmission constraints or `bottlenecks' increase electricity costs to consumers and increase the risk of blackouts."

Now add into the picture large wind and solar power coming on-line over the next 10 years, with no grid infrastructure to support efficient distribution of these new power sources. Like funds for renewable energy, every dollar the US invests into the power grid has a large multiplier affect on the economy.

Millions of new high paying jobs will be created, increasing demand for these US industries: steel, natural gas, construction machinery, IT equipment, machine tools, cement, engineering, finance, etc. This huge increased in demand will lead to more jobs and higher wages in all these industries.

Housing Redevelopment

The US infrastructure plan will fund states to redevelop older, deteriorated residential neighborhoods. These neighborhoods have high foreclosure rates, high crime rates, and are causing financial hardships for cities, counties and states around the US. Many options exist with the proper funding.

This would involve converting these neighborhoods to job training centers, industrial parks, recreation facilities, renewable power plants, etc. As these new facilities are developed, local municipalities will finally start receiving tax revenues from these properties and now have the funds to cycle back into the community. This will also create jobs, and increase wages.

Highway and Bridge

The 100 approach would work here as well. Replace the lowest rated 100 bridges with new bridges. Redesign and rebuild the 100 weakest metro transportation systems in the US. This work has been neglected for decades. These projects would create demand in the above industries mentioned, but also the construction industry would start hiring again.

Employment up, wages up, US GDP up, and revenues into the US treasury up. This is the way to balance the federal deficit in the long run. In 5-7 years we could balance the federal budget.

Transportation Vehicle Fleet

Many have heard T. Boone Pickens talk about using natural gas for the US vehicle fleet. "Its cleaner, more efficient, cheaper, and we own it!" My article goes into more detail about implementing T. Boone's plan.

In Utah people are buying natural gas at the pump for under a dollar a gallon. The conversion kits to make your car or truck a natural gas vehicle cost about $1200. In 7 years we could move 50% of our vehicles onto natural gas and stop importing 500 billion dollars a year of foreign oil. This huge wealth transfer out of the US is severely hurting our economy.

A simple mandate could be as follows. By the year 2015, no new vehicles with oil based propulsion systems are sold in the US. By the year 2022, no vehicle oil based fuel at filling stations. During this time, the US could start a vehicle recycling program to help lower income drivers switch to the new vehicles. The first step is to have natural gas available throughout the US.

GM and Ford Reinvestment Plan

The US could save GM and Ford with the mandate to convert to natural gas and battery technology. GM and Ford would install natural gas filling stations at all their dealerships with US investment. These dealerships would also sell and install the natural gas conversion kits and be certified by the government to do so.

This infrastructure fund would help car owners finance the conversions. The US could help GM and Ford build factories in the US to mass produce new trucks and cars with these new non-oil based propulsion systems.

This above plan would save the US auto firms without wasteful bailouts. This investment in the transition to new technologies would create millions of jobs. As solar and wind power is funded, natural gas would be more available for the transportation industry.

With new shale extraction technologies for natural gas, the US has over 100 years of fuel even with the increase in demand from the US vehicle fleet. Instead of the US funding foreign countries with oil imports, we would tap into our own massive natural gas reserves creating millions of new high paying jobs in the process.

Infrastructure Blueprint

This is a blueprint for a plan, an infrastructure plan that will move the us forward and out of the current recession. The US infrastructure plan could take many other forms and directions. Now is the time for a national dialog on this subject. This blueprint focuses on energy independence, energy efficiency, middle class job creation and developing the new technologies that create high paying jobs for decades to come.