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61–959 2010

THE GREEN ROAD TO ECONOMIC RECOVERY 

HEARING 

BEFORE THE

SELECT COMMITTEE ON 

ENERGY INDEPENDENCE 

AND GLOBAL WARMING 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

SEPTEMBER 18, 2008 

Serial No. 110–49 

( 

Printed for the use of the Select Committee on 

Energy Independence and Global Warming 

globalwarming.house.gov 


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SELECT COMMITTEE ON ENERGY INDEPENDENCE 

AND GLOBAL WARMING 

EDWARD J. MARKEY, Massachusetts, Chairman 

EARL BLUMENAUER, Oregon 

JAY INSLEE, Washington 

JOHN B. LARSON, Connecticut 

HILDA L. SOLIS, California 

STEPHANIE HERSETH SANDLIN, 

South Dakota 

EMANUEL CLEAVER, Missouri 

JOHN J. HALL, New York 

JERRY MCNERNEY, California 

F. JAMES SENSENBRENNER, JR., 

Wisconsin, Ranking Member 

JOHN B. SHADEGG, Arizona 

GREG WALDEN, Oregon 

CANDICE S. MILLER, Michigan 

JOHN SULLIVAN, Oklahoma 

MARSHA BLACKBURN, Tennessee 

PROFESSIONAL STAFF

GERARD J. WALDRON Staff Director 

ALIYA BRODSKY, Chief Clerk 

THOMAS WEIMER, Minority Staff Director 


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C O N T E N T S 

Page 

Hon. Edward J. Markey, a Representative in Congress from the Commonwealth of Massachusetts, opening statement .................................................... 1 

Prepared statement .......................................................................................... 3 

Hon. F. James Sensenbrenner, Jr., a Representative in Congress from the 

State of Wisconsin, opening statement .............................................................. 5 

Hon. Jay Inslee, a Representative in Congress from the State of Washington, 

opening statement ................................................................................................ 6 

Hon. Greg Walden, a Representative in Congress from the State of Oregon, 

opening statement ................................................................................................ 7 

Hon. Hilda Solis, a Representative in Congress from the State of California, 

opening statement ................................................................................................ 7 

Hon. Emanuel Cleaver, II, a Representative in Congress from the State 

of Missouri, opening statement ........................................................................... 8 

Prepared statement .......................................................................................... 9 

Hon. Jerry McNerney, a Representative in Congress from the State of California, opening statement .................................................................................... 10 

Hon. Marsha Blackburn, a Representative in Congress from the State of 

Tennessee, prepared statement .......................................................................... 11 

WITNESSES

Mr. Bracken Hendricks, Senior Fellow, Center for American Progress .............. 13 

Prepared Statement ......................................................................................... 17 

Robert Pollin, Ph.D., Professor of Economics and Co-Director, Political Economy Research Institute, University of Massachusetts Amherst ...................... 32 

Prepared statement .......................................................................................... 35 

Answers to submitted questions ...................................................................... 123 

Fred Redmond, International Vice President, United Steelworkers ................... 45 

Prepared statement .......................................................................................... 47 

Byron Kennard, Executive Director, The Center for Small Business and the 

Environment ......................................................................................................... 50 

Prepared statement .......................................................................................... 52 

Answers to submitted questions ...................................................................... 128 

Margo Thorning, Ph.D., Senior Vice President and Chief Economist, American 

Council for Capital Formation ............................................................................ 61 

Prepared statement .......................................................................................... 99 

Submitted for the Record: Analysis of the Lieberman-Warner Climate 

Security Act (S. 2191) Using The National Energy Modeling System 

(NEMS/ACCF/NAM), a report by the American Council for Capital 

Formation and the National Association of Manufacturers and analysis 

conducted by Science Applications International Corporation (SAIC) ..... 63 

SUBMITTED MATERIAL

Robert Pollin article entitled How to End the Recession in The Nation on 

November 24, 2008 .............................................................................................. 134 

Robert Pollin and Heidi Garret-Peltier article from the University of Massachusetts, Amherst entitled The U.S. Employment Effects of Military and 

Domestic Spending Priorities on October 2007 ................................................. 137 


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THE GREEN ROAD TO ECONOMIC RECOVERY 

THURSDAY, SEPTEMBER 18, 2008 

HOUSE OF REPRESENTATIVES, 

SELECT COMMITTEE ON ENERGY INDEPENDENCE

AND GLOBAL WARMING, 

Washington, DC. 

The committee met, pursuant to call, at 1:33 p.m., in Room 2175, 

Rayburn, Hon. Edward J. Markey [chairman of the committee] presiding. 

Present: Representatives Markey, Blumenauer, Inslee, Solis, 

Herseth Sandlin, Cleaver, Hall, McNerney, Sensenbrenner, Walden, and Miller. 

The CHAIRMAN. This hearing is called to order. 

The United States is in an economic tailspin. Earlier this week, 

Alan Greenspan characterized the situation as a once-in-a-century 

crisis and predicted that we are on the verge of recession. The markets are reeling. The Wall Street titans are collapsing, and home 

values have plummeted. Worst of all for American families, unemployment has soared to its highest level in 5 years with 84,000 jobs 

lost in August and 605,000 jobs lost since the beginning of this 

year. 

To set the economy right, we will have to take bold action on 

many fronts. We must restore oversight, transparency and prudence in the financial markets. We must strengthen the dollar and 

reform our trade policy. And we must forge a new energy strategy, 

one that will finally release us from big oil’s strangle hold and ignite an energy technology revolution and put America back to 

work. ‘‘Change, baby, change’’ must be our mantra if we are going 

to successfully work to restore America to strength and prosperity. 

Speedy adoption of a green stimulus package is a crucial first 

step. A recent study from the Center for American Progress and 

the Political Economy Research Institute shows that by investing 

$100 billion in greening our buildings, expanding our mass transit, 

building a smart electrical grid and supporting wind and solar 

power and advanced biofuels, we can create 2 million new jobs. The 

green investment package they propose creates more jobs, better 

paying jobs than they would at the same level of spending on consumer rebates. It creates four times as many jobs as the same level 

of investment in the oil and gas industry. At the same time, it will 

save American consumers billions in energy costs and slash global 

warming pollution. 

In States all across the country, from California, from Michigan 

to Ohio, the clean energy industry is already among the leaders in 

job creation. In my home State of Massachusetts, cleantech is alVerDate Mar 15 2010 22:44 Nov 16, 2010 Jkt 061959 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 E:\HR\OC\A959.XXX A959

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ready the 10th largest industry, and it is projected to grow to third 

in the next 10 years. 

Energy technology or ET, as Thomas Friedman has called it, is 

all we need with the right policies to strike the spark. We have 

begun to make this change a reality by passing the Energy Independence and Security Act last December and the Comprehensive 

Energy Security and Consumer Protection Act earlier this week. 

The legislation passed in the House this week establishes a comprehensive energy policy that includes, among other things, tax 

credits for wind and solar power, a national renewable electricity 

standard, aggressive building efficiency standards and increased 

funding for mass transit, green buildings and home energy assistance for low-income households. Extending the renewable energy 

tax credits alone will save 116,000 American jobs and $19 billion 

in investment. 

We must now take the next step with a targeted set of investments that will put Americans back to work, retrofitting our buildings to save energy, greening the grid, training workers for green 

jobs and building the fuel-efficient cars of the future right here in 

America. These measures are a down payment on building America’s energy economy, the future first steps toward economic recovery. These are those critical first steps. 

The greatest long-term challenges, however, are also going to be 

dealt with at the same time—America’s economy and national security—that is, freeing us from dependence on foreign energy sources 

and combatting global warming. 

We have an excellent panel of witnesses who will be able to discuss all of these issues for us. We look forward to their testimony, 

and I will turn to recognize the ranking member of the committee, 

the gentleman from Wisconsin, Mr. Sensenbrenner. 

[The prepared statement of Mr. Markey follows:] 


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Mr. SENSENBRENNER. Thank you very much, Mr. Chairman. 

Not often do I cite the words of Democratic politicians, but much 

of the testimony submitted for today’s hearing reminds me of the 

words of former President Harry Truman, who once said, quote, 

‘‘give me a one-handed economist; all my others say, ‘on one hand 

and on the other.’ ’’ 

There is a lot of speculation on how so-called green jobs will 

boost the U.S. economy, which, given the recent news is clearly 

struggling. Any new jobs are good for the economy, green or not. 

Jobs that can transform our energy economy are especially good 

jobs. 

The question isn’t whether green jobs are good or not. The question is whether a program to promote green jobs is the tonic our 

ailing economy needs. I agree with the testimony of one of our witnesses who says that any government efforts to shore up the economy have to start with stabilizing housing prices and strengthening the financial system. 

Margo Thorning, who is the senior vice president and chief economist for the American Council of Capital Formation advises Congress to allow time for recent actions by the Federal Reserve Board 

and the U.S. Treasury to take effect before putting more taxpayer 

dollars at risk. I agree, and I am especially concerned about Congress putting more taxpayer dollars on the line. As Ms. Thorning 

points out, one proposal supported by some here today requires 

$100 billion from the Federal Government to help create those socalled green jobs. I share her skepticism about this report, particularly since this proposal relies on higher taxes or deficit spending 

as a means to pay for these government-supported job programs. 

Taken from either hand, that is a bad idea. 

Some of the witnesses today will say this perpetual revenue 

stream will come from the legislative proposal called ‘‘cap and 

trade.’’ But I call it ‘‘cap and tax’’ because I call them like I see 

them. Cap and tax failed miserably in the Senate earlier this year, 

primarily because it was clear that it would raise both energy 

prices and taxes. Higher taxes won’t pull us out of the economic 

malaise that we are in. In fact, it will stall the economy even more. 

A recent report from Ms. Thorning’s group, the American Council 

for Capital Foundation, shows exactly what we can expect from cap 

and tax: as many as 1.8 million jobs lost by the year 2020; up to 

$1.46 a gallon rise in gas prices; and potentially more than 100 

percent jump in electricity and natural gas prices. All, at the same 

time, while there are no such price increases in economic competitors like China, India and Brazil. 

This does not sound like a formula for economic recovery in 

America. Unfortunately, the House Democratic leadership missed 

its chance this week to help lower energy prices, and that would 

have been a big help to our ailing economy. But instead of opening 

the vital new energy resources our economy needs, the House leadership passed a sham energy bill that keeps most of our energy resources under lock and key. By keeping the 50-mile ban on offshore 

drilling, the bill keeps 88 percent of offshore oil and gas reserves 

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nologies which are vital if we are to confront climate change without damaging the economy. 

However, it would be unfair to say this legislation won’t help create new jobs. By keeping lawsuit reform out of the bill, there will 

be plenty of opportunity for the trial lawyers to sue any company 

that tries to find new domestic energy resources. If that is a green 

job, I think that this sham of an energy bill will produce plenty of 

them. But I don’t believe it is going to help the economy at all. 

As we hear today, economists will have many different ideas of 

what will and won’t improve the economy. As the Irish playwright 

George Bernard Shaw once said, ‘‘if all the economists were laid 

end to end, they still would not reach a conclusion.’’ That said, it 

doesn’t take an economist for me to conclude that higher taxes and 

more regulation are not the answer for our ailing economy. 

And I thank the chairman and yield back the balance of my time. 

The CHAIRMAN. I thank the gentleman. Mr. Sensenbrenner and 

I are both lawyers if any economists want to retaliate. 

Mr. SENSENBRENNER. Will the gentleman yield? 

The CHAIRMAN. I will be glad to. 

Mr. SENSENBRENNER. Only half the lawyers lose their case. 

The CHAIRMAN. We are keeping this in the jocular vein. 

The Chair recognizes the gentleman from Washington State, Mr. 

Inslee. 

Mr. INSLEE. Thank you. 

I am really looking forward to the panel. 

I do want to welcome Bracken Hendricks, who is a friend. 

And I just want to comment, just to set the stage for the discussion, Bracken co-authored a book about a year ago, and he talked 

about three companies that were in just kind of early stages of development. And I want to comment about something that happened 

in the last couple of months. 

One, he wrote about General Motors thinking about building a 

plug-in hybrid car and thought that this gave America great jobcreating potential to create the new nongasoline powered car. Yesterday, General Motors, a day before Bracken shows up, rolled out 

their version of their plug-in hybrid, the GM Volt. That is a prediction that seems to be coming to pass. 

A year ago, in Bracken’s book, he wrote about the Ausra company that was developing a solar thermal technology that could use 

thermal energy to heat a liquid and basically create steam-based 

electricity. I note that, last month, the Ausra company opened up 

the first solar thermal manufacturing plant in Nevada, hiring hundreds of workers in Nevada. That prediction is coming to pass. 

He wrote about a company called MagnaDrive that was in the 

early stages of building this transmission system that makes an 

electrical motor 70 percent more energy efficient. I went and visited their new headquarters in Washington where they are hiring 

at least dozens of people, and they are shipping their products to 

China. That prediction is coming to pass. 

And I think those who have said for some time that this is a 

great economic opportunity are now seeing those predictions come 

to pass, and I look forward to the wisdom from this panel about 

how we can accelerate that. 

Thank you. 


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The CHAIRMAN. The gentleman’s time has expired. 

The Chair recognizes the gentleman from Oregon. 

Mr. WALDEN. Thank you very much, Mr. Chairman. 

And coming from a region that is home to extraordinary opportunities for renewable energy, I welcome the panel and look forward 

to hearing more about not only what can be done to develop green 

jobs and green energy, but what can be done through the marketplace to do that so we can minimize the taxpayer support to get 

some of these industries up and running. Because it is no secret 

that this government is under great strain and stress, as are many 

of—anybody out there in the capital side trying to find credit right 

now. And, you know, the window is going to close, and these subsidies can’t go on forever. 

As much as we want to transition off of the hydrocarbon fuels, 

we also need to access them in the meantime. So I would like to 

see us have a little different strategy where we use the revenue 

generated from the sale of domestic oil and gas, to, A, create jobs 

and, B, invest in this transition period rather than end up with 

higher taxes and all of that, because I think consumers are taking 

it in the wallet now; they can’t afford to take it anymore. The government is in debt up to its ears and beyond. And these industries 

can’t be subsidized forever. 

So I am willing to do it, to invest in research and get things 

going, but it can’t be permanent. 

Mr. Chairman, I will yield back the balance of my time because 

I know we have other members who want to speak. And I will yield 

back, Mr. Chairman. 

The CHAIRMAN. The gentleman’s time has expired. 

The Chair recognizes the gentlelady from California. 

Ms. SOLIS. Thank you, Chairman Markey. 

And I want to thank the witnesses for being here. 

I will be very brief. When it comes to green car jobs, I get so excited because I realize how our economic situation over the last few 

years has suffered so greatly. We lost so many manufacturing jobs 

to trade deals, to different things that have gone on in the U.S. for 

the last few years. And I am excited that we know that we can create these jobs, viable jobs that could sustain a family, allow them 

to have a part of that American dream, but keep those jobs here. 

I mean, that is something that we are not talking up enough. The 

reality is most of those manufacturing jobs left Mexico, and they 

went farther into Indonesia, China and everywhere else and India. 

Now we have to come back and be a competitive force. 

So I just want to say this is an exciting opportunity to start a 

green revolution that will hopefully bring everybody, stakeholders, 

all of them to the table. And I am also talking about those people 

who have traditionally been left out of environmental topics and 

issues. And those are people of color, hardworking-class folks, bluecollar people who now may have a chance to get retooled, reeducated and hopefully brought into an arena where they can also see 

a career ladder and hopefully at the end of the day be able to sustain their lifestyles, the American lifestyles that we all want to 

achieve here for the next few years and decade. 

So with that, I yield back the balance of my time. 

The CHAIRMAN. The gentlelady’s time has expired. 


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The Chair recognizes the gentleman from Missouri, Mr. Cleaver. 

Mr. CLEAVER. Thank you, Mr. Chairman. 

Dan Quayle is—I like him. It may surprise some, primarily because his grandfather was a renowned Methodist Bishop. There are 

churches and buildings on college campuses all over Oklahoma and 

Kansas named Quayle. Quayle United Methodist churches all over. 

And his grandfather was profound. 

Now, the Vice President didn’t quite get the profundities that his 

grandfather had. And so, in a speech, as he was trying to quote the 

model of the United Negro College Fund, which is ‘‘a mind is a terrible thing to waste,’’ the Vice President said, ‘‘it is a terrible thing 

when a man loses his mind.’’ I actually agree with Vice President 

Quayle. 

And I would like to take a twist on that. I would say, a crisis 

is a terrible thing to waste. We are in the biggest crisis probably 

in our lifetimes. And it would be tragic indeed if we allowed this 

crisis to pass without getting something out of it, without coming 

out on the other side better than we were when we entered. 

And that brings us to this whole question of trying to revamp the 

U.S. economy. The Center for American Progress says that there 

is a possibility of creating as many as 2 million jobs and within 2 

years if the United States would put forth the resources into replacing the conventional fossil fuels, coal and so forth, and with 

new sources of energy. And it should be, I think, a great opportunity for us to handle a crisis in a manner that we are better than 

when we entered. I actually had some more Quayle quotes, but we 

don’t have the time for me to use them to dramatize my commitment to this issue. 

I yield back. 

[The prepared statement of Mr. Cleaver follows:] 


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The CHAIRMAN. I thank the gentleman. 

The gentleman from California, Mr. McNerney. 

There are approximately 3 minutes to go on the roll call on the 

House floor. I am going to leave it to the gentleman to recess this 

hearing until after the four roll calls on the House floor. We are 

going to have to go over and make the roll calls and then come 

back and reconvene the hearing. 

I yield to the gentleman. 

Mr. MCNERNEY [presiding]. Thank you, Mr. Chairman. I am glad 

you didn’t say 3 seconds. 

I don’t have much. I am very excited about the opportunity. I 

spent my career developing wind energy technology. I know it is 

fun. I know it is exciting. I know it creates jobs. It is clean and 

good for our economy. And for every dollar we invest in it, we get 

three to five times as many jobs as we get if we invest in oil or 

fossil fuels. So this is the way of the future. This is the way we 

have to go, and I hope that we can make this happen. 

With your intellectual capital, with your force of personality, help 

us make this happen. 

And with that, I adjourn this until after the votes—recess. Excuse me, I recess this until after the vote. 

[Recess.] 

Mr. INSLEE [presiding]. We will gavel our hearing back. Sorry 

about the delay. We appreciate your patience, and I am looking forward to my colleagues returning in a little bit as they return from 

the floor. 

[The prepared statement of Ms. Blackburn follows:] 


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Mr. INSLEE. We have a great panel today. I would like to introduce them, starting with my friend Bracken Hendricks, who is currently senior fellow at the Center for American Progress. Bracken 

specializes in energy and climate issues, and he was founding executive director of the Apollo Alliance and co-author of the book, 

‘‘Apollo’s Fire: Igniting America’s Clean Energy Economy,’’ which 

was an incredible feat to co-author considering that he had to drag 

the other co-author constantly. So that was amazing. 

Mr. Hendricks previously served, among other things, as special 

assistant to the Office of Vice President Al Gore. 

And, Bracken, thank you for your leadership for years on these 

subjects. 

Dr. Robert Pollin is our second witness. He is professor of economics and co-director of the Political Economy and Research Institute at the University of Massachusetts in Amherst. Dr. Pollin’s research centers on macroeconomics, conditions for low wage workers 

in the U.S. and globally and analysis of financial markets, certainly 

timely. He is co-author of the recent report, ‘‘Green Recovery: A 

Program to Create Good Jobs and Start Building a Low-Carbon 

Economy,’’ which addresses exactly the subject of today’s hearing. 

We thank you, Dr. Pollin. 

We want you to know that not all the members of this panel 

share disdain for economists. I happen to have a degree in that. So 

thank you for being here. 

Mr. Fred Redmond is the international vice president for human 

affairs for the United Steelworkers. As a founding member of the 

Blue Green Alliance and the Green Jobs for American campaign, 

the steelworkers have taken a true leading role in the labor movement in advocating for environmental protection and green job creation. He was named to the executive council of the AFL–CIO earlier this year. 

And please convey our thanks for your president’s leadership on 

this in multiple occasions as well. 

Byron Kennard is the executive director of the Center For Small 

Business and the Environment, which he co-founded in 1998. He 

is a longtime environmental advocate. He was awarded the leadership medal of the United Nations environmental program for his 

work in building the environmental movement. He is the author of, 

‘‘Nothing Can Be Done, Everything is Possible,’’ a book of essays 

on social change. And he is a guest columnist for GreenBiz.com, 

FortuneSmallBusiness.com, BusinessWeek.com and other outlets. 

And we appreciate you being here. We need a little social change. 

Dr. Margo Thorning is executive vice president and chief economist for the American Council for Capital Formation. Dr. 

Thorning’s work focuses on tax, environmental and competitive 

issues. She is the author of several books on these issues and has 

testified frequently to quite a number of congressional committees. 

Dr. Thorning, thank you for being here today. 

With that, we should start with Bracken Hendricks. 

STATEMENT OF BRACKEN HENDRICKS 

Mr. HENDRICKS. Thank you very much, Congressman Inslee. I 

understand you are an author as well. 


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I want to especially thank Chairman Markey and Ranking Member Sensenbrenner and all the members of the committee and the 

staff, who are an incredibly competent staff, as well. 

It is an honor to be here today to talk about a number of issues 

that are coming together and finding solutions that actually can 

start to address a number of interrelated issues. August saw the 

unemployment rate jump to 6.1 percent; 9.4 million people are out 

of work. Clearly there is a significant financial crisis brewing. 

Housing values are declining, but there is a whole other sets issues 

that are also affecting the economy right now: Rising energy prices, 

coal prices for Appalachian coal have jumped 200 percent in a very 

short while; $600 billion flows out of the economy for imported oil; 

and of course, there is a brewing climate crisis which with inaction 

presents significant costs and significant long-term burdens to the 

economy. 

I am Bracken Hendricks. I am a senior fellow at the Center for 

American Progress and the Center for American Progress Action 

Fund. And we were honored to work with the University of Massachusetts Political Economy Research Institute and Dr. Robert 

Pollin, who is here, in producing a report called, ‘‘Green Recovery, 

a Program to Create Good Jobs and Start Building a Low-Carbon 

Economy.’’ What we found as we looked at a package of investment 

in climate solutions, including renewable energy and energy efficiency, was that investing wisely in public infrastructure and in 

creating these markets, it is possible to build new industry, improve American competitiveness and create good jobs. This is not 

a substitute for global warming policy, but it is not cap and trade 

itself. 

What we are looking at here is the investment side of the equation. How do we invest in building these markets and creating 

these new industries? We looked at six strategies, three for energy 

efficiency, three for renewables, and we found that they create very 

significant jobs and economic opportunity. They create more jobs 

and they create more jobs at higher wages when compared either 

to a traditional program of economic stimulus, and so if we are to 

consider a package of stimulus, we may want to consider these 

sorts of investments that produce these other long-term benefits as 

they jump-start the economy and move us on to a path of recovery. 

We also compared those investments to investments in the oil industry and traditional energy sector. And I want to just focus in 

here with the bulk of my comments on why renewable energy and 

energy efficiency actually are a very, very strategic point of investment for rebuilding the economy and for creating new opportunities. Investing in energy efficiency and renewable energy should be 

central to any near-term economic package. They create new investment. This is a situation where public investment, strategically 

employed, can create, can crowd in, if you will, new private sector 

investment, helping to create markets, helping to create demand 

and helping to change the cost structure of businesses to create 

new opportunities. 

It also creates access to credit. If you look at financing mechanisms to invest in building retrofits. We are talking about creating 

new demand through these public investments for small businesses. And I am very pleased to share the stage today with a repVerDate Mar 15 2010 22:44 Nov 16, 2010 Jkt 061959 PO 00000 Frm 00018 Fmt 6633 Sfmt 6602 E:\HR\OC\A959.XXX A959

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resentative of small business. It is the lighting contractors, the 

insulators. These are the people who will be employed in a cleanenergy economy. They will do the hard work. We call them green 

jobs, but these are really familiar jobs in professions that we know 

and that are at the bedrock of the American economy. 

And lastly, it is specifically focused on construction and manufacturing. These are very, very significant opportunities. They create 

good jobs, career ladders, and pathways into middle class professions. 

So there is a couple of structural reasons why focusing on energy 

efficiency and renewable energy makes good economic sense. They 

are relatively more labor-intensive than either consumption or investment in traditional energy systems. You are taking a dollar 

that you would otherwise spend on wasted energy and instead you 

are sinking it—and it would result in pollution—instead you are 

sinking that into skilled crafts people to retrofit buildings or advanced manufactured goods that operate at a higher level of efficiency. That is a smart investment. It is not just mindless spending. It is strategic spending. So turning this waste into skills is a 

very significant piece. 

Additionally, the domestic content is greater. If we compared the 

same investment in a consumption-based stimulus, just simply giving reacts to folks and 22 percent of average household expenditures under those circumstances would flow to imported goods. In 

a domestic green economic package, we are talking about something closer to 9 percent that would flow out of the economy. The 

bulk of the money stays in local communities. It reduces costs for 

business, very, very significantly. We have two times the energy intensity of our gross domestic product of the rest of—when compared with other industrial countries. It also creates more jobs 

overall, and they are very broad-based. So this is an opportunity 

to create career ladders and pathways into good jobs with appropriate training. 

I want to commend Representative Solis on her green jobs package that was in the recent energy bill. Linking this to training and 

workforce investment is a great opportunity bring people into good 

jobs. 

And lastly, it lowers the cost of action on climate eventually by 

bringing new products to market. By bringing these new technologies, like renewable energy, up the cost curve so they are in 

greater mass production it is going to drive down the cost of these 

new technologies in the long term. 

And let us see. I want to just also mention that public infrastructure is fundamentally community-based. These are local investments. They are very difficult to outsource. And so this is money 

that tends to stay within communities. 

The other point that I want to make is that there is a great deal 

of policy that we can act on very easily. There is a range of policies 

that are in my written testimony. I would encourage the members 

and the staff to look at the policies that we cite. 

I just want to very quickly touch on the story of the Weatherization Assistance Program as I close my remarks. The Weatherization Assistance Program has a cost-benefit ratio of $2.69 for every 

dollar invested because it produces savings for ratepayers, savings 


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for small businesses, and it helps low-income folks. It also creates 

52 jobs for every million dollars invested. And but over the life of 

the program, there have been 5.6 million homes that have been retrofit through this program, but there are 34 million homes that 

qualify for weatherization assistance. The authorization has been 

upwards of $700 million, but the appropriation has been about 2 

and a quarter million dollars. So we are dramatically under-investing in something that clearly yields a positive cost benefit. It creates more jobs than many other forms of investment, and it saves 

low-income ratepayers and some businesses money to reinvest in 

the community. This is a smart, strategic investment for the American economy. It is a good way to be growing our economy at a time 

of tremendous difficulty in driving new investment into construction and manufacturing jobs. 

Thank you very much for the time, and I appreciate your attention. 

[The statement of Mr. Hendricks follows:] 


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Mr. INSLEE. Thank you, Bracken. 

Dr. Pollin. 

STATEMENT OF ROBERT POLLIN, Ph.D. 

Mr. POLLIN. Thank you very much for having me. 

Thanks to Mr. Markey for inviting me, and Mr. Sensenbrenner, 

and the whole committee. 

I am Robert Pollin. I am professor of economics and co-director 

of the Political Economy Research Institute at the University of 

Massachusetts at Amherst. I am also the co-author of this study 

that came out last week called ‘‘Green Recovery’’ that was done in 

conjunction with my friends at the Center for American Progress. 

And I want to acknowledge the outstanding work done by my 

friends, especially Bracken and Kit Batten in helping us produce 

this piece of work. 

I am going to actually go down the questions that Chairman 

Markey posed to me in the written invitation: 

Number one, do economic conditions justify such a program? I 

think we can—don’t have to spend too much time on the economic 

conditions. We all know that unemployment has risen to 6.1 percent. A year ago, it was 4.7 percent. People are also working fewer 

hours, taking pay cuts. They are discouraged. Those don’t get reflected fully in the unemployment statistics. 

We know obviously what is going on in financial markets. 

Though this is not explicitly a financial market program—thank 

you for acknowledging my work on financial markets—it certainly 

can be integrated into a solution to conditions in financial markets 

because, number one, it is establishing a floor for overall demand 

in the economy, which is one of the main things we need, and number two, it is providing opportunities for a new, productive investment outlets. This is the key. 

I mean, the long-term problem with financial markets is excessive attention to speculative profit opportunities and not enough attention to long-term productive investments. So this is integrated 

into that solution. 

Okay. Why a green stimulus program? This is a $100 billion program over 2 years. And according to the modeling that we have 

done, it would create roughly 2 million jobs. There are six investment initiatives, three in the areas of energy efficiency and three 

renewables. The energy efficiency are building retrofits, which is in 

fact the most important single piece in terms of where we think 

money should be spent now; public transportation and freight rail; 

and smart grid electrical transmission system. Those are the energy efficiency areas. And the renewables are wind power, solar 

power, and biofuels. 

I want to emphasize that the way we have proposed this, the 

way we have modelled it, 70 percent of all of the spending is for 

efficiency. So that is certainly the bulk. 

What are the benefits of the program? Well, as Bracken said, the 

job creation is very widespread. I mean, we have that in the report. 

We go over in detail the types of jobs. People think that green jobs 

some how suggests something esoteric. They have never heard of 

it. Well, these are jobs for roofers, welders, electricians, machinists, 

accountants, secretaries, and, yes, research scientists. So it is 


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across the board. It is a jobs program. We don’t even have to call 

it green jobs. We just have to call it jobs. There are good jobs; there 

is a wide range of jobs. 

The 2 million job creation would—in the current job market, as 

we know, there are 9.4 million people unemployed now. That would 

drop the unemployment level to 7.4 million. If we consider that in 

today’s economy, that would mean a fall in unemployment from 6.1 

to 4.8 percent. And as Bracken said, it is particularly focused on 

construction and manufacturing. We know how hard construction 

has been hit. That is the other side of the financial crisis and the 

housing crisis, is the construction industry is flat. You have over 

half a million jobs having been lost over 2 years. This program 

would bring them back. 

It is very efficient as a jobs program. As we said, as Bracken 

said, this combination of investment focused primarily on energy 

efficiency would create 2 million jobs for the $100 billion in expenditure. That is higher than what we got from the April 2008 stimulus, which would create about 1.7 million jobs. And it is dramatically higher; it is four times higher than what we would get 

through a similar expenditure in the oil industry. 

And as Bracken said, what are the two drivers here? It is not 

really that difficult to figure out. And you can be a two-handed 

economist on this. It is domestic content and labor intensity, right? 

It means more jobs are created within the U.S. economy because 

they are focused there, and you have a higher proportion of employment relative to expenditures on non-employment, such as on 

materials, energy, shipping oil from Saudi Arabia to the United 

States. 

For the energy efficiency area, the domestic content is about 95 

to 96 percent. That makes sense. When you think about retrofitting 

this building, it is not going to take a lot of imports to do that. 

Now, what about benefits in terms of energy savings, which is 

what Mr. Markey also asked me about? Very substantial. We think 

about a building like this, public building retrofits. The U.S. Council on Green Energy Building estimates that we have about 21 billion square feet of public building that could be retrofit on average 

at a $1.40 per square foot. So that is to retrofit and make energy 

efficient every single public building in this country would be 

roughly $30 billion or something less program. It would lower energy costs 20 to 30 percent. If we then think about the same model 

for households, private individual homes, you can get the same 30 

percent return over a matter of 3 years. So energy bills go down 

while you are creating jobs. 

Now, what about the funding in the short term, median term? 

We outline three different types of investment funds: $50 billion in 

tax credits for business; $4 billion in loan guarantees, which then, 

of course, underwrite a much larger number of actual loans themselves; and $46 billion in direct spending. So notice that the majority of spending is going to promote private business. 

In the immediate term, we are talking about a fiscal stimulus, 

a deficit spending. Over the longer term, it would paid through by 

cap-and-trade revenue. The fiscal deficit is a problem. It is not the 

overriding problem. The fiscal deficit now as a proportion of GDP 


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is well within range, certainly, of what we have had historically 

under these kinds of conditions. 

Now, finally, the broader benefits. Reduced demand for oil, it is 

going to exert downward pressure on oil. It is going to improve the 

trade balance, which will then improve our current account balance, too. The job creation will generate more tax revenues. It is 

going to channel funds to productive private investors, and finally, 

it will fight global warming. 

Thank you very much. 

[The statement of Dr. Pollin follows:] 


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Mr. INSLEE. Thank you, Dr. Pollin. 

Mr. Redmond. 

STATEMENT OF FRED REDMOND 

Mr. REDMOND. Thank you, Congressman. 

First of all, Congressman, I want to thank you for being a consistent advocate of working families, not only working families in 

the great state of Washington but throughout this country. We 

thank you for your service. 

Mr. Chairman, my name is Fred Redmond. I am the International Vice President of Human Affairs for the United Steelworkers. 

Steelworkers is the largest industrial union in North America. 

We have 850,000 active members and 250,000 retirees that we are 

privileged to represent. We are also the dominant union in every 

energy-intensive and energy-producing industry throughout this 

country. 

Our union has long held the belief that good jobs and a clean environment go hand in hand. Steelworkers are here today because 

we endorse the ‘‘Green Recovery’’ report released by the Center for 

American Progress. And we applaud the Center for highlighting 

the economic and employment opportunities that can exist when 

significant investments are made in the green economy. The report highlights that an investment of $100 billion can 

mean 2 million jobs in the United States economy over a 2-year period. They estimate that over 900,000 jobs in the construction industry and over 580,000 jobs in the industries that supply goods 

for wind turbines and building retrofits would be created with this 

investment. They also estimate that 500,000 jobs would be created 

in the resell and wholesale industries as a result of increased capital from increased employment. 

And during this time, as our Nation continues to experience an 

economic downturn with falling financial markets and the highest 

unemployment in 4 years, policies that spur investment in the 

emerging green economy are more critical than ever. Our union 

and our members have experienced devastating job losses. Over the 

last 10 years, over 3.2 million manufacturing jobs have been lost 

as a result of unfair trade policies, outsourcing, and exporting of 

jobs instead of products. Many of the jobs have been lost from communities like Cleveland, Ohio; Buffalo, New York; Detroit, Michigan; and Baltimore, Maryland; and have gone to countries, like 

China and India, that have terrible, environmental and labor 

standards. 

Our union strongly believes that today’s environmental challenges are tomorrow’s economic opportunities. Evidence of this fact 

already surrounds us. In Germany, for example, 1.4 million people 

are already employed in green sectors with about 40,000 people 

employed solely in the wind energy industry. Increasingly more 

steel is consumed in Germany by the wind energy industry than 

any other except automotive. 

The green economy offers an opportunity to place the United 

States on a path toward energy independence. It also offers unique 

opportunities to revitalize our domestic manufacturing and construction industries. Some of those 2 million jobs in the Center for 


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American Progress report will be for our Nation’s steelworkers machinists, electricians, roofer, drivers and carpenters. And we have 

already seen this happen in States like Pennsylvania where, in 

2004, the State adopted an 18 percent renewable portfolio standard, and as a result, Gamesa, a Spanish-owned wind turbine company, decided to build its first North American plant in Pennsylvania. And because of the demand created by the RPS, today almost 1,000 steelworkers are employed in Gamesa plants outside of 

Philadelphia, building wind turbines on the site that was abandoned by a U.S. steel mill. State RPS drove Gamesa to invest in 

Philadelphia and, as a result, has helped to revitalize a community 

that was devastated by job loss. 

The green job change did not just stop at Gamesa. As a result 

of the demand by the wind industry for steel plate in 2007, Arcelor 

Mittal Steel recalled 250 steelworkers back to work at its Burns 

Harbor, Indiana, plate mill to meet the demand. While these jobs 

are not specifically green jobs in nature, they serve a green purpose 

because the products that these men and women are making in 

this steel mill will be used in wind turbines. Likewise, component 

parts manufacturing, installation of turbines, maintenance and 

construction of knew transmission lines also serve a green purpose. 

This is what we mean when we talk about green jobs and overall 

greening of the United States economy. It is not just creating new 

jobs but also spurring growth in existing industries. So Steelworkers is ready to work to reverse the downward trend in manufacturing by creating clean-energy jobs while we fight to save the 

manufacturing jobs we have left. 

We believe that we are at a critical point in achieving these 

goals, and several opportunities exist right now. There are opportunities for American business to lead the world in clean energy and 

services. There are opportunities for American workers to thrive in 

a new generation of well-paid green-collar jobs. There are opportunities for American cities to become cleaner, healthier and more efficient places to live and work. And there are opportunities to stimulate the flow of private and public capital and a clean energy and 

energy efficiency initiative that create good-paying jobs across a 

wide spectrum of our economy. 

So the Steelworkers Union, we have worked with other labor 

unions, business, environmental, community groups on both the 

State and Federal level to develop and support clean energy policies that will encourage job creation with investment and domestic 

green technologies, energy efficiency, education, training, and we 

hope to continue to work with Congress on these vital issues 

through our national economy. 

Thank you, Mr. Chairman. 

[The statement of Mr. Redmond follows:] 


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Mr. INSLEE. Thank you, Mr. Redmond. 

And congratulations to those folks getting back to work. 

Mr. Kennard. 

STATEMENT OF BYRON KENNARD 

Mr. KENNARD. Thank you, sir. 

Historically, small businesses have created 60 to 80 percent of all 

net new jobs. This prowess continues even in the current economic 

downturn. In July of this year, for example, small firms added 

50,000 new jobs to the private sector, which offset the 41,000 jobs 

dropped by larger companies. From this, we argue that if new 

green jobs are to be created, small business must be called on it 

create them. 

Moreover, two-thirds of all innovations are produced by entrepreneurial small businesses. According to SBA, small firms produce 13 

times more patents than large firms. From this, we are argue that 

if green technology innovations are to be created, then small businesses must create them. In fact, that is the case. Something like 

80 percent of all clean-tech companies are small firms. 

Small businesses are also the means used to deploy technology, 

deploy innovations throughout society. For example, thousands of 

small businesses distribute, sell and install and service air conditioning, heating, insulation, ventilation and lighting systems, now 

all available in energy-efficient forms. Thus, making America more 

energy-efficient and self-reliant creates enormous economic opportunity for small business. 

This is why the small business provisions in the Energy Independence and Security Act of 2007 were endorsed by the Air Conditioning Contractors of America, the Independent Electrical Contractors, the National Roofing Contractors Association, and the 

Plumbing-Heating-Cooling Contractors Association. These are not 

ordinarily people you find lined up at anti-growth rallies. 

An added plus is that these jobs can’t be outsourced overseas because the work is all local. Thousands of small firms are now becoming more energy-efficient in order to cut costs. This is a big 

deal. Small business is half of the economy. It consumes half of all 

energy use for commercial and industrial purposes in this country, 

much of which is wasted. 

According to EPA’s ENERGY STAR Small Business Program, 

small enterprises can save 30 percent on their energy bills through 

energy-efficiency upgrades. Many good models exist for making this 

happen; they are up and running successfully. These can and 

should be widely replicated. I will mention two. 

One is the Energy Stewardship Initiative of the National Automobile Dealers Association, NADA. Almost 750 auto dealers are 

now voluntarily greening their operations as part of this initiative. 

If all 19,700 members reduced their energy consumption by just 10 

percent, that is the association’s goal, they would save approximately $193 million in energy costs and eliminate more than 1 million tons of greenhouse gas emissions each year. 

Another device is called On-Bill-Financing, which makes small 

business energy efficiency as easy as falling off a log. Under OnBill-Financing, an electrical utility offers upgrades to its small 

business customers and loans to pay for the upgrades. The energy 


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savings are used to pay back the loan. So the monthly utility bill 

is no higher than it was before. And when the loan is paid off, the 

small business owners’ utility bill is permanently lower. The big 

news here is that California’s Public Utility Commission, in October of last year, ordered the State’s utilities to begin offering OnBill-Financing to their small business and institutional customers 

beginning in 2009. 

Here is the icing on the cake. The small business half of the 

economy can be made energy efficient virtually overnight. All the 

technology needed is now available. Basically, these upgrades involve doing the same thing over and over in millions of workplaces. 

Examples: Installing improved lighting, better thermostats and occupancy sensors in bathrooms, offices and storerooms. Small stuff, 

but it adds up. Doing such things will save small business owners 

money at a time when they are being hit hard by soaring energy 

costs and struggling to cope. In this setting, the most important 

thing to do is to get the word out to small business owners that 

they possess practical, affordable options which can be exercised 

right now, not years from now. 

Here is where the Federal Government can help. In summary, I 

offer two suggestions. The ENERGY STAR Small Business Program and EPA provides small business owners all the information 

and technical assistance they need to exercise these options. But it 

is greatly underfunded. EPA is not very interested in small business on this front. Less than 1 percent of the ENERGY STAR 

budget is devoted to outreach to small business. It should be given 

the resources needed to perform the job and to make the small 

business half of the economy energy-efficient. 

Secondly, thanks to the House Small Business Committee and 

the Senate Small Business Committee, very good provisions about 

small business energy use were included in the Energy Policy Act 

of 2005 and the Energy Independence and Security Act of 2007. 

Sadly, none of these have been implemented or funded, and we 

hope the select committee will help their colleagues on Appropriations understand the importance of actually funding these programs. They have laid the basis already for making half of the 

economy energy-efficient quickly. 

Thank you. 

[The statement of Mr. Kennard follows:] 


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Mr. INSLEE. Thank you. 

Dr. Thorning. 

STATEMENT OF MARGO THORNING, Ph.D. 

Ms. THORNING. Thank you very much for the opportunity to appear before this committee. 

My name is Margo Thorning. I am chief economist for the American Council for Capital Formation, and I ask that my testimony 

be submitted for the record. 

I commend this committee for its focus on, what do we need to 

do further to stimulate the U.S. economy? Clearly we face serious 

challenges, GDP, real GDP has grown really at only 1 percent over 

the year for the past four quarters, and employment was 6.1 percent last month. And prices have been rising, most recently at a 

rate of 5.4 percent. Some pundits fear that we are entering a period 

of stagflation with sluggish growth and rising prices. So I think it 

is important to focus on what the fundamental problems are with 

the U.S. economy and try to address those. 

Many people think that the housing crisis, the fall of housing 

prices, is what has caused most of the recent distress, unemployment and sluggish growth. Right now, 10 million people are under 

water in the sense that they owe more on their house than the 

house is worth. If housing prices fall another 15 percent, we can 

expect to see 20 million homeowners under water. So one of the 

first challenges I think we need to do is keep an eye on the housing 

market and see whether we are going to need to intervene any 

more than we already have there. Martin Feldstein of Harvard has 

put forth a plan for a mortgage replacement proposal, which is detailed in my testimony, which could help put a floor under housing 

prices and keep them from falling further. 

The second thing that we need to do and that we have begun to 

do is try to stabilize financial markets. I think the actions of the 

Fed and the Treasury so far have shown resolve and shown that 

we are not going to let happen to the U.S. economy what happened 

to the Japanese economy in the 1990s. Japan failed to intervene, 

failed to act quickly after their real estate and housing bubble and 

financial markets collapsed. I think our regulators have learned 

from that. 

So I think we have already taken significant steps to try to bring 

stability to the financial markets, and if we keep an eye on what 

is going on in the housing situation, I think we have time now to 

wait. I think it is premature to enact further economic stimulus 

packages comparable to the one that was passed in February of 

this year. I think we need to wait and see what happens in terms 

of stability and see if the housing issue, which is our central problem, begins to resolve itself. 

Let me turn to brief comments on the CAP proposal to spend 

$100 billion over 2 years on various forms of green jobs. First, I 

think the cap analysis has got serious flaws. They used an input/ 

output model rather than a traditional macroeconomic model or 

general equilibrium model. The model they used can’t take account 

of changes in prices as they flow through the economy. It is an incomplete snapshot. It is a static analysis rather than a dynamic 

analysis. 


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They propose to pay for the increased spending on renewables 

and other initiatives through a cap-and-trade system which would 

raise $75 billion to $200 billion a year. The ACCF did an analysis 

of the Lieberman-Warner bill in conjunction with the National Association of Manufacturers earlier this year. In that study, we 

found that, by 2014, the cost of the cap and trade bill would be 

about $78 billion a year, which is close to the number that CAP 

proposes to spend. And we found that the higher energy prices 

caused by, on unconventional fuel, caused by the cap and trade, actually reduced job growth compared to the baseline forecast by between 850,000 and almost 2 million jobs. So we lost jobs, even 

though our study did pick up new green jobs because people were 

being encouraged to make use of nonconventional fuels. We did 

pick up green jobs, but on net, we lost jobs because of the higher 

energy prices that flowed through the economy exerted a drag on 

productivity and so forth. GDP was less as well. 

So I would like to ask that this study be submitted for the 

record. 

[The information follows:] 


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Ms. THORNING. Renewables already get the lion’s share of Federal subsidies. That is detailed in Figure 2 and Table 2 of my testimony. I think it is probably not a good use of taxpayer money to 

accelerate the spending that we are already doing on renewables. 

Renewable energy is more expensive than conventional fuels. I 

have a table in my testimony that shows that solar, for example, 

solar electricity was, according to testimony by a GE representative, about 36 cents a kilowatt hour compared to about 7 cents for 

gas and 4 and a half cents for coal. 

Furthermore, if you take a look at states that make great use of 

renewables and have high renewable portfolios, like California and 

Texas, they have the highest electricity costs in the U.S. So I think 

more focus on pushing renewables right now is not appropriate because high energy costs are already exerting a significant drag on 

the U.S. economy. 

I do think there are ways we can encourage energy efficiency 

more than we do in a cost-effective way. One is to increase costrecovery allowances so that we can depreciate more quickly energyefficient investments. And we have a study on our Web site detailing how disadvantaged U.S. firms are in terms of cost recovery. 

When we need to accelerate research on carbon capture and storage, so that we can use the 400 years supply of coal we have here 

and hopefully reduce greenhouse gas emissions and develop plugin vehicles that we will be able to plug in to coal-fired plants, 

thereby decreasing our dependence on foreign oil. 

We need to promote domestic energy sources by increasing access 

to onshore and offshore areas. 

And finally, to conclude, I think the U.S. economy does not need 

the one-two punch of high-cost renewables and a cap-and-trade system. 

Thank you. 

[The statement of Ms. Thorning follows:] 


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Mr. INSLEE. Thank you all. 

I will start, if I can. Maybe I can start with Dr. Pollin, and then 

anyone else who wants to join in. 

I wanted to ask, you, Dr. Pollin, how do you decide how to allocate the strategy between tax credits, loan guarantees, grant programs in the proposal? 

Maybe Bracken can address this, too. But what is the rationale 

for that particular allocation? 

Mr. POLLIN. Well, the first rationale is I think there is actually 

universal agreement that we would like this over time to be primarily focused around the private sector. So the fact that we have 

the program—the main funding allocation is for tax credit. So that 

does lower the cost of capital for private business, small business 

included. 

Similarly, the loan guarantee program, the loan guarantee program offers a lot of opportunity for probably relatively low burden 

on the public fisc because of course the public fisc only pays when 

loans go into default. So, then, why do we even have any? We have $46 billion allocated to the public spending. Well, first and foremost, that is the 

fastest way to generate this recovery program. 

Right now, if a measure were to pass, we could get public building retrofits going right now. Number two. And as I said, if we take 

those estimates of the American Council on Green Buildings, to do 

all the public buildings in the country would be in the range of $26 

billion to $29 billion. We could start that right now in a big way. 

Secondly, the public transportation. It is often said, well, if 

Americans love their cars so much they will never take public 

transportation. Well, actually, public transportation use has gone 

up by 5 percent over the past year, obviously correlated with the 

rise in oil prices. So another measure that we propose is public 

spending to increase availability of public transportation, lower 

fares and increase maintenance. So that is the basic mix. 

Mr. INSLEE [presiding.] Bracken, did you want to add something 

to that or not? 

Mr. HENDRICKS. I wanted to actually, if I may, just speak briefly 

to the question of renewable energy and the subsidy that it has received. 

There are a number of subsidies that the fossil fuel industry has 

received consistently over time that are actually not contained in 

the analysis that Dr. Thorning was referring to. The exclusion of 

public power, inappropriate treatment of highway funding, exclusion of liability caps, the value of underwriting the risk associated 

with nuclear power, a range of costs associated to the investments 

in the Strategic Petroleum Reserve and dealing with fuel cycle 

costs to nuclear power. 

In a whole host of ways there are a number of very substantial 

investments that have been made in the traditional fossil fuel and 

existing mature energy industries over time, and these costs I 

think need to be given full consideration. 

I also would like to just point to the fact that renewable energy, 

when it is brought on line, it provides much greater predictability 

and stability in energy prices; and that essentially what we are 

doing is enabling a situation where capital investments can be 


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made now in new technology that will lock in energy costs and prevent some of the spikes that have been going on. We are at a moment where we have just seen 200 percent increases in Appalachian coal when we are sending over half a trillion dollars in oil 

imports. 

We had an opportunity to invest in the creation of new industries, drive these technologies down the cost curve. It is creating 

new manufacturing opportunities, new small business opportunities. And these are investments that stay within the domestic economy; and this a fundamental difference with the dollars that are 

spent on clean, renewable energy than those that are spent on energy imports. 

I also would just like to take a very brief moment to comment 

on the role of energy efficiency. Energy efficiency, which is the bulk 

of this package, this is 70 percent focused on energy efficiency 

which drives down the cost for businesses for consumers. 

There is an analysis by the American Council for an Energy Efficient Economy, which looked at just a basic suite of energy efficiency programs. And if, in 2001 when the Bush administration 

came in, they had implemented a full and consistent commitment 

to achieving energy efficiency across the American economy, today 

we would have realized $206 billion of energy cost savings as a result of moving these existing technologies into the market. Those 

are very real cost savings. 

So if we are looking at the impacts of costs on the economy, I 

would put to you that the combination of saved energy costs 

through energy efficiency and improved stability and reduced volatility of energy prices from renewables are a significant contribution to the American economy. And I just wanted to underscore 

those points. 

Thank you for your attention. 

Mr. INSLEE. Thank you. If I can, while I still have the chair, at 

least in part, I want to ask Mr. Redmond, how does your membership look at these public investments? If I was going to ask them 

what is a more valuable public investment, $85 billion, loaning it 

to AIG or putting it into the steel going into everything we want 

to build. 

How would your members look at that issue? 

Mr. REDMOND. Well, our members, one of the things that we— 

or task that we took on as a union was to really educate our members, the workers throughout the AFL–CIO, on the future of the 

manufacturing sector and how the opportunity to revive the manufacturing economy in this country has come through the establishment of creating a green economy. 

I think that workers throughout this country, not just in my 

union, but workers generally in manufacturing, understand that 

the need to—that the possibility not only to do a fundamental, humane—we have a fundamental, humane responsibility to leave a 

clean planet for our children. 

Also, with these new technologies, it is going to revitalize the 

manufacturing base in this country. If you were to pose the question of investing in AIG in terms of investing toward a green economy, then I think the majority of workers in this country would 

choose investment, particularly in manufacturing, toward a green 


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economy, because these are jobs that can’t be outsourced, these are 

the type of jobs that can’t be lost to insufficient trade agreements 

and these are jobs that provide a very, very critical responsibility 

that we have to our children and to our planet. And I think that 

more and more American workers are becoming aware of that fact. 

And it is not just directly related, as the example that I gave you 

with steel companies, it is not directly related toward a green economy. But it is the aspects that go into the green economy and the 

amount of products that are going to be needed in order to make 

that become a reality. 

Mr. INSLEE. I thank you. 

And of course the good news is, a couple days ago we passed a 

bill that will move many of the things forward that this report 

talks about, and we have got some more work to come. 

Thank you very much. 

The CHAIRMAN [presiding]. The Chair recognizes the gentleman 

from Missouri, Mr. Cleaver. 

Mr. CLEAVER. Thank you, Mr. Chairman. 

Dr. Pollin, I was very interested in your comments and in your 

submitted report with regard to the economy and the subject matter today. I was not—I was ambivalent on the stimulus package 

that we approved for a variety of reasons. In my real life, I am a 

United Methodist pastor, and I knew what was going to happen 

when people received those checks. They were not going to go buy 

new big screen televisions or refrigerators, all the things I heard 

here in Washington. I knew what they were going to do. They were 

going to put the extra money on their MasterCard payment, make 

a house payment, and that money was not going to turn over in 

the economy. 

Because I deal with real people, I asked Mr. Bernanke—I am on 

the Financial Services Committee. I asked Mr. Bernanke whether 

we needed another stimulus package when he appeared before our 

committee about 6 weeks ago; and he said that it remains a question that there may be a need for what I had said to him, ‘‘stimulus 

2.’’ 

Do you believe that if we had a stimulus package—I mean, you 

were saying you didn’t think we needed one. But let us assume 

that all the smart people conclude that we do need a stimulus 

package—you know, the people who tell us what we ought to do because they are smarter, who appear before the Financial Services 

Committee—and we decide to do it. Would it be a good idea if we 

used that money to get a jump start, as a launching pad for creating the 2 million green jobs that I think we all—at least the 

panel and the two members of this committee remaining—believe 

that we will be able to create? 

I mean, let us take, for example, natural gas. If we created central fueling places in cities where natural gas could be used or— 

there are cities who are in need of infrastructure projects. If we can 

create green source systems, as we think we are going to do in my 

community in Missouri, in Kansas City, Missouri, and really begin 

to do this now instead of its being some futuristic goal; that if we 

have a stimulus package, could we not do two things at once—stimulate the economy and give a jump start to the creation of a green 

economy? 


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Ms. THORNING. A very thoughtful question. And of course I have 

the highest respect for Ben Bernanke’s analysis. And in fact I 

would tend to agree that we might need a stimulus package, but 

I think it is premature. And I think if we do need one there would 

be better ways to deploy $100 billion than trying to force it into alternative energies like solar, wind, photovoltaic, that are very expensive, that we have been funding. 

I was at the Department of Energy almost 30 years ago. I know 

I look too young for that. 

Mr. CLEAVER. You do, you actually do. 

Ms. THORNING. But I was there 30 years ago, almost 30 years 

ago, and we were funding these projects very heavily back 30 years 

ago. So these types of energy we hope some day may be commercially viable, but I think they are not there yet. 

Solar, for example, we can’t store it; it is only practical in certain 

situations. Wind has to be backed up by conventional fossil fuel, so 

the cost of wind is really double the cost in my testimony. 

So if I had limited taxpayer money, I would try to focus it on the 

most—where you get the most bang for the buck. And I think—as 

I say in my testimony, I think it is premature to decide whether 

we need to spend even more taxpayer money to stimulate the economy. 

I think we ought to wait and see what may happen to financial 

markets, and then if the housing market doesn’t begin to rebound, 

if I were going to spend some money, I would spend it on a plan 

like Martin Feldstein has put forth to try to keep people in their 

homes. People who are fighting to stay in their homes aren’t going 

to be interested in insulating their house and that sort of thing, 

they are going to be trying hard to make the payments they need 

to stay there. 

So I would keep an eye on the economy—and your committee, I 

know you are doing that—and I would wait to see if by the next 

2 or 3 months things aren’t improving. But then I would take a 

look at how to help housing, because that is our central problem 

and that is the reason we have had so much turmoil in U.S. financial markets, which unfortunately now has spread to many of our 

trading partners. 

Mr. CLEAVER. But—it is not a but; I agree, and I guess most of 

the experts agree that to solve the housing problem is to at least 

begin the healing of the economy. 

And I agree, we had 300—I think 300,000 first steps toward additional foreclosures last month. I can’t remember the exact figures, 

320,000, which means that this crisis is far from over. And there 

is no reason to believe that we are—that, as many are saying, let’s 

keep the free market, it will correct itself, leave everything alone, 

anybody who invested in products that were not sound will pay for 

it and they won’t do it again and everything is glorious, and we all 

sing Kumbaya. 

The truth of the matter is, I don’t know if we can get a hand 

around the housing market. We have reinvigorated FHA. We 

beefed them up. FHA only had about 3 percent of the market, and 

now it is going to become a viable option for people buying homes. 

We increased—we are now allowing jumbo loans, some $600,000. 

I think we are doing things that we think are going to help. We 


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thought Fannie Mae—in fact, we thought that was going to be a 

help as well, Fannie Mae and Freddie Mac. 

But maybe if we are talking about homes in the poor sections of 

towns, of cities, people might be better able to keep their homes if 

their homes were better insulated. I mean, if you look in the colder 

regions of the country, people are heating up their front yards and 

back yards and little areas over the roof because of how energy inefficient homes are. 

I am not Pollyanna, but I really wonder about losing this opportunity where perhaps there is a convergence of two things, the 

need to get the economy rolling again and the need to do, I think, 

a first step toward a green economy. 

Ms. THORNING. Well, if I could just say one more thing, of course 

we all want to see more energy efficiency as new houses are built. 

It is a question in my mind of what is the most best way to use 

taxpayer money, because this is our taxpayer money we are talking 

about. And if you try to accelerate what is already going on, which 

is considerable work on renewables and new initiatives in that direction, the Federal Government spending lots of money, as are 

States; and of course the renewable portfolio standards also accelerate that kind of transition. 

But one of the earlier witnesses mentioned the German economy 

with 1.4 million workers employed in green energy and 44,000 in 

the wind energy business. I think we ought to take a look at how 

the German economy has performed. In recent years, since 2003, 

the German economy has grown on average at 1.2 percent a year, 

and their unemployment rate has averaged 9.6 percent a year. 

I think one reason the German economy is struggling and so 

sluggish is that they have very stringent environmental requirements, including trying to meet the Kyoto Protocol targets to reduce their greenhouse gas emissions; and they have directed a lot 

of their taxpayer money into very costly renewable energy. So it 

may be that the 44,000 German workers who are making windmills are doing fine, but 9.6 percent of their population is out of 

work and their economy is really in the doldrums. 

So I think, as an economist, I want the most bang for the buck. 

I want to achieve the best we can for all of our people. And if 10 

million people are under water on their mortgages right now and 

if 20 million more home owners—if 20 million would go under 

water if housing prices fall another 15 percent, that is the most serious challenge we will face since the Great Depression. People who 

are owing more on their house than it is worth simply have very 

little incentive to stay in it. 

We will never break this downward spiral if we don’t focus on 

stabilizing housing prices. So I believe while many of the goals are 

quite worthy in the CAP report, I think their analysis is fundamentally flawed because they used an inappropriate model. And I don’t 

think we would see a net gain of 2 million jobs; I think we would 

see loss of jobs in other sectors as prices rose. 

And, of course—so, on balance, I think we need to hold back and 

wait and see how the economy is going to do; and then, if it isn’t 

improving, put the resources into our fundamental problem, which 

is falling housing prices. 

Mr. CLEAVER. Thank you. 


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The CHAIRMAN. The gentleman’s time has expired. 

Let us just have a brief discussion if we could about efficiency. 

Let us leave aside renewables for a second. Let us just focus on efficiency. 

Is it worth it to invest in efficiency? Do we get a big payback 

from moving that way? Is the short-term investment almost inevitably rewarded by a longer-term benefit to the individual, to the 

company, to the country? 

Dr. Pollin, could you deal with that question? 

Mr. POLLIN. Well, the short answer is ‘‘yes.’’ The efficiency gains, 

as I documented and discussed, are very straightforward. We are 

using known technologies. We aren’t thinking about futuristic technologies. 

We know that we can deploy workers because a lot of it is construction jobs. We know that 600,000 or so construction jobs have 

been lost over the last year. We know we can start these things immediately. We don’t have to engage in land purchases, designing 

projects for infrastructure and so forth. 

So the answer is a very straightforward ‘‘yes.’’ 

The CHAIRMAN. Okay. 

Dr. Thorning, what do you have to say to Mr. Pollin? 

Ms. THORNING. I think energy efficiencies ultimately are very desirable. The question is how fast do we get it and who pays for it. 

The U.S. economy, if you look at the DOE data, is getting more 

energy efficient by about 1.7 percent every year. Each dollar of 

GDP is generated with less energy every year. So we are making 

good strides in that direction. 

The question is, what is the best way to accelerate it. And as I 

mentioned, if we could take a look at the U.S. Federal Tax Code— 

and, for example, smart meters, which communicate between the 

electricity company and the customer, are depreciated real slowly 

here in the U.S. 

The CHAIRMAN. Good. That is what I am saying. Let’s agree on 

that. Let’s agree that we are going to work on it. 

We will put together a package that you, Dr. Thorning—it is 

called the Pollin-Thorning plan to invest in energy efficiency all 

across the country. And we could do that, don’t you think? 

Ms. THORNING. But the question is, how much taxpayer money 

goes into this? 

The CHAIRMAN. How much does the taxpayer save as a consumer? If you think of the taxpayer as a consumer then, you know, 

I see Mr. Hendricks; he looks at this $9 billion tax break that the 

oil and gas industry gets each year. Well, obviously, the same consumer is actually subsidizing the oil and gas industry as they are 

getting tipped upside down at the pumps. 

So they are one and the same, right, the consumer and the taxpayer, when it comes to this whole energy sector? 

So could you deal with that, Mr. Hendricks, in terms of the relationship that exists between the incentives that are given for one, 

as opposed to the other, that is efficiency? 

Mr. HENDRICKS. Well, that is an excellent point. It is something 

that we document in the report. 

I mentioned earlier the difference in household expenditures. 

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tion, 23 percent of that money flows out of the economy. If you invest in energy cost savings in an infrastructure, only 9 percent 

flows out of the economy. So that basically is money that stays 

within local communities. 

In addition to the sort of investments that we are talking about 

on improved transit spending. Dr. Thorning mentioned the smart 

grid. The economic benefits of improving our grid infrastructure are 

very, very substantial, and they cascade throughout the economy 

because they make the economy, as a whole, function more efficiently. 

I believe the Pacific Northwest Laboratories estimated the benefit at about $80 billion over 20 years of moving to a smart grid 

that has these kind of real-time pricing and abilities to manage 

and optimize proficiency. RAND Corporation estimates that at 

about $100 billion. That is very, very substantial new investment. 

If you look at how transit spending cascades throughout a community, you are making job access easier for working families, you 

are saving money that consumers would otherwise be spending on 

oil imports, and you are improving quality of life overall. So you 

are creating opportunities for new economic development that are 

very substantial. 

And the efficiency of our economy, we use about twice as much 

energy for every unit of GDP as our closest direct economic competitor. That, in itself, is a competitive disadvantage that we need to 

address. This is a chance to do it in a way that is also going to create benefits and growth. 

The CHAIRMAN. I agree with you 100 percent, Mr. Hendricks. 

That is the model that we have to go to. 

Mr. Redmond, let me go over to renewables here for a second. 

Somebody told me that it takes 26 tons of steel to build one wind 

turbine, 26 tons of steel. 

Now, that seems like a lot of jobs here in the United States, that 

seems like a lot of new opportunities for our country. And Dr. 

Thorning doesn’t think that wind is yet efficient enough as a competing source of electricity, but the cost is certainly plummeting almost the same way that the cost of what we did when we got the 

policy—we had the policy wrong on cell phones. Going into 1993 we 

had analog, and we only had two companies doing it; and it was 

50 cents a minute, and very few people had cell phones. 

But then, in 1994, the committee that Mr. Inslee and I served 

on, the Energy and Commerce Committee—I was the chairman of 

Telecommunications—we moved over 200 megahertz of spectrum 

and didn’t let the first two companies bid on it. The third, fourth 

and fifth company that bid in each market then went digital and 

they lowered the price down to under 10 cents a minute, and now 

there are more cell phones than there are Americans, because you 

just changed the model. 

So if you predict the future by looking at today, you are going 

to have a very real problem. You have to have some confidence that 

this technology is going to come down and there will be a transition 

period. 

Talk to us a little bit about that and how it impacts the steelworkers and other blue collar workers across the country. 


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Mr. REDMOND. You are right, the number that we got is more 

like 20, 28 million pounds of steel. 

The CHAIRMAN. Twenty-eight tons of steel? 

Mr. REDMOND. Twenty-eight tons of steel could go into the building of—construction of one windmill. And the two largest domestic 

steel companies in the United States, which are U.S. Steel and 

Mittal Steel, have been actively pursuing that market. But the 

markets do not exist here in the United States. 

We have had relationships with—I spoke in my report about 

Gamesa, which is a Spanish company, which this week is over in 

Canada because the Canadian Government is very, very interested 

in this sort of technology. 

But the two largest steel producers here in the United States are 

tuned up. They are ready to go. The building trades throughout the 

United States are investing within their training centers in order 

to teach workers, and they have been doing educational courses to 

train dislocated workers in this sort of technology. So the infrastructure is there with the steel companies in the American workforce to capitalize and take advantage of this. 

The CHAIRMAN. So if we had a national renewable electricity 

standard, if we mandated that 15 percent of all electricity by 2020 

had to come from renewables, what would that mean for the steelworkers? What would that mean for other workers across the country? 

Mr. REDMOND. Well, it would be huge, not just for steelworkers. 

But with that sort of renewable standard, I mean, it would also 

have a boom in the construction industry. It would employ and 

generate the need and the capacity to train and employ thousands 

of electricians and people within the building trades. 

And the capability is there. The irony of this is that competing 

markets are coming to realize the necessity for us to go in this direction. And the disappointment to working families and to the 

American labor movement is that the U.S. Government and the 

corporations of the United States and—the investment is not just 

there. We haven’t totally grasped upon this model where, if we 

don’t feel we are going to grasp behind it soon, we are going to be 

left behind in this sort of technology. 

The CHAIRMAN. Thank you, Mr. Redmond. 

Dr. Pollin, Dr. Thorning points to the Lieberman-Warner climate 

change bill as a good example of why legislation in this area of controlling global warming is way too costly and will kill the economy. 

How do you respond to that? 

Mr. POLLIN. Thanks very much. And thanks for the opportunity 

to address this point, because Dr. Thorning has made a couple references to the inappropriateness of the model we used to estimate 

the employment. 

Our model is a very simple model; I acknowledge that, and in 

fact I endorse it, obviously. Whatever we do within any modeling, 

you have to assume things, you have to build in assumptions; and 

my model has an absolute minimum number of assumptions. And 

the basic findings that fall out of it are that you are going to get 

a lot of jobs because of the increased labor intensity and the domestic content. That won’t go away no matter how much we complicate 

the model. 


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Now, by contrast, the model that Dr. Thorning has referred to is 

full of hidden assumptions that she makes no reference to. And in 

fact I have the full paper here. It is very unclear what the references are, and I won’t go through all of them; but I want to get 

to the punch line, the conclusion of their model where Dr. Thorning 

says that this is going to have serious negative consequences with 

Lieberman-Warner, and they know that because of the general 

equilibrium model that they have built. 

Well, if you turn to page 12 of her testimony that shows the 

model and the results—and I am only going to refer to the highcost case. So we see the GDP estimate of 2,014 is 16,100—I mean, 

16.1 trillion and so forth. 

I want to break that down just so we understand what is really 

in this model. It is very important to understand this. 

They begin with the 2005 level of national income, which is 12.4 

trillion; and then they have a baseline case without LiebermanWarner. Without Lieberman-Warner, you come out with 16.4 trillion. With Lieberman-Warner, high cost case, you come out with 

16.1 trillion. It is the difference between a growth of 32 percent 

versus 30 percent, almost indiscernible. And I want to break this 

down further so it is clear, put it in terms that are real for people. Per capita income in 2005 is $41,300. And if we move their 

model—I am not even going to get into my criticism of the hidden 

assumptions; I am saying let’s go with their conclusion. This is 

their conclusion that she was just referring to. Under the baseline situation—so we start at 2005 at $41,300. 

Their baseline estimate for 2014, without Lieberman-Warner, is 

$50,930; with Lieberman-Warner, it is $49,900. Again, almost indiscernible from their own model, from her testimony, okay? And 

that takes no account of these factors that I was referring to, the 

increase in labor intensity, the increase in domestic content, the reduction in fossil fuel expenditure and a solution to global warming. 

The CHAIRMAN. Dr. Pollin, thank you for that answer. And I 

might note how proud we are in Massachusetts. You are University 

of Massachusetts. Thank you so much for being here. 

Mr. POLLIN. I love UMass. Thank you. 

The CHAIRMAN. And I love UMass, and I love the fact that you 

are from UMass. And by the way, I also love the Boston Celtics; 

I love them with every bone in my body. 

But I would like to note that we are honored to have your mother 

and father in the audience, the owners of the Washington Wizards, 

Abe and Irene Pollin, sitting right over here in the front row. And 

we are very proud to have them here with us today as well. 

And I can understand your split allegiance on that. 

Mr. POLLIN. No, not split. 

The CHAIRMAN. No, I mean, you like UMass, but not the Celtics. 

I know there is no love for the Celtics in your entire being. That 

I know. 

And let me go to you, Mr. Kennard, in terms of the small business aspect of this and the benefits that flow from the construction 

and efficiency industry investments. Could you deal with that question for a second? 

Mr. KENNARD. On energy efficiency, I would like to point out that 

there are 27 million small businesses; they are half of the economy, 


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and getting them made energy efficient doesn’t require anything in 

the way of taxpayer support. 

If these businesses become energy efficient, they save money, 

they cut their energy bills. The hang-up is getting the information 

to them about the availability of practical, affordable operations for 

new lighting or whatever. And the difficulty has been getting their 

attention, because small business owners have many responsibilities and haven’t focused much on energy costs. They have assumed 

they can’t do anything about it. That is changing now because soaring energy prices are compelling small business owners to pay attention. 

There have been recent polls. Energy costs have displaced health 

care costs as a priority concern for small business owners. So they 

are really now taking it seriously. So the point is to get them the 

information and say, hey, you can do this now; you don’t have to 

wait on government or the utilities or anybody else, you have got 

options now that will save you money. 

The CHAIRMAN. Thank you, Mr. Kennard. My time is expired. 

The Chair recognizes the gentleman from Washington State, Mr. 

Inslee. 

Mr. INSLEE. Thank you. I think I have one question. 

Dr. Thorning, in your assessment did you factor in the damage 

to the economy that would be occasioned by global warming if it 

is not restrained? 

Ms. THORNING. That is an excellent question. 

Our study did not try to measure the harm that might ensue if 

global emissions don’t fall. None of the other studies by EPA or 

EIA do that either. However, EPA released a study right after our 

study was released, looking at Lieberman-Warner, and they also 

analyzed the impact that would occur if the U.S. met the 

Lieberman-Warner targets to reduce emissions by 40 percent by 

2030 and by 60 percent or so by 2050. 

EPA’s analysis showed that unless China and India and other 

developing countries also got on a sharp path to reduce emissions 

that, by 2050—by 2100, global concentrations of CO2 would be only 

2 to 3 percent less. They would drop from about 730 parts per million to 727 parts per million. 

So EPA concluded that Lieberman-Warner would have no beneficial impact on the global greenhouse gas situation unless other 

countries participate. So that is something that needs to be kept 

in mind as we try to see how to cost effectively reduce greenhouse 

gas emissions. 

I would also like to address the points that Dr. Pollin made when 

he stated that the ACCF/NAM study was full of obscure assumptions. I would like to direct your attention to page 6 of the study 

where all the assumptions are laid out. And our study was one of 

the first to really spell out what assumptions were used when 

SAIC ran the NAM’s model, the Department of Energy’s own 

model. 

So we didn’t hide a thing. And when you use realistic assumptions about how quickly nuclear power generation can come on line 

and how quickly carbon capture and storage can occur and what 

the construction costs for new generation are, you get results simiVerDate Mar 15 2010 22:44 Nov 16, 2010 Jkt 061959 PO 00000 Frm 00125 Fmt 6633 Sfmt 6602 E:\HR\OC\A959.XXX A959

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lar to us. EPA’s scenario number 7 came up with the same results 

as ours did. They constrain nuclear constrained carbon capture. 

So I think it is inescapable that near-term targets and timetables 

to reduce carbon emissions, to switch away from fossil fuel to other 

types of energy would have a drag on the economy. And with respect to the question about the economic consequences of a bill like 

Lieberman-Warner, I do direct you to page 12 of the testimony 

where we show the absolute change compared to the baseline in 

household income, which is very substantial over the three time periods we looked at, as well as the employment impact. And that impact happens because energy prices have to rise sharply to meet 

these targets. 

Mr. INSLEE. Dr. Thorning, excuse me, you have answered six 

questions so far I haven’t asked. We do have some time constraints. 

I just have to say that it is always interesting to me when those 

who want to prevent America from solving global warming come to 

talk to us, they always ignore the fact that we will have economic 

costs associated with inaction. And they come and they urge us to 

do nothing and forget the fact that doing nothing will cost the U.S. 

economy millions of jobs and billions of dollars with the reduction 

of our agricultural output, our mitigation costs, changes in our infrastructure and health costs associated with a rising potential of 

infectious diseases. 

And it is amazing to me that economists will come to us and just 

totally ignore the costs of inaction. That is one point I want to 

make. 

Second, it is also amazing to me that people come, economists 

will come and say that if we do investments in new technologies 

that are not incumbent industries with millions of lobbyists running around Washington, DC, those costs are going to ruin the U.S. 

economy; but we can go ahead and do the costs for the incumbent 

industries that do have millions of dollars of lobbyists running 

around Washington, DC, like the coal and the nuclear industry. 

Those costs are just hunky-dory. I find that very interesting and 

shocking, but that is life. 

Mr. INSLEE [presiding]. And with that, I would like to adjourn 

this committee hearing. And I want to thank all the witnesses for 

joining us in this important discussion. We look forward to great 

progress. Thank you very much. 

[Whereupon, at 4:24 p.m., the committee was adjourned.] 


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