In a speech delivered yesterday at The Brookings Institute, President Obama announced a series of proposals to boost job growth. Acknowledging that the federal government must be fiscally prudent, he indicated that additional funding would come from “savings” from the Troubled Asset Relief Program or TARP.
According to the Associated Press, the Administration now estimates that the TARP will cost about $200 billion less than the $341 billion the White House estimated in August. The lower estimate reflects faster repayments by big banks and less spending on some of the rescue programs as the financial sector recovered from its free fall more quickly than anticipated.
In the world of make-believe money, that means $200 billion available to spend on other programs. The President announced three focus areas: assistance to small businesses through tax cuts and other financial incentives to hire workers; additional infrastructure (e.g., highway, transit, rail, aviation, and water) investments; and energy efficiency and clean energy investments.
For the third focus area, here’s a White House summary:
New incentives for consumers who invest in energy efficient retrofits in their homes. Smart, targeted investments in energy efficiency can help create jobs while improving our energy security and saving consumers money. The President today called on Congress to consider a new program to provide rebates for consumers who make energy efficiency retrofits. Such a program will harness the power of the private sector to help drive consumers to make cost-saving investments in their homes.
Expansion of successful oversubscribed Recovery Act programs to leverage private investment in energy efficiency and create clean energy manufacturing jobs. The Recovery Act included historic investments that have helped to build the foundation for a clean energy economy. The Administration supports expanding programs for which additional federal dollars will leverage private investment and create jobs quickly, such as industrial energy efficiency investments and tax incentives for investing in renewable manufacturing facilities in the U.S.
Consumer incentives for energy efficiency improvements are similar to the Department of Energy’s Energy Efficiency and Conservation Block Grant program. To date, the DOE has awarded more than 1,700 grants, totaling over $1.9 billion. A running list of U.S. states, territories, local governments, and Indian tribes that have received monies is available on the program website. The redirected TARP money would be expected to fund additional programs.
Some DOE stimulus programs have been oversubscribed resulting in the cancellation of anticipated funding rounds, such as with Phases II and III of the Smart Grid Investment Grants. Additional TARP monies will be used to fund certain programs, with the President calling out industrial energy efficiency and renewable manufacturing facilities.
The industrial funding appears to be in addition to the $155 million directed to industrial energy efficiency projects at 41 locations across the country announced in November. The renewable manufacturing component seems to be in addition to ARRA’s previous $2 billion worth of energy related manufacturing investment tax credits. Those credits are aimed at projects creating or retooling manufacturing facilities to make components used to generate renewable energy, storage systems for use in electric or hybrid-electric cars, power grid components supporting addition of renewable sources, and equipment for carbon capture and storage.
Faster repayment by big banks of TARP monies is welcome. Strategically allocating repaid TARP monies to fund energy infrastructure programs with long-term benefits is worthwhile.