PERI: Green is $Green

The PERI report, by Robert Pollin seems to be influential in the “how-to end the recession plan” from President-elect Barack Obama,

Robert Pollin is a professor of economics and founding co-director of the
Political Economy Research Institute at the University of Massachusetts.

“To further all these goals we need a green public- investment stimulus. It would defend state-level health and education projects against budget cuts; finance long-delayed upgrades for our roads, bridges, railroads and water management systems; and underwrite investments in energy efficiency—including building retrofits and public transportation—as well as new wind, solar, geothermal and biomass technologies. This kind of stimulus would generate many more jobs.”

Compares current situation with Reagan’s 1983 spend situation:

Exihibit A: Reagonomics:

One way to approach the question is to consider the last
time the economy faced a recession of similar severity, which
was in 1980–82, during Ronald Reagan’s first term as presi-
dent. In 1982 gross domestic product contracted by 1.9 per-
cent, the most severe one-year drop in GDP since World War
II. Unemployment rose to 9.7 percent that year, which was,
again, the highest figure since the ’30s.
The Reagan administration responded with a massive
stimu lus program, even though its alleged free-market devo-
tees never acknowledged as much. They preferred calling
their program of military expansion and tax cuts for the rich
“supply-side economics.” Whatever the label, this combination generated an increase in the federal deficit of about two percentage points relative to the size of the economy at that time. In 1983 GDP rose sharply by 4.5 percent. In 1984 GDP growth accelerated to 7.2 percent, with Reagan declaring the return to “morning in America.” Unemployment fell back to 7.5 percent.
costs:

“Let’s return to the Reagan experience for perspective. In
1983 the Reagan deficits peaked at 6 percent of the economy’s
GDP. With GDP now around $14.4 trillion, a $1 trillion deficit would represent about 7 percent of GDP, one percentage point higher than the 1983 figure. Of course, the global financial system has undergone dramatic changes since the 1980s, so direct comparisons with the Reagan deficits are not entirely valid. One change is that gov-
ernment debt is increasingly owned by foreign governments and private investors. This means that interest payments on that debt flow increasingly from the coffers of the Treasury to foreign owners of Treasury bonds. ”

PERI UMass Report

Tags: 1983, Barack Obama, PERI, Reagan, Recession, Recovery, Robert Pollin, The Nation