As Congress Debates an Economic Stimulus, Where Should the Money Be Spent?

March 24, 2020 | 12:33 pm
Lucas Sankey/Unsplash
Ken Kimmell
Former President

We face a once-in-a-lifetime challenge—a pandemic that is upending the entire world, threatening the health and lives of millions, overrunning our health care systems, shutting down economies, closing borders, and even ending social gatherings.

But something rare is showing signs of life in Washington DC—a seemingly bi-partisan determination to help the country cope with this crisis, and act with the urgency that the times demand. So far, one immediate emergency bill appropriated approximately $8 billion designed to treat and prevent the virus. (Much more needs to be done here—there is an urgent need for masks, gloves, face shields and gowns for doctors and nurses, and ventilators for sick patients). A second bill has also passed that provides for extended sick leave and free testing for the virus. A third bill is also being debated to stimulate the economy by providing cash to many who are losing or will lose their jobs and helping states to cope with burgeoning unemployment rolls.

These are a good start, and they put the focus where it should be—on helping our front line responders, the critically ill, and the millions of vulnerable workers who through no fault of their own are losing their jobs.

However, as estimates of unemployment reach as high as 30%, it seems likely that these initial bills will fall far short of the stimulus needed to prevent an economic freefall. And so there will be pressure to do more to stimulate the economy, create jobs and consumer demand, either through direct government expenditures, tax credits, loans, or other means. This means the government will be directly and massively guiding the direction of the economy—a circumstance that may not happen again for years or decades. It is therefore imperative that we get this right.

There will likely be many industries with their hats in hand, looking for federal help. How should Congress sort through the competing priorities?

First, large scale, economic stimulus must be guided by a long-term vision of the future economy. That vision, in turn, must be inspired and informed by the imperatives we faced before the virus hit, as those imperatives will still be front and center when the virus recedes.

The most obvious one here is climate change. While COVID-19 has knocked climate change off the front page headlines, climate change remains our most existential threat. To address it, nothing less than a full-scale mobilization of federal resources (matched by other countries around the globe) is needed.

The political realities suggest that the COVID stimulus will not include the funds for that entire mobilization. But the stimulus can be a substantial down payment for the transition to a clean energy economy—and making that payment now would benefit the economy both short term and long term.

Prior to the virus, some of the fastest growing industries in the country were wind and solar energy, yet these fledgling sectors are at grave risk due to supply chain disruptions and a general drop in demand for energy as the economy winds down. The solar industry is projecting to lose as much as thirty percent volume with job losses as high as 120,000 (almost half their workforce), and the wind industry estimates that 35,000 jobs and $43 billion in investments are at risk. Similarly, electric vehicles are starting to finally catch on, with many automakers offering a variety of long-range cars that consumers will find appealing—but general economic conditions may make consumers hesitate to pay the higher up-front costs for an EV, dragging the industry down just as it was starting to rise.

Similarly, agricultural practices which build soil health – and consequently can help farmers adapt to and mitigate climate change – are proving that food can be grown sustainably while still generating profit for farmers and their communities. Thus, if the economic stimulus includes funds for farmers, the focus should be on leveraging assistance to incentivize farmers to adopt these soil health-building practices; once they take hold, they will flourish, but they need an economic nudge now.

A forward-thinking economic stimulus plan would focus on these technologies and practices, both because they are critical for the long term transition we need to make, and because their job growth prior to the virus striking means they are good bets for job growth going forward. Conversely, it would be foolish to use an economic stimulus bill to support the industries from which we must wean ourselves—this means, among others, the stimulus should offer no new subsidies for oil, gas, and coal.

Second, if there is a bailout of industries, there need to be strings attached to protect the public interest. An obvious example: the airlines are very hard hit and undoubtedly will be seeking federal assistance. Such help may make sense, but there must be both safeguards to prevent the assistance from being used unwisely (e.g. buying back stock), and proactive conditions to reform the industry in the public interest. This includes, for example, the airline industry agreeing to enforceable commitments to reduce greenhouse gas emissions from aviation, which are expected to triple between now and 2050 if no action is taken.

There is successful precedent for this. When the car companies were threatened with bankruptcy, the Obama administration approved federal assistance—but got back, in return, a commitment to build more fuel-efficient cars. This was not only good for the climate but the long term health of the industry.

Third, it is immoral to place the entire cost of this stimulus on future generations. This stimulus will be financed mainly through debt, but there are ways of paying for some of it now. For example, a concerted effort can be made to cut federal spending on things we don’t need and which do not generate jobs or stimulate the economy. A poster child example of this is the proposed trillion-dollar plan to rebuild the US nuclear arsenal, much of which is not needed and can reduce our security, and which is a very low jobs producer. By cutting out unnecessary and unproductive expenditures, we can reduce some of the debt from this stimulus that will have to be paid for by our children and grandchildren.


This virus is rapidly accelerating the usual timetable of congressional legislation. It is likely that in the next few weeks Congress will approve trillions of dollars in new spending of different kinds, with vast implications for the economy. There will not be time for hearings, expert testimony, quantitative analyses, and vigorous public debate. Thus, it is extremely important that Congress be guided by compelling underlying principles to guide the allocation of so much investment. Focusing on the long-term direction of the economy, placing public interest conditions on funds to industries, and weeding out unnecessary spending to keep the debt in check, are good places to start.