Smart grid, broadband appear in $825 billion 'stimulus' plan

A 258-page bill proposed by House Democrats as a way to counter the economic downturn spends billions on clean electricity generation, better battery technology, and broadband deployment.

Declan McCullagh Former Senior Writer
Declan McCullagh is the chief political correspondent for CNET. You can e-mail him or follow him on Twitter as declanm. Declan previously was a reporter for Time and the Washington bureau chief for Wired and wrote the Taking Liberties section and Other People's Money column for CBS News' Web site.
Declan McCullagh
3 min read

House Democrats on Thursday revealed details of a massive legislative effort they said would inject new life into a flagging U.S. economy, thanks to a combination of $825 billion in tax cuts and new government spending.

The sprawling, 258-page draft bill includes $32 billion in electric power upgrades, sometimes known as "smart grid" technology, $6 billion for expanded broadband Internet access, and $20 billion for health care information technology.

"The economy is in a crisis not seen since the Great Depression," said letter published Thursday by Rep. David Obey, a Wisconsin Democrat who heads the House Appropriations Committee. "Credit is frozen, consumer purchasing power is in decline, in the last four months the country has lost 2 million jobs and we are expected to lose another 3 (million) to 5 million in the next year."

The House leadership has said it would like to hold a floor vote on the package by January 28 and send it to President-elect Barack Obama by mid-February. One potential obstacle is negotiations with the Senate, which is likely to have its own priorities.

The energy-related sections of what is tentatively called the American Recovery and Reinvestment Act of 2009 include $11 billion for research and development related to the "Smart Grid Investment Program;" $8 billion in loans guarantees for renewable energy generation; $2 billion for loan guarantees to high-capacity battery makers; and $200 million for a grant program for electric vehicles.

Some other portions, excerpted from the summary prepared by Rep. Obey's office:

* Energy Efficiency and Renewable Energy Research: $2 billion for energy efficiency and renewable energy research, development, demonstration, and deployment activities to foster energy independence, reduce carbon emissions, and cut utility bills. Funds are awarded on a competitive basis to universities, companies, and national laboratories.
* Home Weatherization: $6.2 billion to help low-income families reduce their energy costs by weatherizing their homes and make our country more energy efficient.
* Cleaning Fossil Energy: $2.4 billion for carbon capture and sequestration technology demonstration projects. This funding will provide valuable information necessary to reduce the amount of carbon dioxide emitted into the atmosphere from industrial facilities and fossil fuel power plants.
* Alternative Buses and Trucks: $400 million to help state and local governments purchase efficient alternative fuel vehicles to reduce fuel costs and carbon emissions.

In terms of wireless and broadband, the legislation would require the National Telecommunications and Information Administration (part of the Commerce Department) to create a grant program for "nonrecurring" costs of broadband deployment in rural, suburban, and urban areas--meaning, basically, anywhere in the country. NTIA is supposed to prioritize "unserved" and "underserved" areas, two terms that have no actual meaning until the Federal Communications Commission eventually comes up with one.

State governments may apply for grants by submitting reports listing which of their areas have unserved wireless voice, underserved "advanced wireless broadband," unserved basic broadband, and underserved "advanced broadband service." NTIA will dole out separate funds for wireless deployment and broadband deployment.

"Advanced broadband service" is defined as at least 45 megabits per second downstream and 15 megabits per second upstream; "advanced wireless broadband" is 3 mb/sec downstream and 1 mb/sec upstream.

Whether this so-called stimulus will have any positive effect on the economy is uncertain, though, because the U.S. Treasury will pay for it by running up the national debt significantly and future generations of taxpayers will be expected to pay it back.

The bailout's cost so far has ballooned to $8.5 trillion, not counting the $5.2 trillion in Fannie and Freddie guarantees, although the Treasury should eventually recover some or even much of this amount. If deficit spending were a sure way to stimulate the economy, the Treasury could simply borrow, say, $100 trillion -- and the economic malaise of the last few months would evaporate.

A recent article by Greg Mankiw, a professor of economics at Harvard and former adviser to President Bush, surveys recent research and concludes that each dollar of government spending increases economic activity by only 1.4 dollars, while (according to Obama's top economics adviser) a dollar of tax cuts raises the GDP by about $3. And Tyler Cowen of George Mason University suggests that "we are being asked to spend (untold) hundreds of billion dollars" even though the evidence it will have a positive impact "is inconclusive."