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News from EPI Job loss from cuts in clean-technology investment as large as losses from proposed defense sequester, new EPI paper finds

For Immediate Release: Wednesday, December 5, 2012
Contact: Phoebe Silag or Donte Donald, 202-775-8810

Job loss from cuts in clean-technology investment as large as losses from proposed defense sequester, new EPI paper finds

If federal investment in clean technology returned to its 2009 levels in 2013, the job gains would almost equal the job gains from canceling the $54 billion cut to defense spending scheduled for 2013 under the Budget Control Act, a new EPI paper finds.

In Green ‘sequester’ is already costing U.S. jobs: Job losses from ongoing clean-tech cuts will rival those from defense cuts, EPI Research and Policy Director Josh Bivens explains that federal support for clean technology has already been cut back steadily and is scheduled to fall from $47.3 billion in 2009 to $12.9 billion in inflation-adjusted dollars by 2013, a drop of almost $35 billion. Because each $1 of green investments supports 1.5 times as many jobs as each $1 in defense spending, the drop in clean technology investment in 2013 relative to peak levels would translate into about 436,000 fewer jobs, relative to the roughly 448,000 fewer jobs resulting from the proposed cut in defense spending.

“Our nation’s investments in clean technology have supported hundreds of thousands of good jobs across the country and every one of those workers pays taxes,” said David Foster, Executive Director of the BlueGreen Alliance. “As the nation approaches the fiscal cliff, it is critical that we not crash the clean technology bus and sacrifice all the jobs this sector supports.”

“Returning federal clean-technology spending to 2009 levels would actually support a roughly equal number of jobs as would completely deactivating the defense sequester for 2013,” Bivens added. “Thus, it is odd that so much political angst has been expressed over these defense cuts while there has been so little concern over the cutback to support for clean technology, which is already ongoing.”

In 2009 and early 2010, the American Recovery and Reinvestment Act’s $90 billion in green economy investments resulted in roughly 1 million jobs created or saved in 2011. These green investments were particularly effective stimulus because direct spending by governments tends to spur more economic activity per dollar spent than do other forms of stimulus (particularly compared to most  tax cuts) and because green investments tend to have higher labor intensity than does government spending on average. Green investments support 1.13 times as many jobs as average spending. In contrast, defense spending supports 0.74 times as many jobs as average spending.

Clean-technology ARRA investments had wound down almost completely by the middle of 2012, but a quarter of the $35 billion cutback in federal support for clean-technology since 2009 is actually unrelated to ARRA. At least part of the non-ARRA slowdown in green investment reflects the government’s failure to make a permanent policy commitment to clean technology.

“With the threat to defense spending from the automatic cuts built into the Budget Control Act, the bluff that spending cuts should be expected to boost, not smother, economic activity in the short run has been called,” Bivens said. “This is good news, as this argument for cuts was always wholly misplaced. We now have an opportunity to make sensible choices that will bring down joblessness, encourage economic growth and slow the severe environmental and economic damage of climate change.”