Reduced Rate Financing > Tax Credits

As the US is debating Obama's $800 million stimulus package, the German government is now (today - took it a bit longer than I thought) talking about adding €50 billion, spread over two years.

This is in addition to €35 billion, though that was mostly repackaging and just a bit new spending.

But I digress.

One of the underreported elements of the German stimulus package is added spending on the CO₂ building renovation programme. This programme consists of the German state bank KfW providing reduced rate financing through local banks to people who weatherise their homes. In the mean while, there is also a possibility to get minor subsidies, up to 7.5% of the investment with an upper limit of €3750 for family homes. What I've gathered is that the SPD wants to further expand the programme and that the government is considering to adapt the laws on renting to make the programme more attractive for tenants. I hope it gets through.

Now, this programme seems like a good idea to me in the context of Germany, or any country, and a positively great idea in the context of the United States. It gives retail banks and the construction sector something useful to do and it's a sound investment in the future.

Reading this from the politico on the talking points memo blog (about money made available through the financial rescue package last fall, a different thing, but bear with me), I wonder whether the US is going to stare itself blind on the old solutions it has grown used to, namely, tax incentives:

The Obama team told about 35 Senate Democrats gathered at Sunday's meeting that it would grow the size of an energy-tax incentive package and modify proposed tax credits for individuals and for businesses that hire new employees, according to meeting attendees.

Tax incentives for businesses to do useful things are alright, but they only provide an incentive on one side. The same would go for tax incentives for individuals to invest in saving energy. The German programme, on the other hand, provides a structured solution that hits exactly the right points throughout the economy.

So, that's something for the Americans to invest, say, 100 billion dollars in.