The challenges facing President Obama and the U.S. Congress have not gone away. Paul Krugman worries that “unemployment is likely to stay near its current level for a year or more,” because “much of the political establishment now sees stimulus as having been discredited by events, so that it’s very hard to come back and scale the policy up to where it should have been in the first place.”

But there remains a pathway out of Krugman’s dire vision of “a process of defining prosperity down” — if enough politicians embrace the alternative vision of a green economy, promoted by political leaders as far apart on the ideological spectrum as Van Jones and Sen. Lindsey Graham (R-S.C.). The basic concept is simple, as this video from Repower America shows — heat up the economy by cooling down the planet:

The Recovery Act made a down payment for clean energy jobs, primarily through public spending. But the creation of a carbon market would drive private investment away from pollution and into clean energy. A Political Economy Research Institute clean energy economy report found that public-private investments of $150 billion a year could be sustained over ten years and create 1.7 million net long-term jobs in the U.S. economy. Fossil-based energy production sends money overseas and sinks money into capital-intensive projects like mining and drilling, whereas clean energy and energy efficiency requires greater local and labor investment.

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The stronger the carbon cap is in a carbon market, the greater the investment. A $150 billion carbon market would be about double the size of what is being considered by Congress. That investment would be sufficient to construct a nationwide smart grid, retrofit every building in America for energy efficiency, and produce 20 percent of electricity from renewable sources — all by 2020.

If Congress truly wanted to restart this nation’s economy, it would take the legislative framework of the Kerry-Boxer Clean Energy Jobs Act and the Waxman-Markey American Clean Energy Security Act and:

Strengthen the emissions targets to spur $150 billion in clean energy investment a year

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Strengthen the building efficiency standards to require every building in America be refitted by 2020

Strengthen the renewable electricity standards to 20 percent by 2020

– Continue the Recovery Act’s ambitious smart grid plans

Conservatives are absolutely right that the future of the American economy depends not on long-term government spending but on private investment. But the economy needs to be first restarted by a clean energy stimulus and then pointed in the right direction by strong, swift federal action, ending our fealty to Exxon Mobil and Peabody Coal, and ushering in a new era of clean energy independence.

Update: The original version of this post misinterpreted the PERI report’s conclusion that a $150 billion a year investment creates “1.7 million net new jobs a year.” As report author Robert Pollin explains:

It is 1.7 million jobs per year for each year that $150 billion is spent. So we could say there are 1.7 million net new jobs (i.e. 2.5 million clean energy minus 800,000 fossil fuel) jobs, and as long as spending is $150 billion each year, 1.7 people will be able to keep these or equivalent jobs. But the cumulative total of “job years” for 10 years would indeed be 17 million.