Out of Control Policy Blog

Stimulus Money Continues to Dribble

Yet another report is questiong whether the stimulus money is flowing into new spending projects fast enough to really do the job. I commented earlier on a similar conclusion from the Washington Post.  This time, USA Today is blowing the whistle on the inevitably lengthy and bureaucratic process of spending hundreds of billions of dollars.

According to the USA Today investigation,

The money — nearly $1 billion a day — has gone mainly toward highway repairs, financial aid for states, nuclear waste cleanup and other public works, the reports show. In the package, $499 billion is for new spending — the rest is to finance tax cuts, which are reflected starting this month in lower withholding from workers' paychecks.

A more complete accounting of the money being spent by federal agency and department can be found here. The vast majority of the money already spent, $12.3 billion (but obligated $27.9 billion), has been spent by Health and Human Services for things such as health care for the elderly and low incomehouseholds. A very, very distant second in the Department of Agriculture which has spent $324 million. The Department of Housing and Urban Development follows with $205 million spent. In an even more distant fourth place is the Department of Commerce with $23 million.

Where's the Department of Transportation? Its spent $2.2 million dollars of the stimulus money (although it has obligated $7.3 billion).

Interestingly, at one point in the article the reporters write:

The U.S. government has spent about $13 billion of the $60 billion it promised for specific projects, nearly all to help states pay for health care for elderly and low-income Americans. The reports do not say how many jobs have been created.

This money spent so far hasn't created any jobs. All this spending has done is maintain incomes in very narrow target populations. The idea that redistributing dollars creates job is a statistical slight of hand, generated by economic forecasting models that don't take into account the effects of redirecting funds our of other parts of the economy.

This is an interesting example of a naive understanding of job creation that has dominated the discussion on the stimulus bill. Simply redirecting money into a federal spending program will not create jobs. Job creation occurs when new value is created in the economy by doing more with less, not siphoning money out of productive parts of the economy and redirecting it to maintain current consumption levels.

 Unfortunately, this isn't unexpected news.

Samuel Staley is Research Fellow


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Comments to "Stimulus Money Continues to Dribble":

Jennifer Schaus | May 12, 2009, 7:48pm | #

Regardless if you agree or disagree with the stimulus/ARRA funding, there are ways your business can get a piece of the government pie.
The big winners will be the ccurrent contract vehicle holders (ie. GSA Schedules). These folks have the existing relationships & now their clients at the federal, state & local govt area will be able to obtain money to procure the solutions. These relationships have been brewiging for 6-24++ months. Govt is a risk-adverse client & B2G is all about relationship building. It is a long-term investment sales strategy for those with thick skin.

For more in depth look at stimulus contracts visit: www.pulicspend.com/blog

Thank you,
Jennifer Schaus
Jennifer Schaus & Associates
2 0 2 - 3 6 5 - 0 5 9 8
www.JenniferSchaus.com
JSchaus@JenniferSchaus.com



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