Stimulus – What’s It Good For?

Not much, according to the Associated Press:

WASHINGTON – A federal spending surge of more than $20 billion for roads and bridges in President Barack Obama’s first stimulus has had no effect on local unemployment rates, raising questions about his argument for billions more to address an “urgent need to accelerate job growth.”

An Associated Press analysis of stimulus spending found that it didn’t matter if a lot of money was spent on highways or none at all: Local unemployment rates rose and fell regardless. And the stimulus spending only barely helped the beleaguered construction industry, the analysis showed.

… “My bottom line is, I’d be skeptical about putting too much more money into a second stimulus until we’ve seen broader effects from the first stimulus,” said Aaron Jackson, a Bentley University economist who also reviewed AP’s analysis.

For the analysis, the AP reviewed Transportation Department data on more than $21 billion in stimulus projects in every state and Washington, D.C., and the Labor Department’s monthly unemployment data to assess the effects of road and bridge spending on local unemployment and construction employment. The analysis did not try to measure results of the broader aid that also was in the first stimulus such as tax cuts, unemployment benefits or money for states.

Even within the construction industry, which stood to benefit most from transportation money, the AP’s analysis found there was nearly no connection between stimulus money and the number of construction workers hired or fired since Congress passed the recovery program. The effect was so small, one economist compared it to trying to move the Empire State Building by pushing against it.

“As a policy tool for creating jobs, this doesn’t seem to have much bite,” said Emory University economist Thomas Smith, who supported the stimulus and reviewed AP’s analysis. “In terms of creating jobs, it doesn’t seem like it’s created very many. It may well be employing lots of people but those two things are very different.” (emphasis added)

It seems that the only “shovel-ready” aspect of the Obama Administration’s stimulus plan is the ongoing effort to hide the scope of its failure. And it’s not hard to figure out just exactly what the Obama White House will be shoveling:

NEW YORK (CNNMoney.com) — Now we’ll never know just how many jobs were funded by the $787 billion stimulus program.

Until a policy change last month, Obama administration officials had said they would keep a running count of the number of jobs created or saved by the massive American Recovery and Reinvestment Act.

Going forward, the White House will only tally jobs one quarter at a time and not attempt to determine a total.

On top of that, the administration has directed Recovery Act recipients to report all jobs funded with stimulus money – regardless of whether they were new jobs or existing ones. That change gets rid of the controversial “jobs saved” designation, which asked recipients to determine which positions would have been eliminated were it not for stimulus.

… Administration officials decided to change the reporting guidelines after meeting with funding recipients, federal agencies and economists. The shift is in line with recommendations made by the Government Accountability Office, which also raised concerns about the accuracy of the jobs tally released in October.

One of recipients’ main complaints about the reporting process concerned the “jobs saved” designation.

“The recipients were telling us they were having trouble determining whether a job was saved or not,” said Yvonne Jones, a director on the GAO’s strategic issues team. (emphasis added)

President Obama’s defenders regularly point out that economic recovery takes years, and that even the spectacular “Regan Recovery” of the 1980’s got off to a poor start, with a recession that spanned most of 1981 and 1982. True enough, but President Reagan never made the same kind of rosy promises offered by the Obama White House, which assured us that unemployment would not rise above 8.5% if their stimulus spending plans were enacted.

I’m fairly certain that we won’t see any more detailed predictions about economic recovery coming from the White House, until a recovery is well under way.

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