It turns out the federal government is not even efficient at wasting our money. The New York Times reports that less than 6 percent of the $787 billion stimulus package approved by Congress in February has been spent so far. The Obama administration has said it wants to spend 70 percent by the summer of 2010, so it will have to pick up the pace. Not to worry, says Vice President Biden:
I think that what you're going to see happen here is the velocity of this will increase not just arithmetically, but geometrically here. At least, we've got to make that happen.
They'd better hurry, before the economy recovers on its own. Both Federal Reserve Chairman Ben Bernanke and Christina Romer, chairwoman of the president's Council of Economic Advisers, say it looks like the recession will end later this year. (Barclays Capital strategist Barry Knapp says it may have ended last month, which he predicts is where the National Bureau of Economic Research ultimately will locate the bottom of the downturn.) Yet the Congressional Budget Office estimates that only 25 percent of the stimulus money will be spent by the end of the year. That's one-quarter of a sum that stimulus enthusiasts such as New York Times columnist Paul Krugman said was woefully inadequate.
President Obama can still say the stimulus spending accelerated or strengthened the recovery, a claim that cannot be definitively proved or disproved. But that was not the case he made back in February, when he warned that if Congress did not immediately approve the American Recovery and Reinvestment Act, "our nation will sink deeper into a crisis that, at some point, we may not be able to reverse." He said "a failure to act will only deepen this crisis" and "could turn a crisis into a catastrophe." Pausing to debate the package, he said, "will only bring deepening disaster."
There's no question that the stimulus money is "creating jobs" in the sense that people are being hired with it. The White House says the spending will "save or create" 3.5 million jobs, equivalent to 6.8 million additional job-years, by 2012. Leaving aside the question of whether that prediction is accurate (or even falsifiable), it means the government is spending something like $115,000 a year per employee. That seems like a pretty extravagant use of borrowed money, unless the work is worth doing on its own terms. If it were, there would be no need to cite economic stimulus as a justification. In any case, there is a conflict between spending the money well and spending it quickly. "We're trying to get the money out as quickly as we can," says Biden, "but not too quickly, so we don't end up really screwing up here....In 85 days we've gotten tens of billions of dollars out the door, and so far—knock on wood—no real big problems, no real big glitches."
In February, Nick Gillespie noted that stimulus spending always seems to come after the recession is over. Yesterday Veronique de Rugy and Eileen Norcross wondered if we'll ever know exactly where the current batch of magically multiplying money went.