Why Obama's Stimulus Failed: A Case Study of Silver Spring, Maryland

Back in 2009 President Obama predicted his stimulus bill would help push the unemployment rate to 5.6 percent by July 2012. Suffice it to say, his math was a bit off. To help understand why the $800 billion stimulus failed, ReasonTV went to Silver Spring, Md. to see just how the money was spent.

Here is the original text from the Dec 8, 2011 video:

High, persistent unemployment and a sluggish economy underscore what all but the most-dedicated supporters of Barack Obama know to be true: The president's 2009 stimulus program was a massively expensive bust.

Understanding why the stimulus failed is an important step in understanding how the government can—and cannot—goose economic recovery. To get a better sense of how and where the stimulus went wrong, Reason.tv focused on Silver Spring, Maryland, a suburb of Washington, D.C., that's home to a large number of government contractors and other recipients of money earmarked for the sorts of "shovel ready" projects that were going to bring the economy back to life.

President Obama's top economic advisor Larry Summers laid out ground rules for how stimulus dollars should be spent: The funds must be "targeted" at resources idled by the recession, the interventions must be "temporary," and they needed to "timely," or injected quickly into the economy.

None of that turned out to be true. "Even if you were to believe that government spending can trigger economic growth," says Veronique de Rugy, Reason columnist and senior research fellow at the Mercatus Center, "the money is never spent in a way that's consistent with the conditions laid out by the Keynesians for it to be efficient."

Reason.tv identified four basic ways in which the stimulus was doomed almost before it was put into operation. For the full discussion of those areas and links to supporting data, go to http://reason.com/blog/2011/12/08/why-obamas-stimulus-failed-a-case-study

Written and produced by Jim Epstein, who also narrates.

Approximately 8 minutes.

Go to http://Reason.tv for downloadable versions and detailed links and text. Also subscribe to Reason.tv's YouTube Channel to receive automatic updates when new material goes live.

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  • Mr. FIFY||

    Oh, now ya gone'n done it, Epstein! Now the leftists are gonna come here and tell us why Obama is The Bestest President Of All Human History, and we are racist capitalist pig-fuckers for not being able to supplicate ourselves before Him.

  • Mr. FIFY||

    Also, fried chicken.

  • Caleb Turberville||

    Do you know what other secret, insular group likes to send their minions off to harass detractors, resorts to arguments from authority, and bases their faith in long-debunked texts?

  • Mr. FIFY||

    Wait, I know this one...

  • Caleb Turberville||

    I originally thought that this was a clever remark. Then, I turned to the side advertisements and saw that Reason has a conference at sea...

    Isn't that How to Run a Cult 101?

  • ||

    Isn't that How to Run a Cult 101?

    Meet on a cruise liner? Not really. That's nothing specific to cults. I believe there's some sort of skeptics organization that does that as well. Penn and Teller were there. Sort of like this one: http://www.skeptic.com/geology.....ka-Cruise/

  • Caleb Turberville||

    Okay, so let me see if I got that this right:

    a) Meet on a cruise liner for Q/A session with Roger Ebert and Richard Roeper - NOT A CULT
    b) Meet on a cruise liner to re-live Darwin's expedition to the Galapagos - NOT A CULT
    c) Meet on a cruise liner to meet up with like-minded people interested in "Free minds and free markets" - NOT A CULT
    d) Meet on a cruise liner for the purposes of enslav...der..."contracting" followers' "thetans" to the cause of the 1 billion year struggle against the evil galatic warlord Xenu - ?

  • R||

    Yeah, pretty much. It's the REASON (drink!) you're meeting on a cruise ship, not the meeting on a cruise ship itself, that determines if you're a cult.

  • ||

    I think it is the other way around and backwards.

    Cruise ship going is the cult and the meetings that go on, what ever they are about, is only cover.

    You just wait until they get you on board...then comes the sales pitch for more cruises and cabin upgrades.

  • R C Dean||

    Do you know what other secret, insular group

    Oooh, I know this one!

    Scientology, amirite?

  • Mr Whipple||

    That shit ain't funny. I was just called a redneck racist for disagreeing with Obama's policies. I was also told that rich white racists are the cause of the economic disparity in this country.

    Then he told me, that if I don't like the government, I should move to Somalia. So, I told him, if he doesn't like racism, he should move to Africa.

    That didn't go over too well. But WTF? I was only trying to explain to him how intentional creeping monetary inflation leads to a redistribution of wealth from the poor and middle class to the wealthy. I guess his small, limited negro mind can't grasp complex economic theories.

    DOH!

  • Mr. FIFY||

    Another ignorant fool who can't read a dictionary entry. Sorry you had to put up with such bullshit, Whipple.

  • Anonymous Coward||

    I was just called a redneck racist for disagreeing with Obama's policies.

    So...not wanting to blow up brown people is racist? Well damn, somebody get me a scorecard because I clearly can't keep track of the game without one.

  • Mr. FIFY||

    Buying the wrong brand of yogurt is racist, if you ask the wrong person.

  • Emperor Wears No Clothes||

    Then he told me, that if I don't like the government, I should move to Somalia.

    Who started that anyway? Does it come from some statist handbook?

  • Anonymous Coward||

    Everytime I drive by the Obama campaign headquarters on Washington Ave., I'm greeted by a large, window-sized, off-color portrait of Barry's face. And it strikes me as creepy in a personality cult sort of way.

  • Mr. FIFY||

    Feature, not bug.

  • ||

    See The Multiplier exists, it's 0.01

  • Sevo||

    The sign is wrong on that number.

  • some guy||

    Only a 1% premium for financial services rendered? That's a good deal... right?

  • Ken Shultz||

    I know the stimulus was ineffective, but what really bothers me about the stimulus was how it was really financed. If you followed the shell game, the stimulus was essentially the TARP money that was "paid back".

    TARP was $700 billion, and when the program was first proposed, some brave souls in Congress suggested that when the money was paid back, maybe it should be used to pay down the debt...

    I know! Crazy, isn't it?

    Well that proposal was completely ignored, so when Congress finally decided to let Wall Street start paying that $700 billion back? That's when Congress and the president realized they had an extra $800 billion burning a hole in their pockets.

    If it hadn't been for TARP, there probably wouldn't have been a stimulus. Just like if it hadn't been for 9/11, there probably wouldn't have been an invasion of Iraq. The stimulus was the switch part of the ol' bait and switch.

    So, when I see the stimulus, I'm reminded of Rahm Emanuel's adage about how "You never want a serious crisis to go to waste", and it makes me sick to see how easily manipulated we are by fear.

    Fear is the mind-killer. I don't blame Obama or any other politician for the stupid stimulus. I blame my friends, family, and coworkers for being so easily manipulated.

  • Killazontherun||

    At the time when the stimulus passed one of my acquaintances owned a construction salvage company (finds use for unused materials from projects that are winding down). He asked me if I thought it would help his business. I asked him if he had any connections in the public sector he has built from his business contacts. He answered in the negative, and I told him, 'you're getting squat out of this.'

    I have enough class not to say I told you so when I run in to him. His business had to be liquidated and he now works two jobs making about 60% of what he did in his last good quarter, Spring of '08.

  • Mr. FIFY||

    Another victim of the stimulus, which was perfect according to Tony.

  • Killazontherun||

    You know what I think of Tony? Trick question, I don't.

  • ||

    Keynesianism: the beatings will continue until morale improves!

  • BakedPenguin||

    If Keynes were around today, he'd probably scream at the way his ideas were distorted. Still, it's hard to feel any sympathy for him, given the cover he's provided to big government.

    If I can make an adjustment to your statement - Obamanomics: the beatings will continue until the economy improves.

  • bopomtXQ||

    Learn how to make money using Google. You can monetize your searching skills and earn up to $375 per hour working for this billion dollar company. You choose your working hours. Details can be found here xurl.es/dyp7n

  • T o n y||

    "the money is never spent in a way that's consistent with the conditions laid out by the Keynesians for it to be efficient."

    That was largely true, but why was it the case? Could it be because tax cuts, a huge portion of the stimulus, are more politically palatable than other versions of spending? What do you guys claim tax cuts do again?

    Most municipalities probable experienced what mine is: lots of construction and other activity funded by stimulus. When the money started drying up, public sector workers started losing their jobs, and are the main dent in the bad unemployment data coming out over the past months. The unemployment rate is estimated to be a point lower or so if those jobs weren't being cut.

    Everything about the experiences of the last three years suggest that stimulus does work, but that we haven't had enough to return to acceptable growth. Everything about the last 10 years or so suggests that the alternatives are laughably incoherent and wrong. All you guys have to offer are confidence fairies and other magical market creatures whose activity amount to "it will just work, we promise!"

  • Mr. FIFY||

    "it will just work, we promise! All we have to do is spend a shitload of money and raise taxes on evil rich white people, because Fuck You, That's Why."

    We're going to be hearing versions of that shit up til election day... and beyond. It's all leftists have.

  • Dylan||

    "When the money started drying up..."

    So you're saying that stimulus only "grows" the economy until the stimulus payments stop coming, then the economy crashes? Good, we agree. Now if only we could find a way to keep those stimulus payments coming forever...

  • T o n y||

    It's only useful if it stimulates the economy into a virtuous growth cycle. Though take government's share of GDP down to where libertarians want it and see how easy it is to have growth.

  • T o n y||

    It's only useful if it stimulates the economy into a virtuous growth cycle. Though take government's share of GDP down to where libertarians want it and see how easy it is to have growth.

  • Mr. FIFY||

    So... what is the optimal "government share of GDP"?

    While you're at it, tell us what should be the optimal temperature.

  • Dylan||

    Double the dumbass-ness! Serves me right for responding.

    "how easy it is to have growth."

    Real growth (i.e an increase in productivity) isn't easy. It requires a good idea, savings (someone producing without consuming), investment (people who have enough confidence in the idea to put their savings into it), and expertise to implement the idea.

    The kind of "growth" you're talking about is easy. All it requires is an idea (good or bad), and guns to force people to support it whether they like the idea or not. Your "growth" leads to the miss allocation (and outright waste) of resources, as bad decisions are made when people spend other people's money on matters of which they have no experience.

  • ||

    Tax cuts aren't spending unless you believe everything is actually owned by the government....

  • Mr. FIFY||

    ...and leftists definitely believe everything is actually owned by the government. Including people.

  • ||

    That was largely true, but why was it the case? Could it be because tax cuts, a huge portion of the stimulus, are more politically palatable than other versions of spending?

    How would tax cuts cause stimulus money to be spent inefficiently. One has nothing to do with the other. Another day, another failed attempt to move the goalposts by Tony.

  • Mr. FIFY||

    In leftist-speak, tax cuts are "spending".

    Also, if Department X is slated to get a 5% budget increase next year, but only gets 4.5%, it's "slashing the budget".

    Newspeak at its finest.

  • Joe R.||

    In newspeak, that's a 10 percent cut.

  • Mr. FIFY||

    Good point.

  • Dylan||

    Of course tax cuts are spent inefficiently! Each and every dollar that an individual spends in his own self interest is a dollar that could have been spent for the collective good!

  • Jake W||

    That one made my night.

  • Mr. FIFY||

    Did you manage to get hold of Obama's second-term notes, Dylan? That sounds like his kind of policy.

  • R C Dean||

    Cribbed directly from Hillary!, too. Well played.

  • Fatty Bolger||

    *** THIS IS WHAT TONY ACTUALLY BELIEVES ***

  • Mr. FIFY||

    It's actually worse than that, Fatty.

  • Brutus||

    Tony, a shitload of the porkulus was money shoveled into bottomless pits like Medicare and Medicaid. Feminists, outraged at the amount of money put into actual infrastructure projects, howled and got another shitload piled into "human infrastructure" shit that had zero to do with real infrastructure.

    If you want to toss a hissy fit over political distribution of the porkulus, look at the grasping suckholes on the Left.

  • Mr. FIFY||

    Feminists are always outraged.

  • Brutus||

    It works. Read Tom Wolfe's "Mau-Mauing the Flak Catchers" for a look into the phenomenon.

  • Mr. FIFY||

    I admit I'm not much into Wolfe, but I'll give it a spin.

  • ||

    Everything about the experiences of the last three years suggest that stimulus does work, but that we haven't had enough to return to acceptable growth.

    Except for every economic study done on the subject.

    For one who places such emphasis on scientific "consensus" you sure are abandoning it quickly when the results don't go your way.

  • Mr. FIFY||

    He has perpetual mangina pain, joshua. Cut the poor guy some slack.

  • ||

    government budget deficits are found to be linearly and negatively associated with the growth rate of both real and potential output. The fact that the change in the debt ratio and the budget deficits are linearly and negatively associated with growth (and with the long-term interest rates) may point to a more detrimental impact of the public debt stock even below the threshold. Hence, targeting a higher debt level to support growth is not a policy option.

    http://www.google.com/url?sa=t.....Uo1EvIMcuQ

  • robc||

    you SF'd the link.

  • ||

    Sometimes google can be a fucking asshole.

    www.ecb.int/pub/pdf/scpwps/ecbwp1237.pdf

  • ||

    Economics isn't science, only Keynesianism is.

  • T o n y||

    If it's not at least somewhat scientific then what possible verifiable claims could you make? But you don't even think policy should be judged based on outcome. It's just specious promises tacked onto moral first principles.

  • Mr. FIFY||

    Why do you keep bringing morality into government, Tony? The two should - and must - be kept separate. Just like religion and government.

    I suspect you'll respond with your lofty, derisive tone... something pithy like "you're just a stupid hillbilly", for instance.

  • ||

    If it's not at least somewhat scientific then what possible verifiable claims could you make?

    Huh?

    I linked to a study showing how Keynesian does not work. Want more links? They all say the fucking same thing; that the stimulus did not work and actually hurts the economy. In fact many of them say this before the stimulus was even spent.

    The science says you are dead wrong.

  • ||

    I was being sarcastic, jackass.

  • ||

    This is why half assed threaded comments is BS. I don't know if you are saying i am a jackass or tony.

    Anyway in case it is the former i was responding to tony...i knew you were being sarcastic.

  • Anonymous Coward||

    When the money started drying up, public sector workers started losing their jobs, and are the main dent in the bad unemployment data coming out over the past months.

    Gollum-Tony: We hateses the trickle down economics! Except when it's for public sector workers! Then we'll give them money and it will trickle into other parts of the economy! Honest Elizabeth Warren!

    The unemployment rate is estimated to be a point lower or so if those jobs weren't being cut.

    Can I borrow that crystal ball after you get done with it? The Powerball is starting to creep higher and I'd like to win before everyone and his mother is out buying tickets.

  • ||

    Can I borrow that crystal ball after you get done with it?

    Won't work. Tony's crystal ball only shows alternative Keynesian utopias where powerball numbers are calculated by how bad Bush was minus how good Obama was.

  • Sevo||

    T o n y|7.8.12 @ 4:55PM|#
    "the money is never spent in a way that's consistent with the conditions laid out by the Keynesians for it to be efficient."
    That was largely true, but why was it the case?..."

    Shithead,...
    Naah. I'm tired of wasting time correcting an ignoramus.

  • Killazontherun||

    I just had to share this; it is almost beautiful, like an origami composed of invincible ignorance.

    From the comments.

    http://www.nypost.com/p/news/o.....EjTlkM0uYO

    The southern states have been a scourge on this country from the beginning.Those buffoons down there have been responsible for most everything horrible ever inflicted on this country.From slavery to faith healers to even damned tobacco! A generally stupid populace.That putrid region leads the nation in illiteracy and obesity, racism and republicans.They too often dictate policy in this country to the point of holding us all back from true enlightenment with their stupid behaviors and customs.Warmongers as well.The tail wagging the dog.A national disgrace, those southern states.
  • Killazontherun||

    Oh, and followed up with this from the same author:

  • Killazontherun||

    Huh, didn't except my indention that time. Likely left a tag open.

    As for 'government handouts' ,again you buy the stupid line that liberalism ruined minorities.Wrong.Largely republican policies of the last forty years have done that.The exporting of good middle-class jobs overseas for ever-increasing profit margins has hit minorities hard.Traditionally those jobs helped lift minorities into the middle-class.Those jobs aren't here anymore.Add the lack of quality healthcare and imprisonment due to ridiculous drug laws.Conservatism has hurt.Liberalism has been a salve on the wound.

  • Mr. FIFY||

    God, that was fucking painful to read.

  • Concerned Citizen||

    There must be a libertarian among the photogs at our local newspaper. They showed a family having to live in a shelter - a black, obese mother of 7, her latest just 2 months old. No father in the equation. They had to leave their Section 8 housing due to mice. The other showed a black 17 year old and her 1 year old baby, getting on a city bus. The bus drivers union was on strike over the 4th, forcing this teen mom to take a cab to the local fireworks display. Poor thing had to pay $100 to get to and from the event, whereas the bus would have been covered under her monthly pass. Infuckingcredible how the left has enslaved these people, and the left does this with no shame. But at least one person at our local paper chose to spotlight two cases.

  • Mr. FIFY||

    She's dirt-poor, but just *had* to cab it over to the fireworks display.

    Our money, right down the toilet.

  • Concerned Citizen||

    And her daughter has pierced ears. I'm sure we could cite similar examples all day and all night, and the left would dismiss them all and blame capitalism. CBS did show the most prosperous, and most educated, group in America, the Asians, on the news the other day. Only because now they're getting interested in politics. Nevermind why they're so succesful.

  • Mr. FIFY||

    Well, to be fair, ear-piercing can be virtually free... but the rest of it? She blew a hundred taxpayer-provided welfare dollars to take a cab to a fireworks display? That's the fucking sad part.

  • Concerned Citizen||

    That's why I think there's a mole at the newspaper, spotlighting two examples of the Great Society's failures. The 280lb black woman in Section 8 housing holding her 2 MONTH OLD baby??? Learned helplesness.

  • Mr. FIFY||

    Hey... aren't we engaging in racism, by merely pointing these things out?

    /snark

  • Concerned Citizen||

    No doubt. Try as I might, I can't figure out how I'm responsible for their plight. Or how the Asians are able to overcome my white privilege. Liberalism is confusing...

  • Mr. FIFY||

    Fuck, do I hate the phrase "white privilege".

  • Fernando||

  • ||

    So white privilege is basically just another name for white guilt? Because that's what the author seems to be saying. Of course I don't see why one example of life's unfairness would make it okay to cause an injustice to a hardworking individual by denying him or her a position they earned just because they are white.

  • Archduke PantsFan||

    Yes, instead of feeling guilty for being white, you should be thankful you're not a minority.

  • Libertarius||

    It's rayciss to refuse white guilt or reject white privilege.

    Are you getting the name of the game?

  • Brutus||

    White privilege looks like a wall-o-text?

  • Mr. FIFY||

    Like a candy-ass white boy from Baltimore?

  • Archduke PantsFan||

  • Brutus||

    Damn, that's too bad, but at 95 years, you can't feel too cheated. Sorry to see his role in "The Wild Bunch" not mentioned. Great flick.

  • MarkVShaney||

    ""the money is never spent in a way that's consistent with the conditions laid out by the Keynesians for it to be efficient."

    Too true. One non-profit stimulus recipient in Portland OR, Oregon Tradeswomen Inc. received ~ 500k in stimulus cash; created or "saved" 0 jobs according to the stimulus .gov website and promptly moved their offices to brand new digs in the "hipster" neighborhood.

    Their goal- to train women to do construction jobs... you know the industry hardest hit and with the highest unemployment since the bubble burst.

  • sloopyinca||

    Ron Paul Endorses Mitt Romney.

    UN-FUCKING-BELIEVABLE!!!

  • ||

  • ||

    I hate you.

  • Mr Whipple||

    DICK DICK DICK DICK DICK DICK DICK DICK DICK DICK DICK DICK DICK DICK DICK DICK DICK DICK DICK DICK DICK DICK DICK DICK

  • sloopyinca||

    How many dicks is that?

    /Mr Blue

  • Ken Shultz||

    jackass

  • sloopyinca||

    If it were ever appropriate for you to call somebody a cunt, this was it.

  • Banjos||

    And they say libertarians don't have a sense of humor.

  • Fatty Bolger||

    Nice.

    But it will happen.

  • Killazontherun||

    You've heard the story before, but it really kind of gets you in the gut to read Nichelle Nichols account.

    http://www.shadowandact.com/?p=16389

  • ||

    That story is inspiring....

    ...then again it eventually lead to the election of a guy who has either exceeded or tied Bush for being the worse president in living memory.

    We should have elected Nichelle Nichols instead.

  • ||

  • Archduke PantsFan||

  • Mr. FIFY||

    A dose o' stoopid, from the HuffPo:

    http://www.huffingtonpost.com/.....p_ref=food

    Fucking leftists. How do they work?

  • Archduke PantsFan||

    Here's how they work: Corporations are evil, governments are good.

  • Mr. FIFY||

    Oh, yeah. I keep forgetting.

  • Cytotoxic||

    Have you played SimCity? They view the world as SimCity. And you Sims better stop ruining their city, which would work great if you just subsumed yourself to The Great Good with enthusiasm.

  • Archduke PantsFan||

    Pass that gambling ordinance and make a deal to sell your garbage to East Haverbrook, and your money problems are over!

  • ||

    At least most of the comments are pretty good.

  • Archduke PantsFan||

  • Sevo||

    OT, but in the continuing series of CA stupidity:
    http://www.sfgate.com/business.....690485.php
    The intent is to allow the governments to claim the property under eminent domain, stiff the lender and give it to the folks who bought what they couldn't afford.
    What could possibly go wrong there?

  • Ice Nine||

    So, I told him, if he doesn't like racism, he should move to Africa.

    Appears that you are misinformed - racism is alive and well in Africa. Goes by a different name there but what the heck. It is alive and well everywhere, actually.

  • Auric Demonocles||

    I'm pretty sure that was the point.

  • ||

    OT:

    So i watched the first and second episode of Newsroom. The first one was bullshit but it had good production value and actors talked fast which was fun.

    The second one was complete fucking train wreak.

    Going for the third episode right now...i expect a train wreak.

  • ||

    Ok that was quick.

    8 min into it:

    "Who are we to make these decisions?"

    "We are the media elite"

    TRAIN WREAK!!!

  • ||

    30 min in

    "Koch Brothers run the tea party!!!!"

  • ||

    towards the end Jane fucking Fonda just made a golfing joke involving Moses and Jesus and Sam Waterston just compared the 2010 republican victory to McCarthyism.

  • BakedPenguin||

    You wreck a train. You wreak havoc.

  • #||

    So really they are just parodying the actual liberal media?

  • Nike air max womens||

    President Obama's top economic advisor Larry Summers laid out ground rules for how stimulus dollars should be spent: The funds must be "targeted" at resources idled by the recession, the interventions must be "temporary," and they needed to "timely," or injected quickly into the economy.

  • jason||

    This is the most overrated government in the unites states history but it did not stand on its terms.

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