Where did all that sweet stimulus money go?Columnist Ron Hart asks a question that's answered by the cover story of the current issue of Reason (and perfectly summarized by the cover image of same):
Of the money spent in swing state Wisconsin, 80 percent went to public sector unions – those with already locked-in jobs. In fact, right-to-work states got $266 less per person in stimulus money than heavily unionized states. Where Democrats had a vast majority of representatives, their states got $460 per person more.
More pointedly, Hart writes,
Remember when Obama got his trillion-odd dollars of "stimulus money" which he and the Democrats breathlessly said we needed for "shovel ready" jobs to re-build roads and infrastructure? Please e-mail me if anything of the sort got built in your town. Nothing got built in the cities where I spend time....
Peter Suderman's article in the May issue - which you'd be reading right now if you subscribed for just $14.63 under our special Sequestration Offer - lays out exactly where stimulus spending went and why it didn't work as advertised.
Yes, tens of millions of dollars literally went to install new toilets in parks Alaska, New Mexico, Washington state, and elsewhere. If only we could have flushed our way to recovery.
More important, Suderman writes (and this can't be underscored enough), "The economy's performance continues to be far worse than the White House's worst-case projections for what might happen if there had been no stimulus at all."
Stimulus defenders will claim that the only thing that stood between us and a second Great Depression was the the $787 billion stimulus (a figure later upgraded to $833 billion). Suderman patiently and exhaustively catalogs why any such claims not only fly in the face of observable economic reality but also rest upon weak theoretical assumptions about the size of the government's multiplier and the effect of policy changes on employment.
There's probably no changing some people's minds, but for those of you who may yet be convinced that stimulus spending isn't all what it's cracked up to be, ponder the latest Bloomberg View column by Peter Orzag, who served as Barack Obama's first budget director and helped created the 2009 stimulus package. You know, the one that was supposed to be filled to the busting-point with "shovel-ready jobs" that were heavy on road and bridge repairs.
"It's the perfect time to fix our roads and bridges," reads the headline to Orzag's March 26 piece. He writes that while "the 2009 stimulus bill helped a bit," we only spent $100 billion on infrastructure. Now,
we need to couple immediate federal spending on public assets with substantial, credible deficit-reduction measures that are scheduled to take effect later on. Such a “barbell” approach to fiscal policy would require that Republicans acknowledge the value of additional stimulus while the unemployment rate is high, and that Democrats see how Medicare, Medicaid and Social Security could be preserved and strengthened through certain cost-saving measures over time. The upfront piece should include an ambitious $250 billion infrastructure program (including federal, state and local spending) over the next two years.
Of course, such spending isn't nearly enough, so Orzag further suggests that we bring back the "Build America Bonds" that have helped create record levels of municipal borrowing and then start adding user fees on top of it all, because "a road-pricing system could raise as much as $55 billion a year to finance new investments or deficit reduction." Meanwhile, congressional Democrats are calling for somewhere between $100 billion (Senate members) and $200 billion (House members). Because invoking "substantial, credible deficit-reduction measures" means never having to reduce spending. Or looking at proven ways of tapping private funds for infrastructure buildout during "fiscally constrained" times. No, let's tax and borrow and throw user fees on top of the whole megillah. Because, you know, the new money can be used for "deficit reduction" or "new investments."
The pattern here isn't hard to detect and it is about as comforting as 18th-century medicine: We need to keep bleeding the patient until he recovers enough so we can stop bleeding him. If he's not up and walking around in a little bit, that's only proof that we haven't bled him enough. But don't worry, because we'll enact substantial, credible blood-recovery measures down the road.
For more on why the stimulus failed, watch this Reason TV case study of spending in Silver Spring, Maryland: