Economics

Your Stimulus Dollars at Work: Going to Places Regardless of Economic Need

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USA Today's invaluable Dennis Cauchon has written up results of the paper's study of where stimulus spending has been directed. You'd expect it to go to the places hit hardest by the recession, right? Well, you'd be wrong:

States with the highest jobless rates are getting less money per person under the federal stimulus program than states with below-average unemployment, a USA TODAY analysis finds.

Hard-hit Florida ranks last in stimulus benefits per resident despite having the nation's fifth-highest unemployment rate. Nevada has the nation's worst unemployment — 14.2% — but ranks 46th in stimulus benefits.

By contrast, North Dakota has the nation's lowest jobless rate — 3.6% — but ranks fourth in stimulus benefits. Alaska ranks No. 1 in stimulus aid — $3,505 per person — and has a jobless rate below the 9.5% national rate.

Stimulus benefits skew to better-off states because of longtime federal spending formulas that consider many things — income, population density, highway fatalities — but usually not unemployment. Result: States that do well under federal formulas prospered again in the $862 billion stimulus law, regardless of their jobless rate

Whole thing, including a nifty and nauseating interactive graphic, here.

And if any of this sounds familiar, well, it should. Reason columnist and Mercatus Center economist Veronique de Rugy wrote up the same results for us back in November 2009:

Michigan's 15.2 percent unemployment rate is the highest in the country. So far, it has received $403 per person in stimulus funds. That's above the average stimulus per person across all states ($326).  However, it's lower than the $409 per person that the state of Vermont, a state with relatively low unemployment (6.8 percent), has received so far. Michigan's per-person take is also much lower than the $707 per person the District of Columbia received. D.C.'s unemployment rate is 9.9 percent.

Now look at the state with the lowest unemployment rate in the country: North Dakota. It's getting $253 per person with a 4.3 percent unemployment rate. Many other states are receiving roughly the same amount of stimulus funds per person despite much higher rates of unemployment.

Which suggests that stimulus funds are being allocated without thought to the level of unemployment within states. If government spending could in fact create jobs, then the problem of unemployment could be mitigated by distributing funds to states based on their relative unemployment levels.  

But that's not being done at all. Instead, funds are being distributed randomly, as quickly as possible, among the states. That in turn suggests something else: Even the federal government doesn't believe the myth that government spending can actually create jobs.

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28 responses to “Your Stimulus Dollars at Work: Going to Places Regardless of Economic Need

  1. You’d expect it to go to the places hit hardest by the recession, right?

    No.

    But that’s just the sort of rat-bagging teafucker I am.

    1. That was my first reaction to that line… Who in their right mind would possibly believe that stimulus money had anything at all to do with who needed it?

      1. Brain-dead Obamacrats?

        1. redundant

  2. I don’t think anyone who is familiar with public choice theory would think this money would be distributed according to economic need.

    1. Wait a minute! To each according to his need?
      That sounds oddly familiar…

  3. Since the population numbers are so different, I am not convinced that these numbers mean anything. Alaska has 698,000 people. If you send them much of anything, their per capita is going to be high. In contrast, California has 36 million people. To get the California per capita up to the Alaska rate would cost $129 billion. You really never could get the states even in per capita spending.

    1. you’re probably right….the top 5 states in per-capita spending are all very low population states:

      Alaska
      South Dakota
      Montana
      North Dakota
      Vermont

  4. I’d be willing to guess that Nevada did so poorly at receiving stimulus funds because most of the stimulus was used for highway projects, and Nevada generally refuses Federal Highway funding, due to all of the strings the Feds attach.

  5. Your Stimulus Dollars at Work: Going to Places Regardless of Economic Need

    That is inevitable, does not matter who’s in charge – Calculation Problem, anyone?

    Stimulus benefits skew to better-off states because of longtime federal spending formulas that consider many things ? income, population density, highway fatalities ? but usually not unemployment. Result: States that do well under federal formulas prospered again in the $862 billion stimulus law, regardless of their jobless rate.

    So the results of using formulas for economic calculation can be plainly seen. Instead, profit-seeking and the price system always seem to stock the grocery stores and the shoe stores invariably, regardless of how far the points of distribution – how is that ever possible with all that greed?

    I wonder . . . Wow wow wow Wondeeeer!

    1. Stimulus benefits skew to better-off states

      It takes money to make money, bitches.

  6. I just plotted the data – unemployment v spending. It’s just noise. A linear regression shows high unemployment states get *nominally* less than low unemployment states, but the fit is so poor as to be meaningless.

    1. See? The System works!

    2. What if you ran the fit against number or percent of Democratic voters rather than unemployment?

  7. Obviously, they’re growing the northern territories and abandoning the southern ones in anticipation of global warming.

  8. high unemployment states get *nominally* less than low unemployment states, but the fit is so poor as to be meaningless.

    So spending that was sold as alleviating unemployment can be defended, at best, as having no relation to unemployment? Is that about right?

    1. Fr the fit to make sense you have to include all 58 states…

    2. That’s about right. Not much of a surprise, or a story. Why is reason pimping crap from USA today?

  9. I think it is rather obvious. The stimulus money went where the need was the greatest and the need had nothing to do with unemployment.

    1. Re: Not an Economist,

      The stimulus money went where the need was the greatest and the need had nothing to do with unemployment.

      Uh…. so how did the government measure the need?

        1. Re: Sean W. Malone,

          I just knew you were going to say that…

  10. It takes money to make money, bitches.

    The unofficial motto of K Street.

    1. Periodically, the WSJ runs an article showing that the best return on investment in America is lobbying. Can’t remember the numbers, but each dollar spent lobbying returns, on average, tens or hundreds of dollars in rents.

  11. Yeah to Texas for being 49th per capita spending. Every day but Sunday (and some wednesday nights) I’m glad I live here.

  12. The 9.6% unemployment rate is misleading. Once you leave the Anchorage Bowl and Juneau, the unemployment rate in most areas is above 10%, and tops out at 22% in the lower YK Delta area. The official rate in my off-the-road-system area is 10%, but the actual rate is closer to 15-17%.

    When looking at it in per capita terms, don’t forget that due to the massive costs of projects in rural areas and the odds of anything in this fucking state needing a full (costly) NEPA review due to the majority of land in the hands of the feds, the $3,505 doesn’t go as far. Not that it excuses the stimulus in the first place.

  13. The current crop of Democrats and the naive and unqualified POTUS actually were able to fuck up an $800 billion stimulus. Literally almost anything else would have been an improvement, starting with the easy to implement 1.5 – 2 year payroll tax holiday – no exceptions for income. Instead we got every last item from the Democrat wet dream backlog, and they still weren’t able to increase aggregate demand enough to put a dent in unemployment.

    Boy, it’s a good thing we got those incompetent Republicans out of there, huh?

    1. Stimulus benefits skew to Democrat’s Districts:

      Report: Democratic districts received nearly twice the amount of stimulus funds as GOP districts

      A new analysis of the $157 billion distributed by the American Reinvestment and Recovery act, popularly known as the stimulus bill, shows that the funds were distributed without regard for what states were most in need of jobs.

      “You would think that if the stimulus money was actually spent to create jobs, there would be more stimulus money spent in high unemployment states,” said Veronique de Rugy, a scholar at the Mercatus Center who produced the analysis. “But we don’t find any correlation.”

      The Mercatus Center at George Mason University in Virginia is one of the nation’s most respected economic and regulatory think tanks and has a Nobel prize-winning economist on staff. The econometric analysis was done using data provided by Recovery.gov — the government website devoted to tracking the stimulus data — as well as a host of other government databases.

      Additionally, Mercatus found that stimulus funds were not disbursed geographically with any special regard for low-income Americans. “We find no correlation between economic indicators and stimulus funding. Preliminary results find no statistically significant effect of unemployment, median income or mean income on stimulus funds allocation,” said the report.

      The Mercatus Center analysis also found that Democratic congressional districts received on average almost double the funding of Republican congressional districts. Republican congressional districts received on average $232 million in stimulus funds while Democratic districts received $439 million on average.

      http://www.washingtonexaminer……z0vexPqqHA

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