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Only 10% Of Stimulus Spent On Infrastructure

From the Wall Street Journal:

Obama’s Stimulus, Five Years Later

By James Freeman | February 17, 2014

Five years ago today, President Barack Obama signed the American Recovery and Reinvestment Act into law. The $830 billion spending blowout was sold by the White House as a way to keep unemployment from rising above 8%. But the stimulus would fail on its own terms. 2009 marked the first of four straight years when unemployment averaged more than 8%. And of course the unemployment rate would have been even worse in those years and still today if so many people had not quit the labor force, driving labor-participation rates to 1970s levels.

To be fair, Obama’s stimulus has helped more people ‘to choose’ to leave the workforce, and thereby lower the jobless rate. Because buried in the stimulus package was a minor executive order whereby Obama did away with the work requirement for Food Stamps. (Which is separate and apart from his gutting of the work requirement in welfare.)

Obama’s stimulus package also gave Social Security a lot more money to ‘streamline’ their disability claims process. Which has translated into many more people ‘choosing’ to leave the workforce to collect SSDI.

The Obama White House had been egged on by liberal economists like Paul Krugman, who in November of 2008 recommended a stimulus of at least $600 billion. Team Obama worked with Democrats in Congress to exceed his minimum request by more than 30%. But after the failure of the stimulus the same liberal economists who had enthusiastically supported the plan would claim that its main flaw was that it was too small.

Krugman and the rest of the lunatic left wanted a stimulus package that would match what the government spent fighting WWII.

But, in reality, the actual cost of the original $800 billion pork-laden stimulus has ballooned to over $2 trillion. Which contradicts those who say it didn’t work because it wasn’t big enough. Which contradicts those who say it didn’t work because it wasn’t big enough.

Shortly after the passage of the Recovery Act in 2009, Vice President Joseph Biden urged local politicians not to spend the money on "stupid things." They ignored his advice, and so did Mr. Biden. The federal government poured billions into the government and education sectors, where unemployment was low, but spent only about 10% on promised infrastructure, though the unemployment rate in construction was running in double digits.

We have always said that most of the money went to public sector unions and Obama’s crony capitalist pals in the ‘green tech’ industry. But it’s nice to see that confirmed.

And some of the individual projects funded by the law were truly appalling. $783,000 was spent on a study of why young people consume malt liquor and marijuana. $92,000 went to the Army Corps of Engineers for costumes for mascots like Bobber the Water Safety Dog. $219,000 funded a study of college "hookups."

In aggregate, the spending helped drive federal outlays from less than $3 trillion in 2008 to $3.5 trillion in 2009, where federal spending has roughly remained ever since.

That is, government spending became locked in at Obama’s one time only stimulus rate, via continuing resolutions. Because CRs do not allow for any real cuts in spending. They require that roughly the same amount of money continues to be spent.

The legacy is a slow-growth economy: Growth over the last 18 quarters has averaged just 2.4% — pretty shoddy compared to better than 4% growth during the Reagan recovery in the 1980s and almost 4% in the 1990s recovery.

The failure of the stimulus was a failure of the neo-Keynesian belief that economies can be jolted into action by a wave of government spending. In fact, people are smart enough to realize that every dollar poured into the economy via government spending must eventually be taken out of the productive economy in the form of taxes.

The ‘Invisible Hand’ is even smarter. In fact, taking so much money out of the private sector tied up the ‘Invisible Hand.’

The way to jolt an economy to life and to sustain long-term growth is to create more incentives for people to work, save and invest. Let’s hope Washington’s next stimulus plan is aimed at reducing the tax and regulatory burden on American job creators.

Dream on.

This article was posted by Steve on Monday, February 17th, 2014. Comments are currently closed.

One Response to “Only 10% Of Stimulus Spent On Infrastructure”

  1. GetBackJack says:

    If ever this is an honest accounting of how Congress ‘appropriates’ (steals) money from us, and an honest accounting of how it is siphoned off, a bloody god-awful hair raising, terrifying revolution would not begin to be enough to describe what would happen next ..

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