Conservative
Type 40
How Stimulus Fails - Reason Magazine
Its not hard to make the case that President Barack Obamas $840 billion stimulus was a failure. The economy, which was supposed to recover as a result of the massive spending, has largely remained in the doldrums.
The ground rules for stimulus dollars, as laid out by Obamas top economic adviser at the time, Larry Summers, were based on the insights of legendary 20th-century economist John Maynard Keynes. The funds were to be targeted at resources idled by the recession, and the interventions were to be temporary and timely, 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 reason columnist Veronique de Rugy, a senior research fellow at George Mason Universitys Mercatus Center, the money is never spent in a way thats consistent with the conditions laid out by the Keynesians for it to be efficient.
Obama said the stimulus would put nearly 400,000 people back to work rebuilding America. But in the year after the stimulus was passed, the U.S. construction industry shed about 900,000 jobs, or 14 percent of its work force. The industry still hadnt recovered two-and-a-half years later.
In Maryland, the specialty trades, a subset of the construction industry that handles big infrastructure projects, have lost an estimated 8 percent of their work force since the stimulus was passed, amounting to 8,000 jobs.
Or consider Palladian Partners, a communications firm in Silver Spring that has received $98 million in government contracts during the last 12 years. The National Institutes of Health (NIH), Palladians biggest client, tacked $363,760 in stimulus dollars onto an existing contract, then followed that up with two more awards totaling $431,333. Palladian was to spend the money collecting and disseminating information about how the NIH was spending stimulus money.
The stimulus bill set aside $500 million for a program to train and recruit people for the new green economy. The program promised to place 80,000 people in so-called green jobs. The grant period is more than half over, and the program has placed only 8,000 people in jobs, according to a report by the Department of Labors inspector general.
Were going to weatherize homes, Obama said in an interview with CBS on February 4, 2009. That immediately puts people back to work. What would be a more effective stimulus package than that?
According to Keynesian theory, stimulus funds must be spent quickly to be effective. By the presidents own account, one of the most shovel-ready programs in the package was supposed to be a $5 billion initiative to weatherize 590,000 homes around the country. But according to a February 2010 report by the Department of Energys inspector general, only 8 percent of the weatherization money was tapped in the programs first year.
The main lesson of the stimulus is that creating jobs is a very complex process, says De Rugy. And certainly it cant be directed by a top-down institution that pretty much fails at everything it does.