Tim Griffin spoke in Central Arkansas recently at a townhall meeting and mentioned that a couple of million of stimulus money went to build the walking bridge in Little Rock that will be opening this summer. Then he went on to show how it was silly for our government to try to stimulate the economy with our national credit card. I was reminded on that when I read these two articles below:
The Arkansas Times Blog reported today:
The bikers/walkers/runners are humming about the dedication of the Two Rivers Bridge across the Little Maumelle River. It’s set for 11:30 a.m. Friday. The Transportation secretary, Ray LaHood, is to be in attendance.
Enthusiasts want to turn out a crowd to show support for future bike/hike projects in the area.
Steve Chapman rightly noted in his article “Stimulus to Nowhere” noted:
Mired in excruciating negotiations over the budget and the debt ceiling, President Barack Obama might reflect that things didn’t have to turn out this way. The impasse grows mainly out of one major decision he made early on: pushing through a giant stimulus.
When he took office in January 2009, this was his first priority. The following month, Obama signed the American Recovery and Reinvestment Act, with a price tag eventually put at $862 billion.
It was, he said at the time, the most sweeping economic recovery package in our history,” and would “create or save three and a half million jobs over the next two years.”
The president was right about the first claim. As a share of gross domestic output, it was the largest fiscal stimulus program ever tried in this country. But the second claim doesn’t stand up so well. Today, total nonfarm employment is down by more than a million jobs.
The package had three main components: tax cuts, aid to state governments and spending on infrastructure projects. Tax cuts would induce consumers to buy stuff. State aid would prop up spending by keeping government workers employed. Infrastructure outlay would generate hiring to build roads, bridges and other public works.
The idea behind channeling money to state governments is that it would reduce the paring of government payrolls, thus preserving the spending power of public employees. But the plan went awry, according to a paper by Dartmouth College economists James Feyrer and Bruce Sacerdote published by the National Bureau of Economic Research.
“Transfers to the states to support education and law enforcement appear to have little effect,” they concluded. Most likely, they said, states used the money to avoid raising taxes or borrowing money.
That’s right: The federal government took out loans that it will have to cover with future tax increases … so states don’t have to. It’s like paying your Visa bill with your MasterCard.
The public works component could have been called public non-works. It sounds easy for Washington to pay contractors to embark on “shovel-ready projects” that needed only money to get started. The administration somehow forgot that even when the need is urgent, the government moves at the speed of a glacier.
John Cogan and John Taylor, affiliated with Stanford University and the Hoover Institution, reported earlier this year that out of that $862 billion, a microscopic $4 billion has been used to finance infrastructure. Even Obama has been chagrined.
“There’s no such thing as shovel-ready projects,” he complained last year.
Even if jobs were somehow created or saved by this ambitious effort, they came at a prohibitive price. Feyrer and Sacerdote say the costs may have been as high as $400,000 perjob.
Based on all this evidence, we don’t really know whether the federal government can use fiscal policy to engineer a recovery. We do know it can go broke trying.
The Daily Hatch 