The Economic Stimulus Program - The Failure That Keeps On Failing

We have covered the fiasco known as the economic stimulus program many times in this blog. Highlights of failure include the following:

• The President said that if the stimulus program was not passed, unemployment could go as high as 8% but the stimulus program would drive unemployment down under 6%. The program was implemented and we endured at least 42 consecutive months of unemployment never dipping BELOW 8%.
• The Congressional Budget Office estimated that the final cost of the stimulus program was about $820 billion. The administration brags that the program created or saved about 2.7 million jobs. Even if you buy their generous/unrealistic estimate of jobs, the cost per job comes out to over $300,000 per job created or saved. Since the average household income is about $50,000, it cost at least six times as much to create a job as what could be expected to be paid in salary for that job. Not an efficient use of taxpayer wealth or an effective way to create jobs.
• At this rate, it would cost about $4 TRILLION to get every American currently counted in the unemployment rate (about 13 million people) a job, a totally unrealistic approach to the unemployment problem.
• Tens of billions of stimulus dollars were indiscriminately given out to Obama supporters, cronies, and fund raisers with little thought that giving out taxpayer wealth to these people would actually result in positive economic results. As a result, we ended up losing taxpayer money to such incompetent alternative energy companies like Solyndra, A123, Abound Solar and other failing and bankrupt companies.
• An investigative report by the Associated Press uncovered the fact that half of the bridges repaired using stimulus funds were not in need of repairs. Again, another example of how corrupt and poorly implemented the entire program was.
• And if wasting money on shaky, crony-linked companies and solid bridges was not bad enough, there were hundreds of other examples of wasteful spending including replacing windows in an obsolete, closed visitor center at Mt. St. Helens, studying bugs on an island off the coast of Africa, and other inane and useless projects.

Disgraceful misuse of taxpayer funds. But the economic stimulus program is so bad that it keeps on giving us material to review. Bill Dupor, an economics professor at Ohio State University, analyzed data from Recovery.gov, a Federal government website that compiled and tracked the official, government approved results from the economic stimulus program. His results were published in Investor’s Business Daily.

The professor meticulously went through all of the entries related to job creation and savings at the site and tallied/counted that 682,000 jobs were saved or created in 2009, the first year of the program. Unfortunately, only about 25% of them, 166,000 were in the private sector. Since government jobs do not expand the economy, they merely shuffle market wealth from taxpayers to government workers, the stimulus plan was even less effective than its advocates claimed.

While other sources estimated higher job creation levels, they used economic and statistical methods to estimate the job creation totals. The professor used no estimation methods, he counted actual job creation tallies himself and did not use estimation processes.

What was the professor’s final conclusion: “It’s still an open question about the effect of the stimulus, and it will take more time to sort it out. But it’s coming to a point now where we’re beginning to understand that there is no real evidence to say that we avoided a great depression through the stimulus.

As we have said many times: governments do not create jobs. The marketplace creates jobs. Governments can create work (e.g. replacing windows, studying bugs, hiring more government employees, etc.) but this is creating work using existing wealth in the economy. It does not create additional wealth or economic growth.

Another example of failure comes to us from a report done by the Washington Examiner from October 8, 2012. Using the same, official government tracking website (Recovery.com) of job creation as a result of the stimulus program, the Examiner came across a stimulus program that was supposed to promote healthy eating (again, remember that this is a government controlled and populated website so its integrity is due to the Obama administration, not a conservative source):

“Sesame Workshop will carry out an expansion of its highly successful Healthy Habits for Life initiative, which promotes improved nutrition and increased physical activity, targeting low-income preschool-aged children and their families and care providers."

How this project would create jobs and keep unemployment down seems like a very big stretch to me. And, according to the government website, it did not succeed in creating a lot of jobs efficiently. The website claims the project created 1.47 new jobs.

No big deal, you say? Well, the cost of these 1.47 jobs was $1,067,532 or about $726,000 per job created. That was the size of the grant to the Sesame Street folks from the Federal government, courtesy of the taxpayers. This is far worse than the overall ratio we created above, where we showed that each stimulus job created or saved cost over $300,000 each.

Note: I find it fascinating that the government is so precise in its measurement that they can would report “jobs created” to the second decimal place!

The economic stimulus program continues to show its failing ways three years after it was implemented. Wasteful spending on idiotic programs, the hiring of more government workers vs. expanding the economy, an explosion of crony capitalism, and skyrocketing and persistently high unemployment rates. All at a cost of about $7,000 per U.S. household and almost another TRILLION added to the national debt.

The failure that keeps on failing.

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http://www.repealamendment/