A funny thing happened on the way to the voting booth: Americans discovered that most federal stimulus funds were being used to stimulate government, not the economy.
I was on the road recently, driving from my home in southeast Louisiana through a long stretch of Mississippi to Tuscaloosa, Ala., then to the outskirts of Birmingham and on to Auburn, Ala., and finally back to my home by way of Montgomery and Mobile. Along the way I was slowed from time to time as I passed by road and bridge repair projects marked with prominent signs indicating they were funded by the American Recovery and Reinvestment Act, President Obamas so-called stimulus bill.
Naturally I was thrilled to see my tax dollars at work, although honesty compels me to report that not much actual work seemed to be going on at any of the sites. Most of the visible workers were just standing around. Of course, such standing around is typical of public construction projects, so I dont suppose that what I saw was in any way owing to the stimulus funding in particular.
This huge legislative enactment provides for a great variety of increased spending and some reduction in taxes over a period of 10 years. The Congressional Budget Office computed that the net amount of money to be injected into, or not removed from, the economy as a result of the stimulus bill totals about $787 billion.
At the time the bill was being debated and discussed, a common plea in its defense had to do with funding so-called shovel-ready projects to repair or replace public roads, bridges and other structures widely taken to be in a state of decay or disrepair. This plea made an appealing talking point, since most Americans place at least some value on such infrastructure.
Alas, only a tiny proportion of the funds expended so far has been directed to this well-advertised objective. According to the governments website for tracking stimulus expenditures (Recovery.gov), as of October 27, 2010, $464.2 billion had been made available to a long list of government agencies and $317.8 billion had been spent.
Of the total amount disbursed, 70 percent had been spent by three departments: $91.9 billion by the Department of Health and Human Services, $65.0 billion by the Department of Education, and $62.6 billion by the Department of Labor. The Department of Transportations outlays came to just $21.6 billion, or 6.8 percent of the total.
Shovel-ready infrastructure projects have evidently proved difficult to find. Small wonder, then, that President Obama confessed just prior to the election to having realized too late that theres no such thing as shovel-ready projects. Despite this realization, the president did not propose freezing such spending. Perhaps he had other objectives in mind from the start.
Other leading spenders of stimulus money have included the Department of Agriculture ($18.5 billion), the Social Security Administration ($13.7 billion), the Department of the Treasury ($7.9 billion), and the Environmental Protection Agency ($4.3 billion).
A common element of these government departments and agencies is their shortage of shovels, not to mention shovel-ready projects. They also excel at dishing out subsidies to undeserving but politically potent special interests and paying handsome salaries and benefits to bureaucratic drones and wreckers on the government payroll.
So far, the National Aeronautics and Space Administration has spent $733 million of the more than $1 billion allocated to it. Is it possible to shovel outer space?
No doubt the General Services Administration, the Department of Veterans Affairs, the National Science Foundation, the Railroad Retirement Board, and the National Endowment for the Arts are shoveling something. I leave it as an exercise for the reader to ascertain exactly what.
Yet, as I saw with my own eyes, some work evidently is going on in Mississippi and Alabama to fix roads and bridges. Thats something, but its hardly going to have a noticeable effect on recovery from the recession.
Robert Higgs is Senior Fellow in Political Economy at The Independent Institute and Editor at Large of the Institutes quarterly journal The Independent Review. He received his Ph.D. in economics from Johns Hopkins University, and he has taught at the University of Washington, Lafayette College, Seattle University, and the University of Economics, Prague. He has been a visiting scholar at Oxford University and Stanford University, and a fellow for the Hoover Institution and the National Science Foundation. He is the author of many books, including Depression, War, and Cold War.
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