We will be posting on the stimulus bill for months and years, because it will take that long to figure out what was in it. Congressman who voted for it may never know what they actually voted for. Veronique de Rugy takes a first swing at it:
Total spending amounts to $792 billion, with $570 billion in direct spending and $212 billion in tax provisions. These numbers don't include the massive amount of interest that will accrue on the increased debt. If we include that, the total amount comes to $1.14 trillion.
Supporters of the package describe the legislation as transportation and infrastructure investment, the idea being to use new spending to put America back to work while at the same time fixing decrepit infrastructure. However, only 17 percent of the discretionary spending in this package is for infrastructure items. More worrisome still, the final version lacks any mechanism to ensure that spending will be targeted toward infrastructure projects with high economic returns
De Rugy actually overestimates the infrastructure spending, because she looks at the spending over 10 years. Since the stimulative effect of infrastructure spending in this recession is, at most, limited to 2009-2010 spending, and since the infrastructure spending is more back-end loaded, the percentage is much lower in the first 2 years -- something like 6-7% as I calculated here (I will go back through the CBO reports with an update when I get a chance, but Kevin Drum links them here, hilariously saying they "scored well."
Unfortunately, even this seems to wildly underestimate the true cost of the bill. In creating the bill, Congress increased the general operating funds for zillions of departments and programs (remember, 80+% of the spending is departmental budget increases, not infrastructure construction). However, they show these increasing disappearing after a couple of years. We all know that Democrats consider removing an increase to be "a massive cut" so we can assume that at some point, these budget increases will be extended for eternity. If one makes this more realistic assumption, then the cost of the stimulus bill is over $3 trillion! [update: Carpe Diem demonstrates this with a nice set of graphs]
My other project I am working on is to look at some of the "shovel ready" projects on the mayor's list here (warning! 600 page pdf!!) in the Phoenix area. My incoming hypothesis is that any project on here either:
- Is not shovel ready, as it takes years to get a project through planning, procurement, and environmental permitting, but once anyone in DC finds that out, they won't take back the money, -OR-
- Is something that the local residents, who will enjoy the benefit, refused to fund, raising the question as to why the rest of us should fund it.
I won't spill the beans yet, but here are a few tastes from the Phoenix area:
- A major upgrade to the water system of the town of Paradise Valley, a small community embedded in Phoenix which is, by a fairly good margin, the single wealthiest zip code in the state.
- A lot of solar. Solar is a particularly good choice for this list because 1) Obama has a hard-on for it, so he is unlikely to question it 2) Solar's problem is high capital cost vs. the amount of electricity produced, but if someone else is paying the capital cost....