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Life Support for Government

November 20, 2009, 9:06 am

I have warned about this before:

In fact, Hollywood's portion of the stimulus package reveals an important factor of the Recovery Act: The money is not going to areas that would more directly stimulate the economy but instead to provide ongoing life support to deficit-ridden federal, state and local agencies.

That is the main impression I have gotten when reading the stimulus jobs data base -- the fake districts and BS accounting did not catch my eye so much as the fact that all the jobs seemed to  be saved jobs in government agencies.  I am pretty sure that had the stimulus been originally sold with its true goals -- to help stave off financial accountability in state and local governments -- it would have had more difficulty passing.

Though some of us saw this even in the bill itself (this blog, Jan 27, 2009)

So do you see my point. The reason so much of this infrastructure bill can be spent in the next two years is that there is no infrastructure in it, at least in the first two years!  42% of the deficit impact in 2009/2010 is tax cuts, another 44% is in transfer payments to individuals and state governments.  1% is defense.  At least 5% seems to be just pumping up a number of budgets with no infrastructure impact (such as at Homeland Security).  And at most 6% is infrastructure and green energy.  I say at most because it is unclear if this stuff is really incremental, and much of this budget may be for planners and government departments rather than actual facilities on the ground.

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Category: Government
  • Bill

    It isn't even the political or ideological problems with the actual spending targets that is most disturbing (although they are plenty disturbing enough!).

    Simply from the perspective of economic theory, the only justification for a stimulus (which does nothing more than move spending decisions from present or future taxpayers to government officials) is that the multiplier will be greater, so there will be a greater total impact on the economy than would occur if individuals made their own decisions about where to spend their money. Whatever you think about that theory (I think it is pretty bogus, but I have no formal economics training so I'm pretty sure my opinion doesn't count), it surely doesn't apply when the dollars are spent in the least stimulating part of the economy. The multiplier in this case has to be less than 1.0. The stimulus is actually further sucking the life out of the economy.
    We're in the best of hands.

  • Allen

    I wouldn't belittle the significance of the flaws in data. The only thing worse than no data is bad data. Of course the buearcrats are blaming transparency for this, that we're just seeing it before they could clean it up. And that's a load of crap. You can't polish a turd. This data has no business getting into the system, so to speak, unless it's known to be correct. Their entire process is flawed and they don't want to admit it.

  • Lenny

    This whole jobs "saved or created" game would be very entertaining if I didn't have to remember how much of my future earnings is being wasted in the process. It occured to me, however, that there is one small silver lining.

    I was reading through the whitehouse.gov blog where the administration is defending itself when I came across this statement - "...transparency is going to be messy – but it is better than the alternative."

    Their point was that all this reporting is going to be messy but in the end we'll all see how wonderful the stimulus has been. I had to stop and acknowledge that as far as I can remember, no previous adminstration has ever published this kind of raw feedback so freely but rather than helping us see how wonderful the stimulus is, this quick turnaround in publishing the reports is giving us all a good look at what the emperor's new clothes are really made of.

  • http://www.aguanomics.com David Zetland

    Totally.