Infrastructure? Did We Say Infrastructure? We Meant "Government Employee Pay Maintenance"

Remember when the stimulus bill was all about "infrastructure" and "green energy?"  Way back in January of 2009 (sorry I am in I-told-you-so mode) I observed how less than 6% of the first two years spending appeared to be related to infrastructure.  It turns out that this is exactly how it played out

According to Recovery.gov, the government has now paid out $415 billion of the stimulus funds. Tax rebates account for $163 billion. Of the $252 of direct spending, the Department of Transportation has paid out $14 billion. That's 5.5%.

I kind of proud I came that close to the actual number.  Note then that the stimulus was sold to Americans based on 5.5% of the program.  No mention by Obama in selling it where the other 94.5% was going.  It would have been interesting to see public reaction at the time if Obama had said "we want to spend $230 billion making sure government employees continue to get 8% pay raises, even through the recession.  We are going to stimulate the economy by giving your money to a bunch of assistant principals who do little work but call themselves 'educators' so that they can pretend to be teachers when government budget cuts come along."

  • Interesting -- what is increasingly clear to me is that the government fears defaulting on government paychecks almost as much as defaulting on its debt -- herein lies the real problem of society and the political economy...

  • Sean

    I am curious, did you look at how much was spent on health care in the stimulus bill? It did not all go to government raises. I know as of August of last year, nearly 10x more money went to healthcare through block grants for Medicaid and Medicare than to infrastructure. I live near Baltimore and the all the factories which had been the source of blue collar jobs are closed while hospitals are being built or expanded left and right. (Its so bad the lawyers spend much more ad money on chasing malpractice cases than work related injuries.) The government created a health care monster by paying for process rather than results. The stimulus and the health care plan just double down on the imbalance.

  • DKH

    To be fair, I think the tax cuts were played up, too, in the sense of "see? tax cuts! this is a bone for the Republicans; they should support the bill". So in that sense, 43% of the program was sold to the public. Who can't get behind that?

  • Mesa Econoguy

    Government pay raises:

    The Government Pay Bonus

  • caseyboy

    The stimulus program was a political payback scheme. Not 1 Republican in the House and only a few Rino's in the Senate supported it. You can quibble about the numbers, but most of the money went to local governments who for the most part maintained staff and granted annual pay increases as though the economy was A-Ok. Even the money that went for infrastructure was contracted out to union companies rather than non-union shops. Political payback. And now that they p___'d away all that money they don't have the necessary flexibility to take meaningful steps to stimulate the economy. Such as cutting the corporate tax rate in half and reducing capital gains to 10%. Cutting taxes reduces the cost of capital and that in turn makes more business investment projects viable for funding. New business investment means more jobs and more economic activity. And that leads to higher tax revenues. It has been proven 3 times in my life time. A cut in the tax rate led to higher taxes collected.