House Speaker Nancy Pelosi laid out the three guiding principles of the economic stimulus package: that it be “timely, temporary and targeted.”
More than a year later, it is clear that none of these principles has been fulfilled.
Timely? As CBS News reported as recently as August 16, almost all of the stimulus money has been awarded, but that is very different from it all being spent. For instance, the U.S. Department of Energy has doled out $30.2 billion worth of stimulus grants, but only paid out $6.2 billion. Or Detroit, which has spent less than 1 percent of the $8.8 million in stimulus funds it was given. All told, after nearly 18 months after passage, more than half of the stimulus funds devoted to investment projects has not been spent.
Temporary? The New York Post reported today that “some of the more popular stimulus programs look likely to be made permanent – in which case, the “temporary” fix could end up costing more than $3.2 trillion. What should we have expected? The government loves to create programs, the appearance of doing something often leads to votes, but they are loath to take anything back. Government programs are like toothpaste, once it is out of the tube, it is darn near impossible to get it back in.
Beyond the continued spending, one thing that is certainly not temporary is the debt burden that it has caused. A recent CBO estimate found that the cost of the economic stimulus package was $814 billion – a significant reason why our government has run record deficits for the past two years. Those compounding deficits could have serious long-term consequences for our economy. The CBO admits as much, saying in a report that the long run costs of each additional dollar of debt crowds out about 33 cents worth of private investment. In other words, higher spending now leads to lower GDP later.
Targeted? This, more than any other “guiding principle” is where the stimulus has missed the mark. Things like $554,763 to replace the windows in a visitor’s center that has been closed since 2007, or $1.9 million spent to study photograph ants, or $89,298 spent to replace a new sidewalk with a newer sidewalk that leads to nowhere but a ditch.
The waste is obvious. But even more nefarious is the idea that President Obama made a conscious decision to “target” his own pet projects rather than surefire job creators. As TIME reported last week,
But in the words of Vice President Joe Biden, Obama’s effusive Recovery Act point man, “Now the fun stuff starts!” The “fun stuff,” about one-sixth of the total cost, is an all-out effort to exploit the crisis to make green energy, green building and green transportation real…
Whereas Obama’s Council of Economic Advisers wanted a “textbook Keynesian response” and “argued for tax cuts and income transfers to get cash circulating quickly,” Obama wanted something else. As TIME reported,
“Obama and Biden also saw a golden opportunity to address priorities; they emphasized shovel-worthy as well as shovel-ready.”
I’m sorry, but in the worst economic downturn since the Great Depression the only priority the Obama administration should have been addressing was the lack of jobs.
Worse, Obama’s pet projects may actually hurt us fiscally in the long-term. Moreover, other nation’s experience with implementing a green economy suggests that their may be a net job loss. For instance, Spain has lost two jobs for every one jobs created with windmills and solar farms. In Denmark, a study finds that the cost of each green job to the government costs $90,000 to $140,000 annually and once the government handouts end, so do the jobs. Germany’s green bubble also burst after a prominent think tank found that,
“Germany’s PV [solar energy] promotion has become a subsidization regime that, on a per-worker basis, has reached a level that far exceeds average wages, with per-worker subsidies as high as 175,000 € (US $ 240,000).”
Obama’s high-speed rail plans will likely cause similar problems. As Steve Forbes explains,
“Bottom line: All of these rail projects couldn’t pass even a laugh test in the private sector, yet they will soak up capital that otherwise could be used for productive purposes. Almost all high-speed rail schemes around the world operate at a loss. Even those touted as turning a profit are usually helped with off-balance-sheet government subsidies.”
For a list of other reasons why Americans should be skeptical when Vice President Joe Biden says, “Now the fun stuff starts,” check out this AP Fact Check on Obama’s latest stimulus assertions.
Contrary to Pelosi’s assertions the stimulus has proven to be neither timely, temporary, nor targeted. But those are not the rubrics by which the success of the stimulus will be ultimately judged. The bottom line for most Americans is whether it created jobs. The answer to that, more than any other factor, is the reason for its failure.
by Brandon Greife, Political Director of the College Republican National Committee