Economy

“Creating” Jobs With Stimulus Money

December 24, 2010

Multiple Pages
“Creating” Jobs With Stimulus Money

The $787-billion American Recovery and Reinvestment Act of 2009 (ARRA), signed into law by President Obama on February 17, 2009, has been largely forgotten, despite the fact that it consumes hundreds of millions of taxpayers’ dollars daily. Earlier this month the Recovery Progress Report summarized: “As of December 1, $466.8 billion of the $787 billion stimulus has been committed to states; $333.8 billion has been paid out.” [Note: That adds up to over $800 billion, but the government was never that great at math.]

With deficits surging and inflation rising, we should recall that by 2011, the ARRA was expected to have created over 3.5 million jobs. But unemployment is up to 9.8 percent, a 21 percent increase from when the “stimulus” bill was signed. Unemployed workers have become a class of their own—distressed, demoralized, and destitute.

Senator Tom Coburn’s (R-OK) report, “100 Stimulus Projects: A Second Opinion”, outlined some of the most obscure stimulus projects Congress included in the legislation:

-$3.4 million for Wildlife “Eco-Passage” in Florida
-$800,000 to repave a rarely-used back-up runway in Johnstown, Pennsylvania
-$10 million to renovate a century old train station that hasn’t been used in 30 years
-$1 million to construct a new guardrail over an Oklahoma lake

Despite the hundreds of billions already paid out for “stimulation,” the economy and unemployment rate remain stagnant. Why? Because the government does not allocate funds efficiently. Spending is based on political favoritism instead of common sense and good business.

“In the end, the ARRA is not an economic stimulus. It is a political stimulus, designed to line bureaucrats’ pockets with votes and political contributions.”

It was reported recently that The National Science Foundation contributed $141,002 in stimulus money to Montana University for a six-week excursion to Hangzhou, China, to study dinosaur eggs. How many jobs did this “collegiate” field trip create? Zero—a giant goose egg.

In September, two audits performed by the Los Angeles controller revealed that “L.A. spent enormous portions of the $594 million in stimulus funds it received on projects that created or saved just a handful of jobs.” The audits, in particular, assessed the $111 million used by the city’s Director of Public Works and Department of Transportation, calculating that the construction projects hatched a total of 54 jobs—about $2 million per job.

This sounds more like political back-scratching than job-generation. Because this is stimulus money, you can’t help but assume it was not allocated to improve public works and transportation, but to pump money into the Los Angeles economy—and to “create” jobs.

Another problem is the ARRA’s focus on producing public-sector jobs. Such jobs are less productive because government bureaucrats are the “proprietors” rather than CEOs and private-sector management.

According to the U.S. Bureau of Labor Statistics National Compensation Survey, “private-sector employees worked an average of 2,050 hours in 2008, 12 percent more than the 1,825 hours worked by the average public-sector employee.” Private-sector managers have higher expectations, giving employees a greater incentive to perform. They work harder, longer, and smarter.

The government’s monopoly over the public sector discourages competitive behavior. Worker productivity suffers. A lack of employee accountability spawns a lethargic workforce and feeds into a system that is less innovative and more susceptible to financial waste.

Private enterprises encourage competition. They must continually innovate and improve their goods and services to rival competitors, and all employees are held accountable for their roles in achieving this goal. Contrary to the private sector, government is a protected monopoly which shields public employees from incompetence and hinders corporate progress. Unfortunately, the public sector reaps the majority of stimulus benefits.

In the end, the ARRA is not an economic stimulus. It is a political stimulus designed to line bureaucrats’ pockets with votes and political contributions. It is a vacuum without a bag. And in the spirit of the 21st century, it is American taxpayers’ dollars at work.

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