Stimulus check, 7 months in

It’s been seven months since the stimulus bill was passed. Just shortly after his inauguration, President Obama issued this statement.

“There are many numbers in this plan…It will put billions of dollars in immediate tax relief into the pockets of working families.

But out of all these numbers, there is one that matters most to me: this recovery plan will save or create more than 3 million new jobs over the next few years. “

Despite this promise, unemployment today stands at 9.7%, the highest it’s been since 1983. The broader unemployment rate is a staggering 16.8%. Last month, unemployment surged in 27 states.

For the most part, there seems to be a consensus that unemployment is a lagging indicator, meaning its rise is delayed until after other segments of the economy have already improved. Even so, since the recession began in December 2007, 7.4 million jobs have been lost. 4 million of those have been shed since December of 2008, just a month before President Obama’s official transition to power. As of last month, 9.1 million people had accepted part-time work, unable to find full-time, permanent employment.

In fact, job creation as a result of the stimulus has been limited to government jobs. USA Today reports:

“Fourteen of the top federal agencies responsible for spending under the American Recovery and Reinvestment Act say they’ve hired about 3,000 workers with stimulus money. That’s helped fuel the continued growth of the federal government, which increased by more than 25,000 employees, or 1.3%, since December 2008, according to the latest quarterly report.”

It gets even worse. Not only has the stimulus failed to create private sector jobs, but the administrative structures created to implement and oversee the stimulus are depleting the emergency funds they were created to oversee.

“Thirteen agencies that report stimulus-related administrative expenses separately on their weekly spending reports say they’ve spent $186.8 million so far on salaries and other overhead. Those agencies have reported spending $46.1 billion in stimulus funds overall.”

Supporters of the stimulus would argue that distributing the funds and creating jobs costs money. And, to a certain extent, that is true for any government action aimed at creating growth. Tax cuts also cost money — in theory — in decreased revenue for the government. But, they don’t drain the government of funds set to up to increase jobs, funds that are borrowed and upon which interest accrues.

Back in January, The Heritage Foundation pointed out that if the stimulus created 3.675 million jobs, each job would cost $217,000. I wonder if their figure included all the various administrative costs required to create the jobs in the first place. Or to oversee the distribution of the funds.

Presumably, there are some stimulus projects that have gotten underway. Road paving projects for one — because they are faster to get off the ground than construction projects that have numerous environmental hurdles to overcome. But, we now have seven months worth of data and no evidence that the stimulus has created any jobs — save for government jobs. As for saving jobs that would otherwise have been eliminated, I have yet to see anything that offers up a method of calculating this shaky proposition.

So, seven months into the program, unemployment is climbing, and jobs that were promised to Americans if only they trusted Washington to pass the biggest spending bill in U.S. history, are nowhere in sight.

In the statement quoted earlier, the President also promised:

“I can also promise that my administration will administer this recovery plan with a level of transparency and accountability never before seen in Washington. Once it is passed, every American will be able to go the website recovery.gov and see how and where their money is being spent.”

In addition to calling the stimulus bill a jobs bill, the President and his administration promised an unprecedented level of transparency related to the stimulus funds. Recovery.gov is a website that became all too familiar to Americans (well, except to Vice President Biden who famously blanked on the ‘number’ during a live TV spot). Yet, here we are seven months later, and recovery.gov offers nothing more than a very general overview of how stimulus funds have been distributed by state and department.

But, we now have a firm date for the new site, October 1. State and local contractors and other entities will have 10 days each quarter to provide specific information identifying the funds they received, how they were spent and how many jobs were created out of those funds.

But, even this is not without it’s problems. BusinessWeek reports:

“Put another way, without careful auditing, the government will have little way of judging whether all those tens of thousands of stimulus funds recipients are accurately relaying where they spent the money and how many jobs were truly created.”

Seven months in and unemployment is rising, job losses of 550,000 per week are nothing out of the norm, consumer spending is low despite the rebates included in the stimulus, and with Democrats’ health care reform and cap-and-trade proposals still on the table, the spending spree may not be over.

It’s time for Washington to come to terms with the fact that the stimulus is not working. Perhaps they should listen to the 60% of Americans who doubt that the feds will use the stimulus funds as promised on infrastructure or to the 75% of voters who do not believe that the stimulus has helped the economy.

The right thing to do is to cancel the stimulus and regroup. But, as Democrats have made clear with health care, their biggest fear is that they do not have time on their side. So, they refuse to tear up the old plans and start anew; instead, they’ll continue to pull numbers out of the air like ‘the stimulus has saved 1 million jobs.’ And sadly, in another 7 months, things might not look that different than they do today.

Tags: capitalism, government spending, Government Transparency, Stimulus