Obama’s Ironic, Belated, and Unaffordable Infrastructure “Stimulus”

by Hans Bader on September 6, 2011 · 3 comments

in Deregulate to Stimulate, Economy, Employment, Stimulus to Nowhere

In a Labor Day speech to an AFL-CIO rally in Detroit, President Obama said that “roads and bridges nationwide need rebuilding and more than 1 million unemployed construction workers are itching to ‘get dirty’ making the repairs. He portrayed Congress as an obstacle to getting that work done.” But it’s Obama who was the obstacle to road and bridge repair. He blocked such repairs when the federal government still had the money for it, in order to pay for welfare and social spending instead. Now, the money just isn’t there, thanks to the Obama administration running up trillions in debt through record spending, resulting in a fiscal crisis and the downgrading of America’s credit rating.

A logical place to have financed road and bridge repairs would have been Obama’s $800 billion stimulus package. But the stimulus package was purged of most investments in roads and bridges, and filled instead with welfare and social spending, out of political correctness, after feminist leaders complained that building and repairing roads and bridges would put unemployed blue-collar men to work, rather than women.

Christina Hoff Sommers points out that “of the 5.7 million jobs Americans lost between December 2007 and May 2009, nearly 80 percent had been held by men,” because men “predominate in manufacturing and construction, the hardest-hit sectors, which have lost more than 3 million jobs since December 2007.” But when some administration officials floated the concept of “an ambitious . . . stimulus program to modernize roads, bridges, schools, electrical grids, public transportation, and dams” as a way of “reinvigorating the hardest-hit sectors of the economy,” “Women’s groups were appalled,” asking “Where are the New Jobs for Women?” and denouncing what they called “The Macho Stimulus Plan.”

As Sommers notes, the Obama administration quickly knuckled under to this pressure, replacing its recovery package with an $800 billion stimulus package that instead “skews job creation somewhat towards women” by spending money instead on social services like welfare that are administered mostly by female employees.

As a 2009 Associated Press story reported, “Stimulus Funds Go to Social Programs Over ‘Shovel-ready’ Projects.” A team of six AP reporters who have been tracking the funds find that the $300 billion sent to the states is being used mainly for health care, education, unemployment benefits, food stamps, and other social services.” Or, as another AP report put it, “Stimulus Aid Favors Welfare, Not Work, Programs.”

The stimulus package also repealed welfare reform, as Slate’s Mickey Kaus and the Heritage Foundation have noted. (In 2008, Obama ran campaign ads claiming to support welfare reform, even though he had sought to undermine welfare reform as an Illinois legislator. The stimulus package largely repealed the 1996 welfare-reform law.)

Spending is already at such a high level that more won’t do any good even under Keynesian economic theory, which recognizes the diminishing marginal returns on deficit spending as a “stimulus.” (Combined Federal and state government spending is now as high as a percentage of the economy as it was at its peak in World War II, and so is combined federal/state debt debt.  Deficits are at unprecedented levels and are expected to exceed a trillion dollars for years.) Instead of increasing spending and the rate at which America is hurdling towards bankruptcy, Obama should consider how spending cuts helped the economy in the past – such as when America experienced an “economic boom” after our government slashed spending in 1946, and how Canada’s economy boomed after it slashed government spending in the 1990’s.

It’s also naive to believe any claims Obama may make about creating transportation jobs. The ”green jobs” Obama promised in 2009 never materialized, as Walter Russell Mead and The New York Times have noted.  Instead, the stimulus package backfired, using so-called “green jobs” funding to outsource American jobs to China. The stimulus package did contain a small amount of money for transportation, but it was only slowly put to use, since the supposedly “shovel-ready” transportation projects promised by Obama turned out to be anything but, thanks to federal red tape that Obama failed to waive in the stimulus package. Much of the stimulus’s “transportation” spending is actually for pork and boondoggles.

Obama relied on a campaign of fear and deception to pass the stimulus package, claiming it was needed to prevent the economy from suffering from “irreversible decline,” even though the Congressional Budget Office admitted that the stimulus package would shrink the economy “in the long run.” The stimulus package has since destroyed thousands of jobs in America’s export sector, and subsidized countless examples of government waste and corruption. Obama has zero credibility when it comes to jobs and stimulating the economy, and that’s reflected in last month’s jobs report, which showed the economy created zero jobs in August.

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