Recovery Act

Stimulus Wiped Out a Million Private Sector Jobs

by Hans Bader on May 21, 2011

in Economy, Employment, Stimulus to Nowhere

The economy may be slowly recovering, but that’s in spite of — not because of — the recent orgy of federal spending. Two economics professors, Tim Conley and Bill Dupor, concluded this month that the $800 billion stimulus package wiped out a million private-sector jobs, destroying a net 550,000 jobs. (The American Recovery and Reinvestment Act, also known as the stimulus package, created 450,000 government jobs, partly offsetting the million private-sector jobs it wiped out.) “The majority of destroyed/forestalled jobs were in growth industries,” they say.

The stimulus package was earlier criticized by many leading economics professors, like Harvard’s Jeffrey Miron, Robert Barro, and Martin Feldstein. Professor Barro called it “the worst bill that has been put forward since the 1930s.” Nobel laureates Gary Becker and Vernon Smith have also criticized it. 200 economists signed a statement publicly opposing the stimulus package.

While pushing the stimulus package through Congress, Obama cited claims by the Congressional Budget Office (CBO) that it would save jobs in the short run, while ignoring the CBO’s own conclusion that the stimulus package will actually shrink the economy over the long run, by increasing the national debt and thus crowding out private investment. Contrary to the CBO’s findings, Obama claimed that “irreversible decline” would occur if the stimulus was not enacted into law.

Obama has run up the largest budget deficits in history, running monthly deficits that are bigger than Bush’s entire annual deficit for 2007, after the economy started to go south.

The Failed Stimulus Package Reveals What Economy Really Needs

by Ben Lieberman on September 29, 2010

in Economy, Energy, Regulation, Stimulus to Nowhere

A failure can make for a valuable learning experience, and the stimulus package is no exception. Clearly the stimulus has not worked, and from its inception many economists doubted the wisdom of the federal government trying to spend our way into prosperity. But putting aside questions about the merits of spending as means of sparking an economic recovery, it appears that the feds were not even able to dole out the money in a timely manner. The culprit — regulatory red tape.

Several studies conducted by the Department of Energy’s Office of the Inspector General (here , here , and here) have concluded that many of the stimulus-funded projects related to energy were very slow to get off the ground. For example, DOE’s investigation of one program dealing with block grants for energy conservation projects concluded that “as of August 2010, more than one year after the Recovery Act was passed, grant recipients had expended only about 8.4 percent of the $3.2 billion authorized for the Program.” Not exactly the “shovel ready” boost to the economy we were promised.

Regulatory delays were the reason. In its most recent report, DOE’s Inspector General concluded that “various regulatory requirements had slowed spending,” including “the Davis-Bacon Act, National Historic Preservation Act, Buy American provisions of the Recovery Act, and National Environmental Policy Act (NEPA).”

Granted, the programs funded by the stimulus are a big waste of taxpayer dollars, and it is a good thing that the feds can’t squander our money more quickly. But the point is that even the big government proponents of the stimulus package are finding out what it is like to get tripped up by — big government. Whilst hoisted on their own petard, one can hope that the legislators who supported the stimulus might figure this out.

Perhaps they will learn the critical lesson that can lead to real economic growth. Just as stimulus spending faces a regulatory gauntlet, so does private investment. Efforts by large and small businesses to expand — the real source of an economic recovery and job growth — are hampered by the regulatory state at least as much as are the government projects highlighted in the DOE reports. Streamlining or eliminating these regulatory hurdles would do far more to help the economy than all the stimulus spending in the world.

$6 Billion For Broadband, Or How I Learned To Stop Worrying And LOL At The Recovery Act

by Nick Brown on January 16, 2009 · 5 comments

in Economy, Stimulus to Nowhere, Tech & Telecom

Speeding its way across the Internetz today are copies of the American Recovery and Reinvestment Act of 2009. Eager policy analysts, lobbyists, and grassroots organizations all over the country are scouring its 258 pages as we speak. As a tech policy analyst who is very interested to see what was going to happen with the Promised One’s Broadband Stimulus plan, I too dove into the fine reading that my giant PDF copy of the proposed act would provide.

Prior to my study of the bill, as I sent the document to my printer, visions of the sorcelations such a mighty plan might bring wrought both excitement and fears for the future of the Internet. I grabbed the freshly printed document from the copier, my fingertips brushing the pages and sending chills that delivered the grandeur of the most daring broadband project ever conceived on the face of our planet to my mind’s eye. The thought was both intriguing to see how such a plan would be delivered, and brought with it the scourge of the possibility of enforced government regulation, and implementation of mandatory net neutrality policy via acceptance of the funds by the bidding project companies.

I returned to my desk and began reading. I read it. Then I read it again.  (The section on broadband is very short, especially for a plan that will, “get true broadband to every community in America“.)

And that’s when I started to LOL.

$6 Billion. That’s it. $6 Billion to increase broadband penetration to the “underserved” part of America. Current penetration of broadband in this country is just over 25%, connecting roughly 71 million Americans to high-speed Internet. Most of these individuals live in areas where they have access to readily available sophisticated networks. Obama’s broadband stimulus is for rural areas; areas where many companies have avoided going because the problems getting broadband in those areas are not miniscule and will cost more money to develop than in populated regions where an infrastructure backbone is present.

So let’s put this into perspective. AT&T announced roughly a year and a half ago that it underestimated its U-Verse project that uses fiber-to-the-node and fiber-to-the-point technology.  They now estimate it will run them $6.5 Billion. Verizon, who many feel is keeping their true costs for their FiOS service out of the press, announced publicly back in 2006 that they anticipated spending $18 billion to connect 7 million customers nation wide with fiber.

$6 billion to reach a vast and widespread audience with broadband in the distinct regions and rural areas in this country is a laugh. Additionally, the funding is actually broken down even farther.  $2.825 billion is focused on rural area business development.  Another $2.825 Billion is focused on rural wireless and broadband; $1 billion of which is aimed at wireless deployment, with the remaining $1.825 going toward broadband deployment.  The final $350 Million of the $6 Billion will go to the State Broadband Data and Development Grant program established by the Broadband Data Improvement Act in October of 2008.

I cannot believe that this tiny allotment in the grand scheme, after it is spread thin over state projects, grants, and various companies awarded funds for infrastructure projects will even make a recognizable dent in the state of broadband here in the US.  And this is not even to mention the sneaky requirement to enforce the FCC’s broadband policy statement by accepting the funds; essentially sneaking in net neutrality policy light into the mix.  This, of course, along with the requirement for any network built with these funds to be open access, and how that will affect the nature of other networks is a bigger question.  But ultimately, I would argue that based on what we are seeing in the act, that these funds would probably just be better suited going somewhere entirely different…preferably back in the tax payers pocket.