An Unstimulated Recovery

Having just read promises of impending economic recovery, readers may have a common question in response to news about the implementation of the “stimulus” program:

THE STATE HAD SPENT $254.2 million of the $1.1 billion [promised to Rhode Island] as of July 24, according to data released by the state Office of Economic Recovery & Reinvestment. Close to $207 million — more than 80 percent — has gone to help plug budget holes, although $31 million was used to increase unemployment benefits and another $5.6 million was spent to expand food stamp access.

Which URI Economics Professor Len Lardaro reinforces as follows:

“I will say, not that the stimulus is perfect, but the fact that there is so much criticism is because the economy is doing so much better. We can afford to gripe,” he said.

So, if only $10.6 million has gone toward projects that do more than plug budget gaps and mitigate the experience of the unemployed, and yet the economy is recovering, why do we have to spend the millions and billions of taxpayer dollars still in the pool? One begins to suspect a scam:

Andres Carbacho-Burgos, an economist at Moody’s, notes that Rhode Island so far has received more stimulus dollars per capita than any other state, save Alaska.
There was no immediate impact on job growth, he says. But hundreds of jobs were saved as cash-strapped schools and state and local governments used stimulus funds to plug budget holes that would have caused widespread layoffs.

The government has done little more, it would seem, than redistribute wealth from the private economy — present and future — to government workers. Sure, we know you’re hurting, they say, but be encouraged about how healthy we are!
The political gamesmanship from RI Democrats, of course, is to blame Governor Carcieri for failing to spend the money more rapidly, but that is the nature of government. If he’d dumped $1.1 billion on the stairs of the State House and the corruptocrats who loiter in the shadows, there, had soaked it all up, the Democrats would be pointing to him when it came time for reckoning.
Look, if you pour money into the machine of the economy, it’s going to run for a bit. Not efficiently. Not in a self-refueling way. But it’ll run. That doesn’t change the fact that government spending is minimally stimulative, slow, and prone to fraud. The slower it is, the less stimulative it will be, and the faster it is, the more prone to fraud it will be. Moreover, it can do no more, for this inefficient and wasteful effort, than steal money from other parts of the economy, including the economy of decades to come.

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Tom W
Tom W
14 years ago

There have been reports that the feminist and/or welfare lobbies prevailed upon the Obama administration to skew “stimulus” to “soft” occupations (i.e., “social service” workers) instead of the traditionally “male” “hard” stimulus, i.e., construction projects.
If this is true, Teresa Paiva-Weed and the parasites at the Poverty Institute are, once again, laughing all the way to the bank with our tax dollars.

14 years ago

“skew “stimulus” to “soft” occupations (i.e., “social service” workers) instead of the traditionally “male” “hard” stimulus, i.e., construction projects.”
Wouldn’t surprise me one bit. This president is going down the same path as FDR which kept the country in a depression for over 10 years. Any signs of recovery will be short lived as long as the government puts money into non-productive resources and continues to stick it to business.

Tom W
Tom W
14 years ago

Well, we do know that the poverty pimps weren’t demonstrating or otherwise screaming bloody murder during this budget cycle – they were notable by their absence.
The unions were bitching about some stuff, such as pensions, but were somewhat subdued.
So it looks like when push comes to shove the poverty pimps have more juice on Smith Hill than do the unions.
But even within that it appears that the state worker side of the unions have more juice than the municipal side. The GA upped their budget by over 12%, so that explains why the poverty pimps were quiet – they were untouched or nearly untouched. The state worker unions took a nick, but not too much.
But the 12% increase came along (query what occurs when the stimulus money is gone) and still the GA cut aid to municipalities. So to the extent that there are taxpayer battles and real cuts, they’re coming out of the hide of the municipal politicians and unions.
But hey, solidarity brother – the GA and the state workers and poverty pimps stayed solid as they sold out their municipal union and Democrat “brothers and sisters.”

Warrington Faust
Warrington Faust
14 years ago

An analogy for the “hard industrialists” out there. Stimulus poured into the economy is like “starting fluid” in a car with an empty gas tank. It will run until the fluid runs out, but it doesn’t put gas in the tank.

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