Suprise! Most of Government Stimulus Stimulated Government

The ProJo tried to figure out where the $1.9 billion in stimulus money that has been spent in Rhode Island has gone (funds can be spent as late as 2015). The ProJo included a chart of the “Top stimulus winners in R.I.”, insofar as what it could determine (apparently, not all entities–such as Medicaid, food stamps, unemployment–need to report their stimulus take).
State Department of Elementary and Secondary Education – $306,120,869
Gilbane Building Co. – $166,864,104
State Department of Transportation – $142,258,998
State Department of Administration – $59,613,259
Clean Water Finance Agency – $45,814,600
State Department of Public Safety – $37,905,163
Brown University – $36,602,898
Rhode Island Public Transit Authority – $34,246,658
The Rhode Island Quality Institute – $27,194,787
Quonset Development Corporation – $26,188,000
Basically, according to the ProJo, at least half of the money (conservatively) has gone directly to government and quasi-government agencies. When it didn’t, it went to private enterprises doing government work (Gilbane Building Co. and Brown University). When combined with the unreported numbers, pretty much all of the stimulus went to maintaining or enlarging government expenditures.

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michael
11 years ago

“State Department of Public Safety – $37,905,163”
We have a State department of Public Safety? I wonder where they are.

Russ
Russ
11 years ago

Ummm, that’s the whole idea, Marc (not sure why you act surprised). If the private sector were expanding, creating jobs, etc. there would be no need for that type of stimulus.
The real questions here are, were these projects beneficial (for instance in creating necessary infrastructure to fuel recovery)? Did these projects create jobs for those who needed them? Did this spending have multiplier effects?

Russ
Russ
11 years ago

Hoarding, Not Hiring – Corporations Stockpile Mountain of Cash
abcnews.go.com/Business/hoarding-hiring-corporations-stockpile-mountain-cash/story?id=10250559
Of course the other type of stimulus would be direct stimulus, for instance in relief to homeowners or in unemployment benefits, although those too would look like funding to governmental agencies in an analysis like above.

Marc
11 years ago

Russ, As the ProJo explains (and I touch on) a lot of the money went to direct stimulus like the gov’t programs that don’t have to report the $s. I get that.
It’s the stimulus that went from one gov’t entity to another gov’t entity (fed->state->local) to plug budget gaps and, too often, to government’s own benefit (at various levels) all which resulted in the same levels of unemployment, negligible job growth (and most of that in gov’t) and a larger baseline from which to continue gov’t grown (25% of GDP vs. 19-20% prior to stimulus). In other words, they didn’t “let the crisis go to waste”.

Dan
Dan
11 years ago

Metro transit subsidies have been doubled for federal employees with stimulus funds. Justify that one, Russ.

JohnD
John
11 years ago

State Department of Public Safety? I think the money was used to build the new State Police headquarters.

Patrick
Patrick
11 years ago

When you give a couple million to a town to plug a budget deficit because that town has a structural problem with their budgeting, how is that going to be “stimulating” the following year when that money is gone?
If my home costs are $1500 a month and I earn $1000 a month, but one month someone gives me $500, what do I do the next month? Or worse, when the next month my costs have gone to $1700? Maybe I should have simply cut the $500 problem in the first place.

Warrington Faust
Warrington Faust
11 years ago

I have never seen it quantified before, but the results should not besurprising. Almost all ofthe news stories I saw indicated that stimulus money was going to government entities. Those so called “shovel ready projects” never seemed to appear.
If they had really intended stimulus,. it would seem to have been more effective if they simply sent every taxpayer a check for $10,000. Remember all of those stories about $1,000, 000 payments for “Creating or preserving” a single job (remember “creating or preserving”).

Justin Katz
Justin Katz
11 years ago

It’s worse than you suggest, Marc. As I predicted, and as has been completely borne out in Tiverton and has been central to the rhetoric of Providence and the state, the stimulus money was merely a way to (1) insulate the government from the recession, and (2) give local, state, and the federal governments talking points for raising taxes et al. when “the stimulus money dried up.”
It’s a scam, through and through, that borrowed money from the future private sector to finance government in the interim. Not surprisingly, it hasn’t worked, and the economy didn’t turn around just because liberals have faith that it always will.

Phil
Phil
11 years ago

The thinking behind the stimulus money was in part to preserve jobs that could have been lost driving unemployment even higher not to mention more stress being placed on businesses. Consumers without jobs would not be buying goods and services as they would while employed. Some economists were urging a much bigger initial stimulus from the federal government saying that half measures would not help. I think that we are dealing with that outcome now. I know of one local construction company who kept people employed mainly doing insulation installation for homeowners who qualified. The fact that money went to local governments meant that property tax payers were spared and services were not slashed. The idea behind the stimulus was to not have cities and towns add to the economic meltdown making things much worse. On a personal level I saw my borrowing limit severely limited by a major bank causing me to suspend plans to increase the size of my oyster seed purchase which will have a future impact including waiting to add a fulltime position.

Dan
Dan
11 years ago

Phil – Does it even somewhat concern you that there is no internal maximum in this stimulus theory? Assume hypothetically that the progressive economic suggestions of Krugman et. al. that you describe are adopted and we increase government stimulus spending two-fold. GDP increases by 2% in 2011. Did the stimulus help the economy, hold it back, or have no effect? How do you know?
On the related matter you describe anecdotally – stimulus funds saving certain jobs, how do we measure what Bastiat referred to as the seen and the unseen? How do we measure the opportunities and jobs were foregone by the creation of the easily identifiable new job? When government taxes to build a park, we can see the children playing in it, but perhaps families could have better invested that money in their college educations?

Phil
Phil
11 years ago

The point of the stimulus was to hold off worse economic conditions until a recovery was underway. Like I wrote half measures did not do the job that some economists were suggesting was needed. Half measures brought mixed results. Had the amount been much higher and we saw direct results to infrastructure repair the benefits would be enjoyed by more people. The fact that children have a safe place to play does not distress me.

Dan
Dan
11 years ago

Phil – You did not address any of my questions or even consider the economic concepts contained within them. Instead you simply restated your premise as a conclusion without any logical support, falling prey to the same exact fallacies that my questions were designed to challenge and underline. I don’t think you understood the point of the park example at all – it has nothing to do with safety or the benefits of parks.
I can’t believe that an otherwise literate and intelligible person could have such poor reading comprehension skills – therefore, unless you correct me on this, I must assume you are deliberately trying to obstruct and frustrate the discourse.

OldTimeLefty
OldTimeLefty
11 years ago

Dan quotes are below in italics:
“How do we measure the opportunities and jobs were foregone by the creation of the easily identifiable new job?”
Dan this “sentence”, if it can be described as one, makes no sense. So if you want to argue, you’ll have to write in complete sentences.
“When government taxes to build a park, we can see the children playing in it, but perhaps families could have better invested that money in their college educations?”
Or they could have gone to a casino and quadrupled their money or lost it all, or they could have spent it on manufacturing mud pies, or they could have … you fill it in. Anything could happen,could have happened or not happened. Your Never-Never land defies rational argument.
OldTimeLefty

Dan
Dan
11 years ago

Wow, OTL, you sure are awesome for pointing out a typo in my post. That makes you super cool. I’m sure that you’ve never made a typo in your life. Apparently everybody should just ignore any content with a typo in it and spend all of their time ridiculing the author over it. Society would be so much better if everyone obsessed over irrelevant, obvious, and inconsequential grammatical oversights like you do.
“Or they could have gone to a casino and quadrupled their money or lost it all, or they could have spent it on manufacturing mud pies, or they could have … you fill it in. Anything could happen,could have happened or not happened. Your Never-Never land defies rational argument.”
Actually your response defies rational argument because you completely missed the point of the thought experiment. Another reading comprehension dropout. I’m not claiming that the park is a net loss or benefit, or that the taxpayers would spend the money better. That’s precisely the point – I have the responsibility to acknowledge what is untestable and unknowable. I’m identifying the problem with making the claim one way or the other as Phil does with stimulus spending. If government cannot prove a net benefit, or even coherently explain how it might distinguish success from failure in the future, then it lacks the moral authority to tax and spend “for the public good.”
You and Russ love quotes so much, here’s one for you:
“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” – F. A. Hayek

Warrington Faust
Warrington Faust
11 years ago

Posted by Old Time Lefty:
“When government taxes to build a park, we can see the children playing in it, but perhaps families could have better invested that money in their college educations?”
Or they could have gone to a casino and quadrupled their money or lost it all, or they could have spent it on manufacturing mud pies, or they could have … you fill it in. Anything could happen,could have happened or not happened. Your Never-Never land defies rational argument.”
My first response to this would be “Well, it’s their money isn’t it”?
I would prefer random spending on new cars, vacations, kitchens, appliances, or even mortgage reduction, rather than using the money to support failing governments.

OldTimeLefty
OldTimeLefty
11 years ago

Dan,
Your skin is very thin.
You fool, you asked a nothing question of Phil and expected an answer. Zero + Zero = Zero. You got what you asked for. It isn’t the typo. It’s the utter inanity of your question.

Dan
Dan
11 years ago

It’s an alien thought process, Warrington, but you have to remember that OTL is operating within a different framework. Whereas we entrust individuals with identifying their own unique wants and needs, and bearing responsibility for their own successes and failures, OTL believes that he can walk into somebody’s life and through cold-hard statistics determine what is best for that individual. Any problem, in his mind, can be solved by him if he is given sufficient time to arrive at a top-down solution, and then resources to enact his will upon others. Go observe Frymaster over on RIFuture for more of this mentality – the man honestly thinks that he can efficiently dictate healthcare and education through top-down mandates for 300 million people. It goes beyond egotistical delusion – it’s madness.

Dan
Dan
11 years ago

OTL – Phil needs you to answer for him… why? You spend time insulting me over a typo… why?
How exactly is my question “inane”? I’ve heard the same exact question asked by numerous well-respected economists and other commentators, some of which have won Nobel prizes just like your idol Krugman. I have yet to hear a satisfactory answer. It’s an important question that needs to be addressed.
The reality, which apparently makes you extremely uncomfortable, is that stimulus is unscientific because it is unfalsifiable. Perhaps spend less time with Oscar Wilde and more time reading scientific works to gain an understanding of why. There is always the “it just wasn’t big enough” justification after the fact. If I’m wrong, tell me why. Your petty insults are a waste of bandwidth and you aren’t half as amusing or clever as you think you are. You only drag every conversation down into the muck with you. Mission accomplished once again.

Phil
Phil
11 years ago

Dan
Sorry I didn’t respond last night. Thanks to OldTime Lefty for having my back.
“Does it even somewhat concern you that there is no internal maximum in this stimulus theory?”
Sorry again. I don’t understand the question.
“Did the stimulus help the economy, hold it back, or have no effect?”
In my non answer I stated that i thought the the half measure of stimulus did not do what it was intended to do. So to answer you ..it helped the economy not get worse.
“How do you know?”
I don’t know. I read, listen and decide what I think is more probable. Like a weather forecast.
On the related matter you describe anecdotally – stimulus funds saving certain jobs, how do we measure what Bastiat referred to as the seen and the unseen?
Sorry I am not that familiar with Bastiat. Is seen and unseen similiar to the knowns and unknowns so cherished by a former Secretary of Defense?
“How do we measure the opportunities and jobs were foregone by the creation of the easily identifiable new job?”
I don’t understand the question.
“When government taxes to build a park, we can see the children playing in it, but perhaps families could have better invested that money in their college educations?”
I object. This a leading question.
Anymore questions you’ll have to get a subpoena. Dan I will not be at my desk until this evening so I cannot respond to your questions until then.

BobN
BobN
11 years ago

I see the Leftist terrorist wannabes are out in full force today.
I recommend that Phil read Bastiat’s work as it is fundamental to understanding both economics and political economy.
The other comments aren’t worth responding to.

Dan
Dan
11 years ago

Phil – I apologize if my questions are unclear. I will try to rephrase them. 1)You are starting out with the assumption that proper stimulus spending by government can get us out of our recession. My problem with this assumption is that it is unfalsifiable, i.e., there is no way to determine whether any given level of spending was helpful or counterproductive after the fact. The example I gave was an attempted illustration of this reality – if government takes your (and Krugman’s) suggestion to double or quadruple stimulus spending and next year GDP grows 2%, how would you go about determining whether the stimulus helped the economy by bringing it up from 0% growth, or hurt the economy by bringing it down from 4% growth? What methodology would you use and what information would you require to make that kind of determination? If you can convincingly answer this question, then you are the foremost economic thinker in the world today and you deserve a Nobel Prize yourself. Of course, OTL thinks the question is “inane” and does not deserve an answer. We don’t know why he thinks this because he did not tell us. 2)The seen and the unseen refers to situations in which there are obvious and immediate benefits versus costs that are less clear and more difficult to measure. My park example was an attempted illustration, e.g., government takes $100 from each person in a town and builds a park with it. The benefits are very clear – a clean, safe place for children in the neighborhood to play, people walk there, bike ride, etc. The costs are more difficult, if not impossible to measure. That $100 will have a different and unique impact for every person in the town, and possibly for people outside the town… Read more »

Phil
Phil
11 years ago

Dan
I was unclear in my earlier comments. The stimulus was meant to address immediate conditions ,not intended to be a long standing economic policy.

Dan
Dan
11 years ago

I still don’t understand how you will determine whether the stimulus was successful or a failure, Phil. Again, how will you make sense of that hypothetical 2% GDP growth rate next year? What conclusions will you draw and what will you base those conclusions upon? Will 2% mean that we have not enough stimulus, just the right amount, or that we have spent too much already and it is doing damage? How will you know?
Presumably the public works you are advocating for with stimulus funds would be permanent. I think the question of what the hidden costs would be behind those immediate and obvious benefits is very relevant here.

Russ
Russ
11 years ago

…the stimulus money was merely a way to (1) insulate the government from the recession, and (2) give local, state, and the federal governments talking points for raising taxes et al. when “the stimulus money dried up.” Yes, how much better it would have been to have raised taxes a couple years ago in an economy with even less demand, more unemployed, and more folks with no income having lost their unemployment benefits. Those folks must be some type of evil geniuses to hatch such a plan (probaly just to throw us off the trail)! What gets me is not so much concern with how stimulus money was spent, but how little concern the right seems to have with why the crisis occurred in the first place. Why Isn’t Wall Street in Jail? http://www.rollingstone.com/politics/news/why-isnt-wall-street-in-jail-20110216 In the past few years, the administration has allocated massive amounts of federal resources to catching wrongdoers — of a certain type. Last year, the government deported 393,000 people, at a cost of $5 billion. Since 2007, felony immigration prosecutions along the Mexican border have surged 77 percent; nonfelony prosecutions by 259 percent. In Ohio last month, a single mother was caught lying about where she lived to put her kids into a better school district; the judge in the case tried to sentence her to 10 days in jail for fraud, declaring that letting her go free would “demean the seriousness” of the offenses. So there you have it. Illegal immigrants: 393,000. Lying moms: one. Bankers: zero. The math makes sense only because the politics are so obvious. You want to win elections, you bang on the jailable class. You build prisons and fill them with people for selling dime bags and stealing CD players. But for stealing a billion dollars? For fraud that puts… Read more »

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