bailout, crisis, Democrats, economics, economy, government, left wing, liberalism, marxism, nanny state, news, politics, recession, socialism, spending, stimulus, study

AP shows economic stimulus spending was useless

AP IMPACT: Road projects don’t help unemployment
January 11, 2010 by MATT APUZZO and BRETT J. BLACKLEDGE

WASHINGTON (AP) – Ten months into President Barack Obama’s first economic stimulus plan, a surge in spending on roads and bridges has had no effect on local unemployment and only barely helped the beleaguered construction industry, an Associated Press analysis has found.

Spend a lot or spend nothing at all, it didn’t matter, the AP analysis showed: Local unemployment rates rose and fell regardless of how much stimulus money Washington poured out for transportation, raising questions about Obama’s argument that more road money would address an “urgent need to accelerate job growth.”

Obama wants a second stimulus bill from Congress that relies in part on more road and bridge spending, projects the president said are “at the heart of our effort to accelerate job growth.”

Democrats, bailout, crisis, economics, economy, government, left wing, liberalism, marxism, nanny state, news, politics, recession, socialism, spending, stimulus, study

10 thoughts on “AP shows economic stimulus spending was useless

  1. The AP is a great source of news, however their conclusion about the Obama stimulus couldn’t be more incorrect.

    Based on ProPublica, which has been keeping track of the spending of the stimulus package, only $580 billion of the $787 billion stimulus has been allocated to be spent. Of that $580 billion, $269 billion has not even been spent as of yet.

    With this in mind, I would like to say that it is just too early to simply say the stimulus package is a complete waste. After all, the entire stimulus has not gone into effect as of yet.

    Moreover, there is one thing that most people refuse to consider, but they must. That is the very fact that there are lags in fiscal policy– which is what this stimulus package is. If you have ever taken a marco-economics class, then you might have remembers some mention of “time lags.”

    When we talk about time lags in fiscal policy, we are referring to the amount of time that it takes for the policy to actually have the intended effect on the economy. What happens to be the estimated time lag for fiscal policy you might ask? Well it’s actually one to two years.In this case, we may be leaning more towards two years because the stimulus package is actually going into effect in pieces, and not at the same time.

  2. Thanks for the encouragement. Though I’ve not taken a macro-economics course I am aware of the time lags in fiscal policy. I may have read too much into this story, but is it fair to say the AP study was devoted to the stimulus money already spent? Also, is it fair to analyze the effectiveness of the money already spent even at this early stage?

    This “early analysis” concept is a favorite tool of the news media and one which I think tends to be typically either useless or even harmful; but regarding the funds already spent I’m inclined to believe it appropriate to review the results. This doesn’t mean the AP analysis is correct. The AP may have jumped the gun on this story but it does raise the question, if the lag in fiscal policy is so common I wonder why the Obama administration is already talking about a second stimulus.

    1. Well, I don’t know if you will agree, but I would say that talk of another stimulus is actually a form of “signaling” that Obama is using. In other words, it doesn’t mean that there will really be another stimulus package.

      The mention of it may just be a way of bolstering the confidence of constituents. Lets face it, most Americans are not familiar with things like time lags, the multiplier effect, and what not. Most Americans expect to see change instantaneously. Because they haven’t so far seen such changes, talk about another stimulus is what most Americans want to hear. Talk about another stimulus might just be what will get the confidence level of the average American up, and this may in turn increase consumption much sooner…

    2. I’ve no doubt many Americans expect to see change immediately when the government gets involved to “help” us. This may be largely due to poor public education on the realities of government work as well as the propaganda of the moment – we were told numerous times the stimulus package and bailouts were needed immediately, yet little mention was made to the public about when we would actually notice the impact of this government spending. This combination of ignorance and rhetoric makes it easy for us to assume the “urgent” action taken by the government would produce quick results.

      And I’m sure this signaling could bolster the confidence of the country, as there are many people who want it. On the other hand, it could have the opposite effect. Personally, I do not accept the assumption most Americans want to hear or want to see another stimulus package – that’s something we are told by the administration and the press. What I’m actually seeing is increasing apprehension and concern, not more confidence with talk of more government spending.

  3. Well said!

    But I would like to point out that while all you might see is concern about the situation, if you talk to individuals living in low income area’s, it’s much more than that.

    I admit, I live in a low income area in New York, and everywhere I turn there is talk about the government needing to give more to the average person. The number one complaint has been, and still is, that the government is not helping the average person as much as they are helping banks. In the average person’s mind, the government needs to give more to them and less to the banks.

    Though I don’t agree with this belief, that is basically the basis of why I think talk about a second stimulus is nothing more than signaling to satisfy the average American.

    1. I’m sure your observations are right for many in low income areas. I think that’s part of the concern for folks like me (I also live in a low income area): the expectations of the social safety net, that government should bailout anyone. I hope the people who want to hear about a second stimulus package do feel encouraged by it. And if a second stimulus does happen hopefully it will actually go to the people who need it rather than some big industry, though I see no reason to believe it will.

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