Senator Claire McCaskill recently interviewed with the News-Leader editorial board wherein she explained uses for the stimulus and declared that it had worked.
“Was every dime of it spent exactly right? No, but there’s no question that if you look at the trajectory of job creation in this country, there’s no question that the stimulus stopped the bleeding.”
According to CBO numbers in its Budget and Economic Outlook published this month, the cost of Operation Iraqi Freedom was $709 billion for military and related activities, including training of Iraqi forces and diplomatic operations.
The projected cost of the stimulus, which passed in February 2009, and is expected to have a shelf life of two years, was $862 billion.
Some argue that the economy would have been worse off without these stimulus packages, but the results do not support that view. According to the empirical estimates of the impact of ARRA, if there had been no temporary stimulus payments to individuals or families, their total consumption would have been about the same. And if there had been no ARRA grants to states and localities, their total expenditures would have been about the same. The counterfactual simulations show that the ARRA-induced decline in state and local government purchases was larger than the increase in federal government purchases due to ARRA. In terms of the simple example of Model A versus Model B presented above, these results are evidence against the views represented by Model A, and thus against using such models to show that things would have been worse.
“In the long run you have got to pay for it. The medium and long-run effect is definitely negative. You can’t just keep borrowing forever. Eventually taxes are going to be higher, and that has a negative effect,” he said.
Put simply, stimulus funds caused more job shifting than job creation.
The results suggest that though the program did result in 2 million jobs “created or saved” by March 2010, net job creation was statistically indistinguishable from zero by August of this year. Taken at face value, this would suggest that the stimulus program (with an overall cost of $814 billion) worked only to generate temporary jobs at a cost of over $400,000 per worker. Even if the stimulus had in fact generated this level of employment as a durable outcome, it would still have been an extremely expensive way to generate employment.
Congress‘ chief scorekeeper has again raised the cost estimate of President Obama’s two-year-old economic-stimulus program, calculating it will end up costing taxpayers $821 billion — or $34 billion more than originally projected.
And the economic boost from the added government spending is beginning to wear off, the nonpartisan Congressional Budget Office said in a new report Wednesday. The CBO said that in the final three months of 2010, the stimulus was paying to keep between 1.3 million and 3.5 million people in jobs, both down from the peak recorded in the prior three-month period.
The “benefits” McCaskill claims that the stimulus provided are nonexistent, according to a number of economists and business owners.
The burden of proof is now increasingly on the side of fiscal stimulus advocates. It is easy to point out possible flaws in each of the studies mentioned here — though the biases may end up either exaggerating or diminishing the estimates of the effects of the stimulus. But where is the evidence that the 2009 ARRA fiscal stimulus enhanced employment recovery in a cost-effective and sustainable manner?
Apparently, McCaskill didn’t get the memo that even the White House had run from claiming that the stimulus worked. $6.4 billion stimulus dollars were allocated to phantom districts. McCaskill doesn’t find this monumental irresponsibility to be egregious?
Of course, seeing that her family got $40 million dollars of stimulus cash, I can see how she’d think it’s a successful program. Unless this is what she meant when she said “Was every dime of it spent exactly right? No.”