Everyone Guessed Wrong

On NBC's Meet the Press, VP Joe Biden was asked why job losses have continued despite passage of $787 billion in economic stimulus legislation in February.


Joe said, Everyone guessed wrong at the time the estimate was made about what the state of the economy was at the moment it was passed.

He was speaking to the following chart--which shows unemployment running much higher than presented to us earlier this year. This was not to happen after the economic stimulus plan was passed.


Well, not everyone guessed wrong. Those with a contrary point of view were just ignored by the Obama administration. Consider:

• On February 18, Investors Business Daily opined, The (stimulus) bill Congress hurried to pass last last week without anyone having read the entire 1,434 pages will in fact not stimulate much of anything.

• Respected scholars, including three Nobel prize recipients, some 330 economists in all signed a statement saying that President Obama's claim that "there is no disagreement that we need action by our government, a recovery plan that will help to jump-start the economy" simply is not true.

• The non-partisan Congressional Budget Office (CBO) presented their analytical estimate which said in the long run, the legislation would result in a slight decrease in gross domestic product compared with CBO's baseline economic forecast.
  

Now in part, all of this should not come as a surprise. Much of the $787 billion in stimulus money is not scheduled for distribution until later, much later into 2010 and beyond.



Through June 15, Recovery.gov reports that $141 billion has been allocated and $44.4 billion has been paid out. The difference represents the lag between authorization and "shovel ready" projects, ready to accept the government funding.

"Shovel ready" is one of the big challenges to an impactful stimulus plan. Senator Tom Coburn released a research report, 100 Stimulus Projects: A Second Opinion.

He says this report provides a closer examination of 100 projects, programs and missteps – worth $5.5 billion – some even in my own home state of Oklahoma, that are likely to fail the expectation of out of work Americans who were hoping this bill would create good jobs that they are desperately seeking so that they can provide for their families once again.


By offering 100 examples of questionable stimulus projects, worth $5.5 billion, this report does not attempt to prove that the stimulus is not working. Rather, the intent is to educate taxpayers, policymakers and the media on lessons that can be learned from some of the early missteps and prevent other questionable projects from moving forward.

A new Rasmussen poll released on June 10 shows that 45 percent of taxpayers want to halt all of the remaining unspent stimulus funds, while only 36 percent want to continue.

I suspect there are several reasons for this, such as:

• Americans are tired of bailouts.

• We are seeing "green shoots" of economic recovery without any help from the $787 billion stimulus package.

• People are worried about the current federal deficit explosion, enormous future US debt, potential high inflation in the future and passing these costs along to our children & grandchildren.

• Some may just be suspicious because of projects reported by Senator Coburn and others.

Here is an illustration of the Coburn report from my own state of Wisconsin.

Wisconsin has 1,256 structurally deficient bridges, which is more than the number in Florida, Colorado, Arizona and Alaska – combined. Instead of repairing these bridges, $15.8 million in transportation stimulus money will be used to repair 37 rural bridges that hardly anyone uses.

On average, the 37 rural bridges carry little more than 500 vehicles apiece each day, with several that typically see fewer than 100.

Puzzled residents are wondering why these bridges will receive the state’s first wave of stimulus money when other more pressing needs are getting nothing.

The answer is that many repair projects for the worst off bridges cannot begin quickly, and so are not considered “shovel-ready.”

Shovel-ready projects were pushed to the front of the line, whether they were high priorities or not, and as a result, the only projects available for immediate repairs in Wisconsin were those that almost nobody uses.


One small bridge is receiving $840,000, though it only carries 260 vehicles a day on average. It primarily provides access to a golf course and Rusty’s Backwater Saloon in Stevens Point, WI, which boasts pontoon rentals and a Steak-A-Rooni for just $5.25.

In contrast, the Journal-Sentinal found that half of all Milwaukee streets have not been repaved for forty years and 20 percent of them are past their intended lifespan.