The Mismeasure of Stimulus
An article in the St. Joe News highlights the accomplishments of federal stimulus dollars in Northwest Missouri:
Missouri’s 6th Congressional District, only two of whose 26 counties gave electoral majorities to President Obama, got more than $314 million last year from the federal economic stimulus program. […]
In Plattsburg, Mo., a $1 million stimulus grant is paired with a $4.3 million low-interest loan to help build a water treatment plant. “Those two things you can’t be upset about,” said City Manager D.J. Gehrt. “But it’s not as simple as getting $5.3 million and you can go out and start your project.”
The engineering plans were finished and submitted for review 13 months ago. But the reviews stalled while agencies pondered where the funding might flow. Further delays have come from setting up mechanisms to repay the debt incurred from the loan.
If all goes as planned, Mr. Gehrt said, the treatment plant will be completed in the summer of 2011, maybe a quicker timetable because of the stimulus money, but maybe not.
In the long run, he added, “it’s going to save the ratepayers in our service area a good amount of money.”
In St. Joseph, the stimulus program directed more than $31 million to recipients like the school district, Missouri Western State University, the Department of Transportation and Community Action Partnership.
Etc. No doubt some people are benefiting from the stimulus, but because government spending does not face a profit and loss test, there is no good way to determine which projects are worthwhile and which wasteful. The article also ignores all the things taxpayers and bond holders would have done with the money had it not been taxed away or loaned to the government — in other words, it only pays attention to the seen, but not to the unseen, effects of the spending. These recipients of stimulus funds would not have received the money to do what they’ve done, but that money would have been used instead to create something else, if it hadn’t been spent in the stimulus.
Furthermore, although the $314 million that the 6th district received may seem like a lot of money, it amounts to less per capita than the national average. During the last year, $334 billion in stimulus spending has been allocated with $119 billion going toward tax cuts and another $14 billion in individual benefits like additional unemployment insurance payments. That leaves $201 billion in spending projects awarded during the last year. According to Wikipedia, the population of Missouri’s 6th district is 621,690, and the estimated population of the United States is 308,705,000, which means that the district contains just barely more than 0.2 percent of the national population. Given that 0.2 percent of $201 billion is $402 million, the district falls under the national average for stimulus spending by $58 million dollars.
Maybe the 6th district’s underwhelming support for Obama during 2008 is in some way related to the underwhelming amount of stimulus funds it has received.