Shovel Ready?

by Russ Roberts on October 12, 2009

in Stimulus

In the first eight months of the $787 billion “stimulus” package, the government has managed to spend about $111 billion, less than half of the funds that are available. What are those dollars going to? Here are the top four federal spenders:

HHS $33 billion

Labor $28 billion

Education $21 billion

Social Security Administration $13 billion

They account for 86% of the spending to date.

I don’t think those departments have very many shovels. But let’s give them more money. After all, in the Keynesian world view, it’s all about getting money spent and getting that multiplier working. Too bad we didn’t make that first stimulus even bigger. All money well spent, right?

BTW, I wonder how the cash for clunkers program is going. Did the dealers get their money yet? Anyone know?

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{ 18 comments }

Anonymous October 12, 2009 at 5:50 pm

As far as I can tell the planned spending was supposed to be drawn out but at the same time it was supposed to immediately boost the economy in a dramatic fashion. How those two go together I cannot say.

Anonymous October 12, 2009 at 5:58 pm

Also, I liked what Christopher Westley called C4C: “The ‘I Hate the Poor’ Act of 2009.”

http://fee.org/articles/hate-poor-act-2009/

Anonymous October 12, 2009 at 6:21 pm

Stop asking questions. Worship Obama.

Anonymous October 12, 2009 at 11:31 pm

Hey hey…let’s comment ‘peaceably’! In fact, I hereby award you for what your comments WILL be, rather than what they are.

Anonymous October 12, 2009 at 6:55 pm

The “statesmen” have carefully timed the “stimulus” to achieve its intended effect: to stimulate votes for incumbents in the 2010 elections. In fact, they are so far-sighted, they are even saving a bit of it for 2012.

Anonymous October 12, 2009 at 6:58 pm

Are the American people that stupid?

Anonymous October 12, 2009 at 9:38 pm

Methinks recent evidence supports a positive answer to your question.

Which is it, the Wisdom of Crowds, or the stupidity of crowds proven by their tendency to herd around people and ideas that promise them the impossible, like a free lunch?

mark October 12, 2009 at 7:15 pm

From a guy that works in construction (me), I found the notion of a shovel ready project (especially one owned by a public agency) to be rather comical.

Randy October 12, 2009 at 9:24 pm

Good point. Use of the term “shovel ready” pretty much marks the user as “clueless”… unless they are talking about literally just digging holes… which, given their philosophy, they just might be.

William October 12, 2009 at 9:50 pm

The two transportation projects funded by the “stimulus” bill that I’ve seen–resurfacing of 495 north of the American Legion Bridge and on Old Georgetown Road in Bethesda–are proceeding amazingly slowly.

Anonymous October 12, 2009 at 11:32 pm

While this *is* me, colored shocked, what’re you comparing their progress to?

Mark October 12, 2009 at 11:58 pm

It is hard for any roadwork project to go quickly. When you judge this project on 495 north as going slowly, what are you comparing it to?

Road projects are difficult because traffic and right of ways have to be coordinated and planned throughout the process.

What is disengenuous about the whole “shovel ready” sell is that it created the impression that there would be this massive public works outlay that would result in projects occuring immediately. Even if 100% of the stimulus money was scheduled only for public works, the notion of “shovel ready” projects would still be misleading.

That is just not the way construction works – especially public works!

Methinks October 13, 2009 at 12:02 am

The only thing in government that’s shovel ready is the vast majority of government and its programs. Those are all more than ready for the undertaker’s shovel.

Anonymous October 13, 2009 at 12:08 pm

I know that my Representative and two Senators here in Virginia don’t have time to read Cafe Hayek (because they are too busy reading the health care proposed language) so I sent them a copy of this blog this morning. Thanks for the information

Name October 13, 2009 at 2:17 pm

dealers got their money from the taxpayer, but september car sales were awful. Cash for clunkers was a total failure.

Frank October 13, 2009 at 9:45 pm

Is your first sentence quite accurate? The table at the top of the web page that you appear to refer to says that it is the “US Total for contracts, grants loans and entitlements” and does not appear to include the $288bn of tax relief (See the Did You Know box lower down on the page.) Has that $288bn of tax relief not been “spent”?

breaks the What about the $288bn of tax relief? That doesn’t seem to be included in the totals on the website.

Frank October 13, 2009 at 9:52 pm

Sorry, just found this link – http://www.recovery.gov/News/featured/Pages/Estimated$625BinTaxReliefFromtheRecoveryAct.aspx. that shows that $62.5bn of the tax relief had been spent through the end of August. So, they still haven’t spent a lot but they have spent more than $111bn.

Anonymous October 15, 2009 at 5:31 pm

There’s a lot you don’t know.

1. Of the $787 billion, there are big pieces for AMT relief and tax cuts, not tracked by Recovery.gov. Roberts’ implied denominator is fallacious.

2. The spending reported on the web site is for reimbursement of spending that has already occurred by the recipient. There is a lag between the two.

3. The aid to state governments is spread over their fiscal year, which usually runs from July to June. In fact there are ways the money could have been spent before receipt, or in some future fiscal year (state govs have foresight and can borrow and lend).

4. Most important, especially to an economist, unless you postulate what a recipient would have done with no recovery act, YOU DON’T KNOW THE IMPACT OF THE ASSISTANCE ON TOTAL NET SPENDING.

There are reasonable critiques of the whole package, from either a left or right standpoint, but the remarks from BC and RR do not include any.

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