Wednesday, June 18, 2014

St. Louis Fed: Stimulus didn't stimulate

The St. Louis Branch of the Federal Reserve said most jobs created by the 2009 Recovery Act were "primarily in government."  $821 billion and the taxpayers got little more than a lousy t-shirt.  The St. Louis Fed reported:


It is estimated that at the one-year mark following the start of the stimulus, 166,000 of the 682,000 jobs directly created/saved were in the private sector...

The outcome that I document has a different flavor than the one predicted by advisers to
President-elect Obama. On January 9, 2009, Jared Bernstein and Christina Romer wrote “More
than 90 percent of the jobs created are likely to be in the private sector.”...

the number of government jobs funded by the Department of Education dwarfed the number of private jobs funded by the Department of Transportation by a 14-to-1 ratio....

My finding that job support through Recovery Act funds occurred primarily in the government
sector may help explain why the U.S. unemployment rate did not fall as predicted. By focusing on the government sector, the positive jobs effects of the Act were likely slanted toward the well educated. This is because roughly 49 percent of state and 47 percent of local government workers have at least a bachelor’s degree, whereas for private sector workers this proportion is only 25 percent (see Greenfield, 2007). On the other hand, the labor market during the recession was much weaker for the less educated.  In February 2010, the unemployment rate was 4 percent among persons with a bachelor’s degree and over 9 percent among persons without....

Several times per year since the beginning of the stimulus plan, the CBO has published a
low-high interval estimate of the employment effects (combining direct and indirect jobs
created/saved) of the program. In its first nine reports, the CBO projected that between 1.3
and 3.3 million persons would be employed in 2010 as a result of the Act; however, in its 10th
report (November 2011), the CBO revised its estimate and reported that the Act may have
created/saved as few as 650,000 jobs in 2010


Jones and Rothschild (2011), using their own surveys of grant, loan, and contract recipients, find that approximately one-half of the individuals filling positions directly created by Recovery Act funding were leaving other jobs

34 comments:

Anonymous said...

Since the slow recovery has been marked by a sharp drop in govt employment, that is an odd report.

Anonymous said...

Barry Obama is the worst POTUS in the history of the United States. Bar none.

Anonymous said...

So, if you spend $821B on 650000 jobs ( and that may be a stretch), I get $1.263 million spent for each job. Hmmmmm.

Anonymous said...

So, if you spend $821B on 650000 jobs ( and that may be a stretch), I get $1.263 million spent for each job. Hmmmmm.

Anonymous said...

What did they think the government was going to do with the money? Use it wisely?

Anonymous said...

Amazing yes! Arra reporting ha! And didn't many folks in govt jump on board and roll in their contracting friends to take advantage of these funds? Created jobs? Yeah right! And weren't many of these funds allocated towards the EHR (electronic health records) implementation as a precedent to Obama healthcare In Miss? Like during a particular governor's reign? Just like Katrina fund handling during that time is well? Hhhmmmmm. something to think about but I'm not one to gossip!

Anonymous said...

Thad Cochran VOTED FOR the 2009 Stimulus

Anonymous said...

so was a particular governor speaking out of both sides of his mouth during that time? very interesting. the millions of dollars that was spent on EHR implementation was primarily to get govt agencies on board with Obamacare!

Kingfish said...

Cochran did? Prove it.

Anonymous said...

Cochran voted against stimulus bill. He's more fond of voting for debt ceiling bumps. $11 trillion worth.

Anonymous said...

According to the Washington Post, Cochran voted no on the stimulus. I'm still voting against his return. Go home, Thad. You've been there too long.

Anonymous said...

Buncha' damn drama queens.

Anonymous said...

FACT: In his current term Cochran has voted to raise the debt ceiling by $2.918 TRILLION dollars.

Anonymous said...

Another 650000 jobs lost would have been significant.
I'm wondering how they defined government vs private sector jobs.
If there were government contracts to, for example, build roads or improve infrastructure, the contractor has a private company.
I don't doubt money was ill spent, but as long as we assume all spending is bad and all budget cutting is good,our elected officials can continue to be inefficient and lacking in long term economic strategies.
You can make money or improve your future with your money in the mattress.

Anonymous said...

June 18, 2014 at 11:27 AM = binary thinker

Unknown said...

1004 Prove it! Waiting...

Anonymous said...

1127 my money makes more interest my mattres . in addition I do not agree with 650000 jobs would have been lost....the previous comment was correct! Many of those jobs were replacement jobs or new private contracting companies under new subsidiary names to jump on board to receive grant funding. it would have depended on how the arra form was completed at the time of each purchase or contracted service. the question (on a form mandated by the government) regarding the creation of a new job was not detailed enough to capture additional information. it was vague. although this would have been very difficult to track and be accurate so I guess yo u would have to refer to government statistic reporting which is accurate??????

Anonymous said...

Mississippi did not waste any time spending the arra funding. this was not free money! It was money out of my pocket and your pocket!

Anonymous said...

Don't ya just love it when people have a hammer but can't see the nail?

Anonymous said...

I remember the stimulus. We got lots of highway signs announcing something was paid for by the stimulus (whether the sign or the road, I can't remember). There were also a TON of ads for short term foresters.

Anonymous said...

We all knew at the time there were not this many shovel ready jobs. Just like we knew cash for clinkers would not work. Just like we knew a video did not cause the Benghazi deaths. One of the most maddening things about this white house is that their ideas are so bad, their lies are so outrageous, that you call tell as soon as you hear the plan - nope. That won't work. Those of us who are so desperate to cut federal spending look at the things the federal government is supposed to do - Social Security, Medicare, Post Office, VA Hospitals, and on and on. All of them are screwed up. Oboma was right about one thing - change is needed. It's just this his ideas about change are 100% in the wrong direction.

Anonymous said...

It failed because half of it was tax credits. Tax credits are almost always terrible public policy.

Also it failed in Mississippi because the state just used all the federal money to supplant state funds. Mississippi Medicaid went from being 70% federal to 87% federal in 2009 & 2010. Barbour took every stimulus dollar that he could control but turned down the extended unemployment benefits that he could not reprogram.

Anonymous said...

12:28 pm, you need dictionary, an economics course and to understand how government arrives at figures.
" Lost jobs" are not difficult to calculate.
Binary thinking is no taxes, no spending vs high taxes ,big spending ie black and white.
My argument is how we cut the budget and how we choose to spend matters.
And, it's just to silly to take seriously that any individual could, by keeping their own tax dollars build highways,field an army,or have effective police protection. Do you know how many first responder jobs are dependent on federal funds or how much education is dependent on federal funding?

I pay more taxes than any elected official and more that most CEOs or billionaires. That's ONE of the things you should focus on.

I don't mind it. It's the least I can do for my country which has given me opportunities I wouldn't have had elsewhere. But, I'm pretty pissed that those who benefitted even more , not only lack gratitude but are sucking more off the federal tit in one year than anyone on welfare would get in a lifetime.



Anonymous said...

There were and still are plenty of worthy infrastructure projects that need to be done soon but they are never shovel-ready because the state and local governments will not pay for engineering, design, and environmental permitting with their own money. They want first-dollar federal assistance and the Feds got tired of paying to plan projects only to have the state/locals never come up with the matching funds for construction.

Anonymous said...

June 18, 2014 at 6:28 PM,

Show your tax return. Show your name. Show your facts.

Otherwise you are simply a liar blowing hot air.

nearly 50% of Americans do not pay federal income taxes. I pay over 60% of my income to some government entity.

Either you are a liar or a fool if you say you don't mind. It's you that are attempting to frame things in black and white. Government jobs were created at a rate of 14:1 to private sector jobs. Give that a think. Those government jobs pay ZERO taxes.

No, I didn't say that taxes were not withheld or they don't pay sales taxes or they don't pay real estate taxes or they don't pay ad valorem taxes or they don't pay property taxes or they don't pay fuel taxes or they don't pay other government fees.

What I said is that those government jobs pay ZERO taxes. So, if you pay $1 in taxes and your income is from the private sector, then (if you would have taken an economics course like you suggested another reader do, you would know) you indeed pay more than an elected official or any other government official whose income is paid via taxes.

Anonymous said...

The government jobs created or saved were almost all state and local, not federal. Teachers, law enforcement, public health, and other s/l agencies all got extra subsidies to hire more or at least not lay off the personnel they had. In Miss. The new money replaced a decline in state and local tax revenue so there were not many new hires but there were fewer layoffs.

Anonymous said...

Not taking the bait, 9:10 pm for reasons that should be obvious.

And, I don't see your name on the screen.

You don't think those in government jobs or with government supplements to their local and state salaries pay taxes?

You don't think government workers buy groceries or clothes or pay for housing?



ROFL

Anonymous said...

You folks keep slamming those that are not reporting their names however you are anonymous as well. you don't make sense

Anonymous said...

ROFL,

Do you pay taxes when you transfer money from your savings account to your checking account?

Why not?

If you did, that would be akin to saying that someone whose income is derived from taxes, pays taxes just because it's a line item removed from their pay scale.

Here, I'll connect the dots for you. If I pay $100 in taxes and the government makes $100. Then the government pays you $75 for a government job and you "pay" $25 of that as taxes, how much tax revenue did you bring into the government?

Zero. The government had gross income of $100 and net income of $50. Just because it hading your $25 and then you turned around and gave back that same $25 does not mean you contributed to the gross income.

Saying you paid taxes is akin to a pyramid scheme. If you can follow along that pyramid scheme, maybe you can reason through why adding government jobs IS NOT an answer.

Anonymous said...

10:21,

When you base your comment on your identity but then don't identify yourself, people tend to expect that you are a liar. Especially when that person is telling others how they are supposed to act or think.

Anonymous said...

None of this changes the fact that Mississippi receives
3 dollars for every dollar we send in. If anybody who
works for themselves in this State thinks that they will come out ahead cutting federal spending they are fooling
themselves. Nice to see the Club for Growth hacks
on this forum too.

Anonymous said...

Mississippi does not receive 3 dollars for every dollar in federal taxes paid by its citizens. Bigger Pie Forum (you can click on it on the right hand side of this blog or use the link below) has a great fact sheet summarizing federal spending in Mississippi, which includes sources for all their data. I know this is a big issue in this election, with good points to be made on both sides. I hope everyone will read that fact sheet and have a good understanding of exactly what federal spending consists of in Mississippi so that the debate on this issue can be based on the real facts.

http://www.biggerpieforum.org/sites/biggerpieforum.org/files/MS%20Economy%20-%20Federal%20Spending%20(May%202012)_0.pdf

Andrew said...

@11:37, you should read your own material a bit closer. In the second bullet point, the article identifies that in FY 2010, Mississippi took in just greater than 3:1 in federal to state dollars. In the previous twenty years, the average was closer to 2:1. Is that a positive somehow? The point remains that Mississippi is one of the largest receivers of federal assistance.

Anonymous said...

The point is that, with the exception of a couple of unusual years (Katrina, heavy stimulus spending), Mississippi is historically more in the 2 to 1 ratio. As the info notes, that places us at 22 out of 50 state in per capita federal spending, so we are about in the middle of the pack. That fact did surprise me.

Then, if you look at the breakdown on what that federal money is, the bulk of it is social security, medicare, entitlement programs, etc. I find it interesting that neither candidate has really addressed these programs, and instead the focus has been on what somebody can or can't do through seniority and committee assignments. It seems to me that the bigger issues have been missed with regard to most of the federal money coming to Mississippi.



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