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Veteran Advisor

The Sloooow Trickle

They're making a bundle inside the Beltway, while across the country it takes $2 million to create a pothole-filling job. Never has Washington spent so much to get so little real work.

When the Democrats are in charge, the rich just get richer. Wait — isn't that what we're supposed to say about Republicans?

Not so when federal stimulus funds are being spent.

Washington has taken trickle-down economics to a whole new level of inefficiency. Those closest — literally — to the seat of federal power get the most. By the time the funds make their long journey to paychecks for people doing productive work, there's not a whole lot left.

Take the example, revealed this past week, of how $111 million in stimulus money has so far funded a paltry 55 public-works jobs in Los Angeles. City Controller Wendy Gruel says two municipal departments, Public Works and Transportation, plan eventually to create or retain 264 jobs with that money, but the contracting process is so slow that most of the money is still waiting to be spent.

So the price tag per job is $2 million at this point. Even if the city departments meet their target of 264, it will drop to only $420,000. This is still several times what workers will actually get paid.

So where does all the money go in cases such as this? In part it goes to the capital costs and profit of the contractors. But much of it also gets absorbed into the normal process of government contracting, in which public employees are paid to ensure (ideally) that the taxpayers are getting the most for their money and aren't being cheated by favoritism.

Of course, bureaucrats typically feel no need to rush things along. They don't get paid any less if a street gets repaved a few months late.

L.A. may be worse than most at getting people to work, but its low return on stimulus spending is certainly not unique. Even projects touted by the Obama administration have this problem.

Vice President Joe Biden on Friday cited one in which the New York City Department of Transportation is spending $175 million to renovate bridges and a parking lot, putting all of 120 people to work. That's $1.46 million per job. Another job on Biden's list, a highway project in Ohio, has created 300 jobs and costs $138 million — $460,000 per worker.

The one area where stimulus spending unquestionably has created jobs — and quite a few — is in and around Washington. Unemployment there at last report (as of July) was 6.3%, well below the national average. Year over year, employment increased by 41,800 jobs, the largest total for any metro area.

Los Angeles, by contrast, has an unemployment rate of 12.5% and has lost 23,500 jobs over the previous year.

What's pumping up the D.C. job numbers is no secret. No doubt some folks are being put to work filling potholes, but the real gold mine is in the administrative overhead game. The task of dispensing all that federal money demands the services of private firms that draw up contracts, audit spending, see to the required disclosures and so forth.

It's no shock that, as the Wall Street Journal reports, the stimulus outlay in D.C. and two adjacent congressional districts has hit $2,000 per resident, almost triple the national average.

This is where the trickling-down starts, and there's a lot less left to trickle once the Beltway locals have had their fill.

1 Reply
Senior Contributor

Re: The Sloooow Trickle

Here is another example of how government works and how the marxists cheerlead:

 

The New Yorker had an article defending the $800 billion stimulus, and their staff financial columnist defened it by pointing out that the money had raised the GNP of the USA by about  half a trillion.  Notice how he did not say by $500 billlion...then it would have been obvious that $300 billion of the funds  just melted away. They would have been better served to have just spend the money digging a hole at one spot and then filling it back in. At least then, they could say they raised the GNP by the full $800 billion. What a joke!