San Fransisco Fed. Says Stimulus Was A Huge Waste

According to recovery.gov, the President's website designed to track the stimulus plan, the $800 Billion plus porkulous bill passed in February 2009 is responsible for 3,348,813 jobs.  According to a new analysis conducted by the San Fransisco office of the Federal Reserve, the president's projection is off by only 3,348,813 jobs.  That's correct The American Recovery and Reinvestment Act of 2009 created exactly zero permanent jobs.

Those of us who are still unemployed or even those who simply watch the unemployment numbers know that the stimulus bill was a failure, but what this study shows is that we could have saved the $800+  Billion. Jobs would have been almost the same and the federal deficit would have been in better shape. I say almost becase the plan did create short term jobs but they are long gone. The study also kills the Democratic party argument that we would have fallen into a depression without the Presidential porkage because for all intents and purposes, based on the effect of the plan, there was very little help to the economy:

Wilson’s  [SF Federal Reserve] study makes an important contribution to this debate by focusing on state-by-state comparisons. A large portion of stimulus funding at the state level was based on criteria that were entirely independent of the economic situation that states faced. For example, the number of existing highway miles was used to calculate additional transportation spending.

The study uses this resulting variation in state-level stimulus funding to determine what impact ARRA funding had on employment — including both the direct impact of workers hired to complete planned projects, as well as any broader spillover effects resulting from greater government spending. Administration economists have repeatedly emphasized the importance of this indirect employment growth in driving economic recovery.

The results suggest that though the program did result in 2 million jobs “created or saved” by March 2010, net job creation was statistically indistinguishable from zero by August of this year. Taken at face value, this would suggest that the stimulus program (with an overall cost of $814 billion) worked only to generate temporary jobs at a cost of over $400,000 per worker. Even if the stimulus had in fact generated this level of employment as a durable outcome, it would still have been an extremely expensive way to generate employment.

It gets better, because the study also shows that stimulus generated federal assistance to state Medicaid plans may have cost jobs.

One possibility is that requirements to maintain full Medicaid benefits in order to receive federal aid proved sufficiently expensive that state governments pushed though additional rounds of layoffs in non-health related areas. 

The report says cautions not to regard it as infallible but:

The burden of proof is now increasingly on the side of fiscal stimulus advocates. It is easy to point out possible flaws in each of the studies mentioned here — though the biases may end up either exaggerating or diminishing the estimates of the effects of the stimulus. But where is the evidence that the 2009 ARRA fiscal stimulus enhanced employment recovery in a cost-effective and sustainable manner?