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Document drop: Porkulus One is a failure, so let's do it again!

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By Michelle Malkin  •  July 8, 2009 09:13 AM

As you all have heard, Laura D’Andrea Tyson, the Clinton economic adviser now on Team Obama, has floated a second stimulus plan. Democrat Sen. Sheldon Whitehouse of Rhode Island has echoed the call. Other Democrats are open to it.

Only 10 percent of Porkulus One has been spent, misspent, or gone untracked, but who’s counting?

I’ve uploaded two documents for your perusal this morning: The first is a GAO report on stimulus spending by states and localities, which will be released this morning at a House oversight hearing.

You can read the whole thing here.

Bottom line: The funds are not being spent on what they’re supposed to be spent on. States made up their own criteria for spending. School and transportation bureaucrats preserved their own jobs instead of “stimulating” others.

The second document is a GOP memo dissecting the failures of Porkulus One.

You can read the whole thing here. A few key excerpts:

According the U.S. Bureau of Labor Statistics, the number of long-term unemployed American workers increased by 433,000 to 4.4 million in June. 1 The U.S. unemployment rate stands at 9.5%. 2 However, in a paper published by the head of President Obama’s Council of Economic Advisers, Christina Romer, the Administration’s $787 billion economic stimulus plan was projected to keep U.S.
unemployment below 8%. 3 Figure 1 depicts the Administration’s original estimates along with actual unemployment. When asked to explain the discrepancy between what the Administration claimed would be the effects of its stimulus on unemployment and reality, Vice President Joseph Biden acknowledged that the Administration “misread how bad the economy was.” 4

Vice President Biden’s comments raise serious questions about the Administration’s credibility on its employment estimates. Despite the Administration’s demonstrated inability to accurately estimate the effect of its stimulus package on actual unemployment, it continues to assert that the plan will “save and
create more than 3.5 million jobs over the next two years.” 6 For example, in the press release accompanying his first quarterly report on stimulus spending, Vice President Biden claimed that stimulus
spending had “created or saved” 150,000 jobs. 7 However, the actual report made no such claims, making it unclear where exactly the Vice President derived his claim. 8 President Obama asserted on June 8 that stimulus spending would save or create 600,000 jobs over the subsequent 100 days. 9 The Administration has essentially “rigged the game” of reporting the tangible effects of its stimulus program by creating an immeasurable metric – “jobs created or saved” – that no one can disprove.

And on the “counting heads” approach to measuring stimulus effectiveness:

Simply counting the number of people paid with Recovery Act funds ignores a challenging but essential element of understanding the Act’s effects on unemployment: what each employee would have been doing in the absence of Recovery Act funds. For example, if the employee was previously unemployed, and was able to find work as a result of Recovery Act funds, that employee should be counted as a job created. However, if the employee was employed elsewhere and likely to maintain that
employment, but changed jobs as a result of the Recovery Act, unemployment was not reduced as a result of the expenditure. Instead, the Act merely shifted resources from one sector, industry, or business in the economy to another sector, industry, or business. Even under the discredited and outdated Keynesian economic theory adopted and advanced by the Administration and the Democrats in Congress to justify the Recovery Act, this shift in resources would have very little, if any, stimulative effect.

As the Committee Democrats rightly noted in their briefing memorandum, “job creation must be tracked efficiently to ensure that the key purpose of the Recovery Act is being fulfilled: putting the unemployed back to work.” 13 OMB’s guidance is seriously deficient, as it ignores the crucial challenge of understanding whether people employed with Recovery Act funds were (or would have been) unemployed in the absence of the Act, or whether they simply would have been employed elsewhere. Thus, the guidance will likely lead to inflated job reports from stimulus recipients.

OMB’s guidance includes a telling example of this principle being ignored. The guidance includes a reference to faculty members at educational institutions:

Therefore, for purposes of ARRA reporting of jobs created or retained, colleges and university [sic] may count, proportionately, the percentage of effort directly charged to ARRA awards as an FTE [full-time equivalent] equivalent [sic]. For example – A [sic] faculty member charging 50% effort on an ARRA award will be counted as .5 FTE. 14

The guidance thus assumes that every tenured professor receiving stimulus funds for research would have been out on the street if not for the Recovery Act.

In addition, OMB’s guidance includes a loophole that would allow prime recipients of Recovery Act
funds to use statistical estimates to report aggregated project-level job numbers:

However, in limited circumstances, the prime recipient can employ an approved statistical methodology to generate estimates of job impact, thereby collecting data from a smaller subset of sub-recipients and vendors in order to extrapolate an estimate of job impacts to all applicable sub- recipients and vendors. 15

This job reporting method is available when the recipient deems the project-level requirements to be “overly costly or burdensome.” 16 Given that every recipient has an incentive both to minimize the costs of reporting as well as to maximize the number of reported jobs “created or saved” (so as to be more likely to receive future Recovery Act funds), this loophole could lead to many recipients simply estimating job numbers in a way that is not auditable, much as the Administration has done so far with its macroeconomic job claims.

But never mind all that.

Let’s rob future generations again! Because one massive, misguided earmark-stuffed government behemoth rammed through the legislative process just isn’t enough.

Generational Theft Act 2. Spawn of the Porkulus Beast. It’s aaaallliiiiive!

Posted in: fiscal stimulus

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Categories: Enviro-nitwits, fiscal stimulus, Politics